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Grace Pfumbidzayi

Two very significant and related developments happened in Harare on Thursday. One occurred at the Harare Magistrates’ Court and the other at the Harare International Conference Centre. Both have to do with corporate governance — one was a ruling on a crime of corporate misrule, the other a launch of a document that encourages ethical business conduct.

At court, two former Air Zimbabwe bosses, ex-company secretary, Grace Pfumbidzayi and former chief executive, Peter Chikumba, were convicted of criminal abuse of office. Pfumbidzayi was the central figure in a $10 million insurance scam which contributed to the near-collapse of Air Zimbabwe, conniving with Chikumba. At some point, the national flag carrier flew without insurance cover, a huge corporate error or crime, thanks to the duo’s actions.

At the HICC, Vice-President Emmerson Mnangagwa launched the National Code on Corporate Governance (NCCG), a document that prescribes a framework on how business should be run in the private and public sectors. Apart from outlining the best business practice, the code also seeks to fight crimes such as Pfumbidzayi and Chikumba were convicted of.

Zimbabwe has for long been riddled by private and public sector bad corporate governance, of which corruption is a key feature. These, plus illegal western sanctions have conspired to mar the economy in a big way.

VP Mnangagwa said the code for ethical leadership should be rooted in morality, professionalism, values and culture. It deals with corruption, corporate disclosure, communication and mechanisms to create trust between shareholders, boards, managers and employees. The government, state enterprises, family trusts, councils and the private sector are bound to comply with NCCG.

What we have now is a system of ethics, a guiding framework on how business and public officials must conduct themselves and run their companies and government business. Not that business leaders or government and parastatal officials will suddenly realise how bad it is to conduct themselves as Chikumba and Pfumbidzayi did at Air Zimbabwe simply because we now have a code. They know or knew already what bad and good corporate governance is, but with a code now in force, we have a reference point in place that must enhance awareness in a more concrete way on how best to run company or government work.

The code would assist in cleaning up the business environment and making business more efficient, reducing transaction costs, attracting and retaining investment.

“Government will exercise zero tolerance to the scourge of corruption,” VP Mnangagwa said.

“Fellow Zimbabweans, rules alone are not enough to deal with this scourge. We need a change of attitude and culture. This must be pursued urgently.”

It is good we have such high-level commitment to fight corporate malfeasance. A culture of corruption is bad for business, economic growth and the public image of the country at home and abroad.

Magistrate Fadzai Mthombeni made interesting observations on unacceptable corporate governance when sentencing Pfumbidzayi and Chikumba to an effective seven years in jail each yesterday.

“What the two accused persons did cannot be tolerated and they must be punished accordingly,” she said.

“There was a lot of prejudice caused to Air Zimbabwe (Pvt) Ltd by the actions of the two although the State did not go deeper and dig out the fraud charge. Lots of companies are breaking down because of crimes committed by people holding higher positions in the companies and abusing those positions. The courts must put a stop to that and punish the offenders so as to send a clear message to the society. These two convicted persons brought the airline to its knees.”

Mthombeni, and by extension the courts, did her part in setting an example on possible consequences to corporate misrule and unethical conduct. The challenge we have henceforth is implementing the code effectively to instill a culture of good business conduct in the country.

We reject the paradoxical tradition that Zimbabweans are world-class in crafting plans, but the worst in implementing them. The code must not gather dust on company boardroom shelves or be reduced to material for academic research while corporate misrule continues. It must be a living document, as the VP said.

The government, together with the private sector that played a starring role in marshalling corporate support in the writing of the code, must take their co-operation a step further by educating relevant audiences about the existence of the code and the good it seeks to do. Among the audiences who should understand the code are the ordinary people. They must be able to identity situations where the code is violated and raise the alarm when necessary. We already have a presidential complaints handling mechanism in place, so the public must use that hotline to make reports that are relevant to the code as well.

As the government and private sector implement the code, it is useful that we have a monitoring and evaluation system to gauge progress or lack of it at prescribed stages and take corrective action.

Relevant laws and structures like the Prevention of Corruption Act, Companies Act and the Zimbabwe Anti-Corruption Commission, have to be seen to support the success of the code.