News / National
Panic as net closes in on forex abusers
04 Apr 2018 at 07:41hrs | Views
Despite feigning bravado in public, companies fingered in the externalisation of foreign currency and other assets are making a beeline for the Reserve Bank of Zimbabwe (RBZ) to negotiate relaxed deadlines within which they can rectify their positions.
The Daily News can reveal that nearly two-thirds of the companies on the list have approached the central bank nicodemously in order to have their cases resolved amicably.
Of the Chinese companies cited on the list released by President Emmerson Mnangagwa on March 19, 90 percent of them have come forward and are at various stages of bringing back the money with the help of their banks and the RBZ.
Insiders at the central bank told the Daily News that the Chinese were particularly fearful of being sanctioned by their government in Beijing, which is known for coming hard on its nationals who damage its reputation abroad.
For instance, China jailed Sam Pa, the controversial Hong Kong businessman who clandestinely sponsored Zimbabwean dictator Robert Mugabe's discredited regime by funnelling money from illegal diamond sales to the secret service.
The reclusive Pa, credited with spearheading China's spectacular drive into Africa over the last two decades, was jailed in connection with a major corruption scandal involving China's State-owned oil company Sinopec.
The Chinese embassy in Harare, according to sources, came forward to engage government on the externalisers' list and to regularise their status.
China has been extending its footprint aggressively across the globe, emerging as one of the fastest growing economies.
In Zimbabwe, it is considered an all-weather friend of the ruling Zanu-PF government after it fell out with its traditional partners in Europe and in the West over human rights violations.
China is, however, often accused of dumping inferior products, with some of its nationals gaining notoriety for using short-cuts to make a quick buck.
On March 19, Mnangagwa named and shamed over 1 800 companies and individuals accused of funnelling scarce foreign currency resources outside Zimbabwe.
Split into three categories, the list was dominated by Chinese companies and players in the mining industry.
Mnangagwa had to take the extraordinary step of embarrassing the 1 800-plus companies and individuals after they ignored a three-month-long moratorium he had extended to all those who violated exchange control rules last December to correct their positions on a without-prejudice basis.
The compliance deadline was extended by two weeks after very few culprits took advantage of the moratorium, but still not many individuals and firms came forward.
In public, those named and shamed are pleading innocence, saying the list was a rushed job, fraught with inaccuracies.
Business lobby groups also continue to deny their members illegally stashed hundreds of millions of dollars overseas, saying they just did not acquit their foreign payments on time.
They now risk being subpoenaed for falsely vouching for errant businesses, unless they provide evidence to back their claims.
Some of the companies cited had even threatened to sue government for damages, amid concerns that the president violated bank-client confidentiality — a cardinal rule in the banking sector.
Presidential spokesperson George Charamba told the Daily News on Monday that the RBZ did nothing wrong.
"The central bank has an obligation to make sure the economy is not robbed so you can't keep a lesser right against a major one, I mean that's ridiculous. So you can't even prosecute errant clients on grounds of rights? Is that possible? Does the Constitution allow that? It doesn't allow that. So, really they should go to court if they are aggrieved."
While business lobby groups claimed that companies alleged to have externalised funds and assets were now being snubbed by potential suitors and trading partners, Charamba said the list actually bolsters investor confidence in that government was committed to good corporate governance.
"More importantly, which is the bit you guys are missing, it's less the offenders in themselves and more the signal that this is a new era. We cannot proceed on the basis of the unlawfulness which was rampant during the past era, you see, that's the first thing.
"The second thing, if you measure the attractiveness of a destination for investment, it's not just in terms of what you offer in terms of concessions, it's also the strength of the State in enforcing rules and obligations; do you understand? Because when you are coming as an investor, you are not just worried about bringing your money and getting it out, you are also worried that the jurisdiction you have entered in the event of dispute, does it have capacity to enforce rights and enforce obligations of contracting parties — do you understand?
"Now, if you make the State so soft, you are endangering not just the citizens of that country but also foreign investors who come because then they are coming into an environment which is unstructured from the point of view of enforcement. So what you perceive as a problem to investors is in fact an effort to improve our attractiveness, to show investors that they are coming in a jurisdiction where the law exists and is robustly enforced," Charamba told the Daily News.
Mnangagwa's spokesperson said there was need to draw a line on the sand.
"We all agree and we all know that from about 2000, very bad things happened, very bad habits were created, not necessarily because people were immoral but because of the sheer social conditions, economic conditions that were obtaining in the country. But there has to come a time to say we can't go on like this, we have to draw a line and go back to lawful conduct," he told the Daily News.
The Chinese embassy in Harare has come out guns blazing, with deputy ambassador Zhao Boagang telling a news conference on Friday that "the list is not credible; there are many loopholes."
He also suggested that Zimbabwe was looking a gift horse in the mouth.
He said the "Chinese have invested that is why you find them on the list" adding, "you find that there are few or no Americans on the list because they have not invested in this country".
Boagang said "Zimbabwe must have a clear sight of who is their friend".
But Charamba told the Daily News that the embassy here had actually come forward to engage government amicably on the looters list and to regularise their status.
