'Stiffer penalties for corrupt execs'

HARARE - Zimbabwe's capital markets regulator has called on government to amend the Companies Act and make provisions for stiffer penalties on corrupt and fraudulent executives.

Willia Bonyongwe, the Securities Commission of Zimbabwe (SecZim) chairperson, said the country's legislative system is ineffective in dealing with fraud and corruption by business people.

“Legislators should take a page out of India’s workbook, through disgorgement, a fraudster is compelled to return all they defrauded three times over,” she told a SecZim-organised parliamentary workshop on Wednesday.

“This not only discourages stealing and corruption, but also shows players in the industry that the country is serious about wanting to banish corruption,” she said, adding that government must match a fraud or corruption crime with the penalty.

She argued that the current penalties encouraged offenders.

This comes as Zimbabwe Revenue Authority (Zimra) commissioner-general Gershem Pasi recently said the judicial system in Zimbabwe is thwarting efforts to fight corruption in the country.

Pasi said there was need for judicial reforms if the corruption fight was to be effective.

“The fight against corruption will not yield any results with the current judicial system.

I often ask why we have so many road accidents with the amount of roadblocks we have, furthermore, I wonder why so many corrupt people have been fired but are not in jail,” said Pasi.

According to the African Development Bank and a US-based think tank, Global Financial Integrity, Zimbabwe has lost a cumulative $12 billion between 1980 and 2010 through illegal financial outflows ranging from secret financial deals, tax avoidance and illegal commercial activities.

Bonyongwe said the country would not reach its full development potential until the judiciary system becomes efficient.

She also said the amendments to the Companies Act were long overdue and had to be prioritised.

“The current government probe on corruption should also extend to the judiciary system as it is the law enforcement branch,” she said.

Recently, the Zimbabwe Stock Exchange’s chief executive Alban Chirume said the Companies Act must be revamped because it has loopholes and is out of sync with global standards.

He said the bourse had engaged the Law Development Commission, which is spearheading the
project, to provide input.

“The Companies Act is outdated and may have loopholes that will result in exploitation of minorities in its current form,” he said. Zimbabwe’s current Companies Act is derived from the 1948 UK Companies Act. Its overhaul has been on the cards for years.

Chirume said among the issues to be addressed in the revised Act is that of High Court schemes of arrangement that are prejudicing minorities.

“We are also lobbying for reduction of compliance costs to protect shareholder value,” he added.

As part of efforts to protect investors, he said the bourse would be enhancing the role of the financial reporting monitoring panel.

“There is need to restore confidence in financial markets through disclosures to protect investors.

“Company insiders must be accountable through the production of credible financials,” said Chirume.

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