News / National
Firm smuggles $25M cash across border
01 Apr 2018 at 03:27hrs | Views
PRESIDENT Emmerson Mnangagwa's amnesty for illegal externalisation of money has shored up Zimbabwe's foreign currency reserves - and has also exposed the impunity with which companies and individuals spirited away hard cash in recent years.
On March 19 this year, President Mnangagwa made public a list of 1 844 firms and people who externalised an estimated $1 billion, following the expiry of a three-month amnesty that ran from December 1, 2017.
Over $590 million has so far been recovered, and indications are that since March 19 this year, 55 people and companies that had taken more than $90 million out of the country - either as unaccounted for export receipts ($87,9 million) or undelivered imports ($4,8 million) - had approached the Reserve Bank of Zimbabwe to return to good legal standing. All formal cross-border banking transactions are captured in a database maintained by the RBZ, giving monetary authorities up to the minute information on any money that leaves Zimbabwe. It is this database that was used to compile the list and has helped the country recover close to $600 million in just three months. However, some have remained obstinate. One of them, information obtained by our Harare Bureau shows, is a mining company that handed over a total of $25 million in hard currency to its majority shareholder at Beitbridge Border Post.
The businessman has refused to heed the amnesty and it is understood that law enforcement agencies are now handling that matter. Another case is that of a prominent individual who was corruptly paid more than $8 million for "facilitating" an agri-equipment deal.
That individual is said to have now approached the RBZ to try and clear his name but his case has been complicated by the doubly illegal nature of the matter: the bribe and the externalisation. Our Harare Bureau understands that law enforcement agents in Zimbabwe, South Africa and Portugal are investigating the case. A well-placed source at the Finance Ministry said: "The sheer impunity with which people took money outside Zimbabwe says a lot about the previous regime. There simply was no appetite for law and order.
"There are many such cases and that is why we are getting a lot of noise in some sections of the media about why President ED is naming and shaming.
"They are rushing to the media because they know they have been caught on the wrong side. They should approach the Reserve Bank to clean their dirty hands. There is still scope to address these matters without having to take each other to court."
RBZ Governor Dr John Mangudya last week said he would not comment on individual cases, but pointed out that enforcement of laws and regulations was encouraging investors to come to Zimbabwe.
"There is a lie going around. The guilty ones are saying Government's actions scare away investors. The reality is that credible, genuine investors have been telling us how thrilled they are that we are bringing rule of law.
"Investors want to operate in a legal, predictable environment and that is what the new dispensation has been creating. In 2014/15, the RBZ gave an amnesty to externalisers and tax dodgers, but the environment gave people confidence to do as they pleased.
"Now monetary authorities have been given teeth by the President and we have companies coming forward to state their cases, bring back money, and come clean.
"Exchange control is standard practice across the world, and everything we are doing here is provided for by the enabling Act and supporting statutory regulations.
"For instance, in China everyone knows that externalisation will land you in jail for a long, long time. But some of the Chinese companies that were operating here had joined the bandwagon of illegality.
"I am pleased to tell you that a big percentage percent of the Chinese companies on that list have approached us to comply with the law since we published that list."
Dr Mangudya encouraged externalisers to approach their banks or the RBZ directly to clear their names.
"That list that was published was very accurate and we stand by it. The concerned companies know it and that's why they are approaching the (central) bank.
"Our end objective is compliance, full accountability and transparency. There is no use for us to go looking for money from Afreximbank if people continue externalising it. We have to account for that money and every company in Zimbabwe knows that these are international standards that are observed all over the world.
"Investors want to operate in a country where people comply with the law and they are very happy with what the President has done," he said.
Authorities are crafting a Money Laundering and Proceeds of Crime (Amendment) Bill to deal with illicit financial flows. Publication of that list and other interventions, Dr Mangudya said, had shored up Zimbabwe's foreign currency reserves.
"We have noticed that there is a general increase in foreign reserves in the country compared to last year. There has also been an increase in cash deposits and I think this can be attributed to public confidence levels which have also increased.
"According to our end-of-day positions, which is the difference between deposits and cash withdrawals of the day, there has been an increase of between 20 and 25 percent in our foreign currency reserves. This was between end of November last year and March 2018.