"Isn't it for exactly the same laws that we are invoking here," Charamba asked the Daily News rhetorically.
"In China you are actually put before a firing squad for corruption," he said.
"Of course, in terms of consular duties, the embassy must be seen to be defending its own people, isn't that so? It's not an issue at all, except in the newspapers. But more interestingly, they have come forward, of their own volition."
It was revealed by RBZ sources that whereas Zimbabweans were expecting to see the who's who in Zanu-PF featuring prominently on the list, it had been lost to many people that the ruling elite were under travel and financial restrictions, hence it would have been folly for them to externalise money under their names.
It is therefore suspected that the elite in the ruling party might have externalised using fronts appearing on the list, making it difficult to pierce the corporate veil to the point of unmasking them.
"Because of the sanctions, it would be folly for the bigwigs in Zanu-PF to externalise money in their names or through companies directly linked to them. We suspect that some of the heavyweights could be behind those companies cited on the list but they are not directly linked to them," said a source.
"What we know is that those people the media and others expect to see are among the heavy borrowers and some of them have been accommodated under Zamco," added the source. Zamco, an acronym for Zimbabwe Asset Management Company, is a special purpose vehicle created by the RBZ in 2014 to absorb non-performing loans and avert a catastrophic banking crisis amid a floundering economic environment.
It was also revealed that some of the heavyweights used the three-month deadline to explain themselves and agree on a way forward with the RBZ.
Among them was former first lady Grace Mugabe who is said to have disclosed owning two properties in Hong Kong and South Africa worth about $11 million in total.
Curiously, Mugabe in 2004 caused the arrest of then Finance minister Chris Kuruneri on charges of corruption and externalisation of foreign currency to build a six-bedroomed, eight-bathroomed oceanfront house in Cape Town, estimated at more than $2 million.
Kuruneri was said to own two other properties in Llandudno (Wales) and another house near Vancouver in Canada and was alleged to have transferred $500 000, £37 000, 30 000 euros and 1,2 million South African rands to buy and renovate the mansion in Cape Town.
Kuruneri defended the properties as "family investments" and said he would make "no apologies", adding that as a lawyer, he knew all his financial dealings were above board.
He spent more than a year in remand prison and Chief Justice Godfrey Chidyausiku released him on bail after 10 appeals.
Kuruneri was finally acquitted by the High Court in 2007 but his health had markedly deteriorated over his legal woes.
The Mount Darwin East MP then suffered a debilitating stroke, and remains paralysed to this day, attending Parliament regularly in a wheelchair and in the company of an aide.
Musician Elias Musakwa, said to have externalised $9 million, has also engaged the RBZ through his lawyers and discussions to bring back the loot are underway.
Indications are that his case arose during his time at the RBZ when he was responsible for the procurement of farming equipment under the farm mechanisation programme.
The Daily News can reveal that nearly two-thirds of the companies on the list have approached the central bank nicodemously in order to have their cases resolved amicably.
Of the Chinese companies cited on the list released by President Emmerson Mnangagwa on March 19, 90 percent of them have come forward and are at various stages of bringing back the money with the help of their banks and the RBZ.
Insiders at the central bank told the Daily News that the Chinese were particularly fearful of being sanctioned by their government in Beijing, which is known for coming hard on its nationals who damage its reputation abroad.
For instance, China jailed Sam Pa, the controversial Hong Kong businessman who clandestinely sponsored Zimbabwean dictator Robert Mugabe's discredited regime by funnelling money from illegal diamond sales to the secret service.
The reclusive Pa, credited with spearheading China's spectacular drive into Africa over the last two decades, was jailed in connection with a major corruption scandal involving China's State-owned oil company Sinopec.
The Chinese embassy in Harare, according to sources, came forward to engage government on the externalisers' list and to regularise their status.
China has been extending its footprint aggressively across the globe, emerging as one of the fastest growing economies.
In Zimbabwe, it is considered an all-weather friend of the ruling Zanu-PF government after it fell out with its traditional partners in Europe and in the West over human rights violations.
China is, however, often accused of dumping inferior products, with some of its nationals gaining notoriety for using short-cuts to make a quick buck.
On March 19, Mnangagwa named and shamed over 1 800 companies and individuals accused of funnelling scarce foreign currency resources outside Zimbabwe.
Split into three categories, the list was dominated by Chinese companies and players in the mining industry.
Mnangagwa had to take the extraordinary step of embarrassing the 1 800-plus companies and individuals after they ignored a three-month-long moratorium he had extended to all those who violated exchange control rules last December to correct their positions on a without-prejudice basis.
The compliance deadline was extended by two weeks after very few culprits took advantage of the moratorium, but still not many individuals and firms came forward.
In public, those named and shamed are pleading innocence, saying the list was a rushed job, fraught with inaccuracies.
Business lobby groups also continue to deny their members illegally stashed hundreds of millions of dollars overseas, saying they just did not acquit their foreign payments on time.
They now risk being subpoenaed for falsely vouching for errant businesses, unless they provide evidence to back their claims.
Some of the companies cited had even threatened to sue government for damages, amid concerns that the president violated bank-client confidentiality — a cardinal rule in the banking sector.
