The Auditor General has revealed that the Lusaka City Council (LCC) misapplied over K3 million of the Local Government Equalization Fund by using it to procure motor vehicles for senior management.

And the Auditor General has also revealed that the local authority was as at 31st December 2017 owing Pay as You Earn (PAYE) and other contributions amounting to over K160 million which were deducted from employees earnings but not remitted to the respective institutions.

This is contained in the Report of the Auditor General on the accounts of Local Authorities for the financial years ended 31st December 2015, 2016 and 2017.

In the report, the Auditor General explained that LCC management stated that they had refunded the misapplied funds when in fact not.

“During the period under review, the Council received amounts totalling K47, 135, 414 as Equalisation funds out of which at least K9,427,083 was to be used on capital projects. However, K3,108,965 was used to procure motor vehicles for senior management. Although in their response dated 26th March 2019, management stated that the misapplied funds had been refunded to the capital account, as at 31st March 2019, there was no evidence that funds had been refunded,” the report read.

The Auditor General noted that the local authority wasted resources by among other things, constructing a vegetable shelter at Ng’ombe market which is not in use.

“In 2016, the Council spent amounts totalling K153, 113 to construct a vegetable shelter at Ng’ombe market in Roma Ward 7. However, a physical inspection of the shelter carried out in December 2018 revealed that the shelter was not in use rendering the expenditure wasteful. The contract for the alteration and rehabilitation of the SOS Police Post in Matero Constituency was awarded to Mokashi Import and Export Construction on 17th September 2015 at a contract sum of K632,302 and the works were to be completed in twenty (20) weeks. As at 31st December 2018, the contractor was paid in full. Although the project was completed in 2016, as at 31st December 2018, the project had not been handed over to Government and had not been occupied by Zambia Police thereby exposing the building to vandalism,” the report read.

“On 21st April 2017, the Council awarded a contract for the construction of a Storm Water Drainage Network along Chozi Road, Silwiza Ward 13 in Northmead to Stomp Investment Limited at a contract sum of K246,306 with a contract period of six (6) weeks. As at 31st December 2018, the contractor had been paid the full contract amount of K246,306.
However, as at 31st December 2018, although the works had been completed some concrete covers used to cover the entire drainage network had started collapsing as they were made of weak material.”

Meanwhile, the report showed that LCC was as at 31st December 2017 owing Pay as You Earn (PAYE) and other contributions of over K160 million which were deducted from employees earnings but not remitted to the respective institutions.

“As at 31st December 2017, the Council owed Pay as You Earn (PAYE) and other contributions in amounts totalling K160,705,911 deducted from employees’ earnings which had not been remitted to the respective institutions. The mounts are as follows: Zambia Revenue Authority (ZRA) K89,640,895, National Pension Scheme Authority (NAPSA) K44,444,717, Local Authority Superannuation Fund (LASF) K25,261,750 and Zambia Union of Local Authority Workers (ZULAW) K1,358,549 all in all totaling K160,705,911. Included in the amount of K25,261,750 owed to LASF was interest in amounts totaling K673,413 that had accumulated in the year 2017 due to non-remittance of statutory obligations,” the report read.

“Contrary to the Income Tax Act, during the period under review, the Council paid commutation of leave days and settling in allowances in amounts totaling K1,487,766 to one hundred and eighty (180) officers without deducting Pay As You Earn (PAYE).”

And the report also highlighted that the council was owing both former and existing employees over K97 million as at 31st December 2018.

“A review of accounting and other records revealed that the Council owed former and existing employees staff obligations such as terminal benefits, long service bonus and workers compensation in amounts totaling K97,787,115 as at 31st December 2018. The figures were divided as follows: Terminal Benefits K20,161,506, Long Service Bonus K73,118,174 and Workers Compensation K4,507,435,” revealed the report.