This past Friday JP Morgan, America’s largest bank announced that its CEO, Jamie Dimon would receive $18.5M worth of stock as bonus for the next 3 years on top of his $1.5M annual salary. This 74% salary increase is for a job well done in handling the legal problems surrounding the 2012 losses caused by the rogue trade known as the London Whale. You can imagine the outrage from the American public as Wall Street is not exactly the darling of the country as its unscrupulous practices are widely believed to have triggered the 2008-2009 recession The point is this large salary is compensation for a job well done, for making the shareholders money, simples.
When earned and deserved high salaries are appropriate and no biggie. Now flip the script and imagine the setting of such high salaries in Zimbabwe, where economy is struggling to recover, unemployment is upwards of 70%. Yes Zimbabwe began the New Year with more revelations on “Salary Gate” a scandal about obscenely high compensation for senior management of some parastatals that broke late last year.
The latest caught in “Salary Gate” scandal is the CEO of Premier Service Medical Aid Society (PSMAS) (pronounced PIS-MASS) whose base salary was $250,000 a month. PSMAS is the leading medical insurance provider for government workers. The CEO‘s base monthly salary of $250k is peanuts in organization in large healthy economies, however in Zimbabwe $250K is obscenely generous especially so in a country where the average base monthly government salary is between $296 – $400. The Health Minister, under whom PSMAS falls, expressed shock at this salary for a company that is under performing and currently owes at least $38millionin unpaid bills to service providers. The PSMAS board of Directors immediately cut the CEOs salary to at least $60k but retained the CEO without censure. Are you kidding me?
Before the PSMAS scandal, there was the case of Zimbabwe Broadcasting Corporation (ZBC). Also a state run agency, the Broadcasting Corporation’s Chief Executive was suspended after it was revealed that he was earning a salary of $40k /month with benefits. The amount itself would not be an issue if the organization was performing well and not at the brink of insolvency. Per the documents released ZBC generates US$275k monthly, has an annual budget of US$2.3M of which US$1.6 goes to salaries yet employees have gone 6 months with no pay. The Information Minister fired the entire ZBC board for incompetency and lack of oversight.Could these salaries be a result of the hyper-inflationary climate of 2006 -2008, a legacy mindset from the days of trillion Zimbabwe dollar translating to US dollar payouts? Or could this be pure greed and selfishness? Whatever the cause, these ginormous salaries come despite a government edict issued last February, which capped the salaries of all government owned/controlled enterprises at US$6k monthly as part of weaning these organizations from government support and ensuring profitability. Is the rule of law so broken down that senior management acts with impunity and disregards government regulations and still gets away with it?
It is ludicrous for the minister in charge to express shock and ignorance of the goings on in a ministry under his/her watch. In the case of ZBC, a memo by Permanent Secretary to the minister written in November 2012 clearly alluded to gross mismanagement and use of politics to cover-up the misconduct. Nothing ever came out of the memo, not even an investigation. The issues outlined in the memo have been happening for a while and are not new, an indication that malfeasance has become institutionalized.
A lot of questions come to mind, mainly who knew what and when, were these salaries approved by the board of directors, what kind of board approves such compensation packages? How does an economy as small as that of Zimbabwe sustain monthly salaries in the 40k to 60k range. Why was one CEO suspended and the board fired yet the other CEO and board retained their job. Why CEOs of companies operating at a loss get rewarded with pay increases, how does an entity go unaudited for years and the responsible ministers has no clue and most of all where is the damn police, the Criminal Investigation Department or the dreaded Central Intelligence Organization to conduct an investigation!
The answer to all these questions lies with us, the people and our gullibility. How do we sincerely believe the government has the people’s best interest at heart? Can the government seriously expect the people to believe its sincerity in tackling corruption when only those in position of power live lavishly and ordinary civil servants can barely make ends meet on salaries way below the Zimbabwe’s poverty datum line of $540. How does the government justify giving hardworking teachers a mere $79 annual pay raise yet senior managers of non performing companies earn $100k annual pay raise. So what to do? Some specialize in carrying theoretical intellectual discourse on how to change the nation’s situation, others specialize in praying for change and Some are quick to blame western imposed sanctions for the deplorable state of our country yet the harm that we inflict to our own country is many times more than what any sanctions can ever administer. The bottom-line; to quote a well-known writer, we have to free ourselves from fear and bad politics.
Note: Article was written before the events of 1/27/14 in which PSMAS CEO was fired