Presidential spokesperson George Charamba told the Daily News on Monday that the RBZ did nothing wrong.
"The central bank has an obligation to make sure the economy is not robbed so you can't keep a lesser right against a major one, I mean that's ridiculous. So you can't even prosecute errant clients on grounds of rights? Is that possible? Does the Constitution allow that? It doesn't allow that. So, really they should go to court if they are aggrieved."
While business lobby groups claimed that companies alleged to have externalised funds and assets were now being snubbed by potential suitors and trading partners, Charamba said the list actually bolsters investor confidence in that government was committed to good corporate governance.
"More importantly, which is the bit you guys are missing, it's less the offenders in themselves and more the signal that this is a new era. We cannot proceed on the basis of the unlawfulness which was rampant during the past era, you see, that's the first thing.
"The second thing, if you measure the attractiveness of a destination for investment, it's not just in terms of what you offer in terms of concessions, it's also the strength of the State in enforcing rules and obligations; do you understand? Because when you are coming as an investor, you are not just worried about bringing your money and getting it out, you are also worried that the jurisdiction you have entered in the event of dispute, does it have capacity to enforce rights and enforce obligations of contracting parties — do you understand?
"Now, if you make the State so soft, you are endangering not just the citizens of that country but also foreign investors who come because then they are coming into an environment which is unstructured from the point of view of enforcement. So what you perceive as a problem to investors is in fact an effort to improve our attractiveness, to show investors that they are coming in a jurisdiction where the law exists and is robustly enforced," Charamba told the Daily News.
"We all agree and we all know that from about 2000, very bad things happened, very bad habits were created, not necessarily because people were immoral but because of the sheer social conditions, economic conditions that were obtaining in the country. But there has to come a time to say we can't go on like this, we have to draw a line and go back to lawful conduct," he told the Daily News.
The Chinese embassy in Harare has come out guns blazing, with deputy ambassador Zhao Boagang telling a news conference on Friday that "the list is not credible; there are many loopholes."
He also suggested that Zimbabwe was looking a gift horse in the mouth.
He said the "Chinese have invested that is why you find them on the list" adding, "you find that there are few or no Americans on the list because they have not invested in this country".
Boagang said "Zimbabwe must have a clear sight of who is their friend".
But Charamba told the Daily News that the embassy here had actually come forward to engage government amicably on the looters list and to regularise their status.
"Isn't it for exactly the same laws that we are invoking here," Charamba asked the Daily News rhetorically.
"In China you are actually put before a firing squad for corruption," he said.
"Of course, in terms of consular duties, the embassy must be seen to be defending its own people, isn't that so? It's not an issue at all, except in the newspapers. But more interestingly, they have come forward, of their own volition."
It was revealed by RBZ sources that whereas Zimbabweans were expecting to see the who's who in Zanu-PF featuring prominently on the list, it had been lost to many people that the ruling elite were under travel and financial restrictions, hence it would have been folly for them to externalise money under their names.
It is therefore suspected that the elite in the ruling party might have externalised using fronts appearing on the list, making it difficult to pierce the corporate veil to the point of unmasking them.
"Because of the sanctions, it would be folly for the bigwigs in Zanu-PF to externalise money in their names or through companies directly linked to them. We suspect that some of the heavyweights could be behind those companies cited on the list but they are not directly linked to them," said a source.
"What we know is that those people the media and others expect to see are among the heavy borrowers and some of them have been accommodated under Zamco," added the source. Zamco, an acronym for Zimbabwe Asset Management Company, is a special purpose vehicle created by the RBZ in 2014 to absorb non-performing loans and avert a catastrophic banking crisis amid a floundering economic environment.
It was also revealed that some of the heavyweights used the three-month deadline to explain themselves and agree on a way forward with the RBZ.
Among them was former first lady Grace Mugabe who is said to have disclosed owning two properties in Hong Kong and South Africa worth about $11 million in total.
Curiously, Mugabe in 2004 caused the arrest of then Finance minister Chris Kuruneri on charges of corruption and externalisation of foreign currency to build a six-bedroomed, eight-bathroomed oceanfront house in Cape Town, estimated at more than $2 million.
Kuruneri was said to own two other properties in Llandudno (Wales) and another house near Vancouver in Canada and was alleged to have transferred $500 000, £37 000, 30 000 euros and 1,2 million South African rands to buy and renovate the mansion in Cape Town.
Kuruneri defended the properties as "family investments" and said he would make "no apologies", adding that as a lawyer, he knew all his financial dealings were above board.
He spent more than a year in remand prison and Chief Justice Godfrey Chidyausiku released him on bail after 10 appeals.
Kuruneri was finally acquitted by the High Court in 2007 but his health had markedly deteriorated over his legal woes.
The Mount Darwin East MP then suffered a debilitating stroke, and remains paralysed to this day, attending Parliament regularly in a wheelchair and in the company of an aide.
Musician Elias Musakwa, said to have externalised $9 million, has also engaged the RBZ through his lawyers and discussions to bring back the loot are underway.
Indications are that his case arose during his time at the RBZ when he was responsible for the procurement of farming equipment under the farm mechanisation programme.
Source - dailynews
