PSMAS in US$40m tax evasion scandal

Cuthbert Dub

Cuthbert Dub

Takunda Maodza Assistant News Editor
Rich pickings by former Premier Services Medical Aid Society group chief executive officer Dr Cuthbert Dube and other senior executives may not have been taxed since 2009, it has emerged.
This past week, the Zimbabwe Revenue Authority temporarily garnished PSMAS bank accounts over tax arrears of more than US$40 million.
The garnishee order was almost immediately lifted after PSMAS reportedly paid US$2 million and offered Zimra an “acceptable” payment plan.
Documents in The Herald’s possession show that Zimra alerted banks on the garnishee order.

The banks in turn alerted their employees on the development through circulars.
Reads one cautionary circular from management at a local bank to employees dated March 10: “We advise having received a garnishee order from Zimra on Premier Service Medical Aid Society (PSMAS) for US$40 611 916.41. The garnishee order may only be cancelled or withdrawn on advice from Zimra.”

The garnishee order was lifted the same day after PSMAS paid US$2 million and made a pledge to service the debt.
Another circular was sent out to bank staff that same day, reading: “Zimra garnishee order placed on the following client has been cancelled with immediate effect — Premier Service Medical Aid Society. Posting restrictions placed on the accounts have been removed and transactions should now be processed in the normal manner.”

A source told The Herald the debt was related to tax evasion.
“It is to do with the huge salaries and bonuses that management earned since 2009. So it comprises income tax and withholding tax. PSMAS hurriedly paid US$2 million and made a payment plan,” the source said.

PSMAS acting chief executive Dr Farai Muchena yesterday said, “There is no garnishee. They had intentions to do so but it did not go through. It was over outstanding payments.”

Asked on the US$2 million payment to cancel the garnishee order, Dr Muchena said: “I would need to confirm that with our finance department, but at the moment we do not have that capacity.”

He said PSMAS was working with Zimra to rectify “some of the figures”.
Dr Dube reportedly earned US$500 000 monthly in what has become known as the salarygate scandal, while his 14-member management team also pocketed mega salaries.

In total, top executives took home US$1,1 million out of PSMAS’ monthly staff obligations of US$2 million.
Dr Dube’s earnings last year amounted to US$6,4 million, while the total executive wage bill was US$18.6 million.

PSMAS group operations executive Mr Enock Chitekedza got about US$2 million in 2013 while other executives pocketed slightly above a million dollars each.

Zimra did not respond to written questions from The Herald yesterday, but Dr Muchena denied the debt was related to the salaries saga.
PSMAS is heavily indebted and as of December 3, 2013, it owed service providers US$38 million.

It has committed US$16 million every month for settling claims with various service providers.
PSMAS has 802 072 members of which 671 133 are civil servants.

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  • mpengo


    Grounds for arrest!!!! And seizure of assets.

    Now, Minister Mohadi… we await you to act on your promise. Our effective ZRP should not be held back.

    Vanhu ngavasungwe vatongwe!!!

  • Jonson

    Thomas Gandanga Tafirenyika.. The only true prophet sang ” corruption” more than 20 yrs ago

  • leemoyo

    Now Tomana must act because weeks ago he said its not an offence to earn more money in Zimbabwe but its in black and white under tax laws in Zimbabwe that if you dont pay tax- you are breaking the law.
    We need wider investigation on name, business type , total earnings vs tax paid.

  • leemoyo

    Well done Gushungo but I hope its not another MMCZ scenario where you announced a big nothing issue after having good dinner or part. and ultimately noone ever face jail.iF THE SWIFTNESS WE SEE WHEN PEOPLE CRITICISE YOU IN COMBIS IS APPLIED WHEN PEOPLE STEAL NOONE COULD BE IN YOUR CABINET. To criticise you its instant arrest, to steal millions its serious calculative methodical calmly investigation which silently leads to zero arrest.
    In this case you know the MP, you know the Minister and the Investor- why are they still in the streets??

  • macemike

    I thought so – no tax paid! Would love to know what really is going to happen. Will it just be swept under the carpet? perhaps other companies who are currently paying tax should withhold payments – we are small fishes yet we are visited regularly by Zimra but alas the big fish always seems to escape the net. One last thought – does PSMAS require a ITF263 form? – if so have they been issued one? – and if so how?

  • simba

    who will pay this tax bill? if psmas pays, then effectively the gross salaries of these guys will be increased by default over and above the grotesque amounts they already collected. they should pay or their property attached

  • Mimi

    @Mpengo kusungwa for these thieves will not help PSMAS get back the looted funds. What is needed is for them (Dube and his other Executive members) to repay the funds they looted. Obviously they have stashed these funds away. Let them be made to pay back restitution. Kuvasunga will even make the tax payer pay for their well-being vari mujeri, hazvibatsire. The proceeds that were acquired using these funds could be repossessed and sold to ensure that the monies lost are paid back.

    • str8arrow

      asset forfeiture is the way …. whatever these guys and others not yet named but known to have gained from corrupt activities should be forfeited to the state and liquidated to compensate the organisations from which financial resources were looted. i would still insist its looting not earning because they robbed their companies (and yet others not yet named out there still continue to do so) of value. they took in monetary terms more than they added in terms their labour and intellectual input. now they have gone ahead and not paid taxes on the supposed earnings …. just goes to show kuti vanhu ava were and are doing this not out of the fairness of “a fair day’s wages for a fair days labour” but rather greed. an “unholy” need to amass by reaping where they did not sow. for the sake of a suffering nation, the powers that be need to take serious decisive and unprecedented action to deal with this and restore sanity to our beloved nation. sanctions are not the ones killing this economy, its the people entrusted to run the nation’s enterprises. what they have amassed from these obscene salaries should be taken away and returned to the enterprises they stole from for the benefit of the suffering masses of the nation

  • big

    Tax evasion is a serious crime all over the world. Let’s us see your promises to fight graft put into action. Arrest this man before he flees!!!

  • koshy

    well done PSMAS on communicating with zimra urgently paying 2mil and teling em your payment plan. that is what dis otha so educated mr kereke should ev done wen he heard dat d tax man is coming. tax evasion is tax evasion and should be payed

    • dibango

      being in tax arrears is not tax evasion. google for the meaning of tax evasion. there are many companies which are in tax arrears but they can not be sued for invading tax because they had declared to zimra what they are supposed to pay while tax evaders do not declare their taxes to zimra.

  • gogo

    Some of us you buck about nailing down corrupt officials, hezvo ka izvo zviri pachena. Itai tioneka…..

    Munhu ane maziso vakomana ende tiri kuona zvese zviri kuitika munyika ya Nehanda

  • gogo

    President of Bayern Munich, Uli Hoeness is getting 3 and half years in Jail for 27million tax invasion. Ko vedu ava ve 40million vachadii???

    zvichangoperera pano panews paper…..

    hahahahahah ……. I luv Zimbabwe


    we are tired of hearing of these noises about corruption, what we need is action

  • MweniTafara

    There is reasonable argument to send Dube to jail, why is he still roaming the streets?