"This has greatly improved the cash situation in the country as long queues are now being experienced during pay days. One of the reasons for the increase are the policies that we have introduced. The other issue is that consumers have embraced the use of plastic money and mobile money transfers. There is a need for the country to continue producing and lowering imports."
On March 19 this year, President Mnangagwa made public a list of 1 844 firms and people who externalised an estimated $1 billion, following the expiry of a three-month amnesty that ran from December 1, 2017.
Over $590 million has so far been recovered, and indications are that since March 19 this year, 55 people and companies that had taken more than $90 million out of the country - either as unaccounted for export receipts ($87,9 million) or undelivered imports ($4,8 million) - had approached the Reserve Bank of Zimbabwe to return to good legal standing. All formal cross-border banking transactions are captured in a database maintained by the RBZ, giving monetary authorities up to the minute information on any money that leaves Zimbabwe. It is this database that was used to compile the list and has helped the country recover close to $600 million in just three months. However, some have remained obstinate. One of them, information obtained by our Harare Bureau shows, is a mining company that handed over a total of $25 million in hard currency to its majority shareholder at Beitbridge Border Post.
The businessman has refused to heed the amnesty and it is understood that law enforcement agencies are now handling that matter. Another case is that of a prominent individual who was corruptly paid more than $8 million for "facilitating" an agri-equipment deal.
That individual is said to have now approached the RBZ to try and clear his name but his case has been complicated by the doubly illegal nature of the matter: the bribe and the externalisation. Our Harare Bureau understands that law enforcement agents in Zimbabwe, South Africa and Portugal are investigating the case. A well-placed source at the Finance Ministry said: "The sheer impunity with which people took money outside Zimbabwe says a lot about the previous regime. There simply was no appetite for law and order.
"There are many such cases and that is why we are getting a lot of noise in some sections of the media about why President ED is naming and shaming.
"They are rushing to the media because they know they have been caught on the wrong side. They should approach the Reserve Bank to clean their dirty hands. There is still scope to address these matters without having to take each other to court."
RBZ Governor Dr John Mangudya last week said he would not comment on individual cases, but pointed out that enforcement of laws and regulations was encouraging investors to come to Zimbabwe.
"There is a lie going around. The guilty ones are saying Government's actions scare away investors. The reality is that credible, genuine investors have been telling us how thrilled they are that we are bringing rule of law.
"Investors want to operate in a legal, predictable environment and that is what the new dispensation has been creating. In 2014/15, the RBZ gave an amnesty to externalisers and tax dodgers, but the environment gave people confidence to do as they pleased.
"Now monetary authorities have been given teeth by the President and we have companies coming forward to state their cases, bring back money, and come clean.
"Exchange control is standard practice across the world, and everything we are doing here is provided for by the enabling Act and supporting statutory regulations.
"For instance, in China everyone knows that externalisation will land you in jail for a long, long time. But some of the Chinese companies that were operating here had joined the bandwagon of illegality.
"I am pleased to tell you that a big percentage percent of the Chinese companies on that list have approached us to comply with the law since we published that list."
Dr Mangudya encouraged externalisers to approach their banks or the RBZ directly to clear their names.
"That list that was published was very accurate and we stand by it. The concerned companies know it and that's why they are approaching the (central) bank.
"Our end objective is compliance, full accountability and transparency. There is no use for us to go looking for money from Afreximbank if people continue externalising it. We have to account for that money and every company in Zimbabwe knows that these are international standards that are observed all over the world.
"Investors want to operate in a country where people comply with the law and they are very happy with what the President has done," he said.
Authorities are crafting a Money Laundering and Proceeds of Crime (Amendment) Bill to deal with illicit financial flows. Publication of that list and other interventions, Dr Mangudya said, had shored up Zimbabwe's foreign currency reserves.
"We have noticed that there is a general increase in foreign reserves in the country compared to last year. There has also been an increase in cash deposits and I think this can be attributed to public confidence levels which have also increased.
"According to our end-of-day positions, which is the difference between deposits and cash withdrawals of the day, there has been an increase of between 20 and 25 percent in our foreign currency reserves. This was between end of November last year and March 2018.
"This has greatly improved the cash situation in the country as long queues are now being experienced during pay days. One of the reasons for the increase are the policies that we have introduced. The other issue is that consumers have embraced the use of plastic money and mobile money transfers. There is a need for the country to continue producing and lowering imports."
Source - Sunday Mail
