Opinion / Interviews
'RBZ must be as clean as possible'
28 Oct 2018 at 09:09hrs | Views
The Reserve Bank of Zimbabwe has been under scrutiny following the suspension of four directors - Messrs Mirirai Chiremba (financial intelligence), Norman Mataruka (bank supervision), Gresham Muradzikwa (security) and Azvinandawa Saburi (financial markets) - on allegations of corruption and abuse of office. The central bank has also been accused of being complicit in parallel market activities. Last week, The Sunday Mail's Chief Reporter Kuda Bwititi spoke to Deputy RBZ Governor Dr Khupukile Mlambo on this and other issues. Below are excerpts.
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Q: The public would like to know who is conducting the investigations of the four suspended directors and how the probe is being conducted.
A: In general, you might have seen what happened at (the Zimbabwe Revenue Authority) when the general manager was suspended. It is always the board that investigates when senior managers are under probe. I am sure that the board will make an announcement soon. This is an issue that is at a higher level than us, the management.
At this stage, we are not saying the four directors are corrupt: it is just alleged that they are corrupt.
All I can say is that our board is meeting to have a discussion on this issue and they will let the public know. It is a board issue that I am not fully qualified to talk about.
Q: Why did it take a social media post from Mr William Mutumanje (Acie Lumumba) to suspend four senior directors? Does this not imply the RBZ was all along sleeping on duty?
A: Corporate governance requires that once something has been mentioned and people named, you cannot ignore it and you have to take action.
Particular names were mentioned in a public space, so it is difficult for you – if you are the central bank, if you want to maintain integrity within the system – not to take any action.
We are not saying they are guilty, but we are saying if they were named by that official who at the time had a strategic post at the ministry. We have to investigate it.
We, thus, had to say let's put them on suspension until we investigate the matters at hand. It is important that we protect the integrity of the institution.
Q: Globally there are standards for tracking financial transactions. Why is it that the RBZ never acted when people were moving millions of dollars that were traded on the black market?
A: We do have the suspicious transactions policy. We actually spelt it out in one of our recent Monetary Policy Statements.
We are saying that banks must report any such suspicious financial transactions before they take place. We have a department that deals with that at the RBZ and that is the Financial Intelligence Unit.
In this particular situation, it's difficult for us to divulge much more information because the director of this unit is one of the people who has been suspended. So we need to dig into that.
Ordinarily, and as far as I know, all suspicious transactions have always been reported.
My suspicion is that a lot of these things are done in cash, I am talking about cash barons on the black market. These are people who do not use bank accounts but they have no access to cash.
Q: It appears you are shifting blame from the RBZ. At what point does the RBZ lose track of such transactions?
A: The limit from the central bank has always been that you can't withdraw more than $10 000 for corporates and you cannot withdraw more than $1 000 per day as an individual.
As far as we know at the RBZ, those limits were respected.
Of course individuals were withdrawing less because of the cash flows at the banks, but in general, people respected those limits. What should be understood is that the money on the black market is hard to follow-up in terms of allowing and not allowing it to be supplied onto the parallel market.
Q: Does this mean that it is the banks that are responsible?
A: No, I am not shifting the blame to the banks: the banks followed the regulations that we gave them.
I do not think the money on the black market comes directly from the bank. I say so because banks make reports to the RBZ on the movements that take place in different accounts. So if there is one that is suspicious, they have to notify the RBZ; we are not saying the banks were in the parallel market.
Q: How do you explain to the public that we have freshly minted notes that flood the black market, especially in light of a widely held perception that the RBZ uses these bond notes to buy US dollars?
A: People need to understand that it is not only the RBZ which has the fresh money. For example, small-scale miners receive fresh money almost directly from the RBZ because they are paid in cash by Fidelity Printers, which is one of our subsidiaries. So that can also be one explanation.
As the Governor has already said, we have no policy to supply the black market.
Q: With the operation to clampdown on money changers underway, what plans do you have to encourage opening more money bureaux de change and dissuade people from going to the black market?
A: Now that you have a separation of the accounts, it is likely that the bureau de change business will work.
The policy to encourage them has been there, but it has not been effective because there was lack of clear separation between RTGS and nostro accounts.
This meant that if people got foreign currency into their banks, it would go into the same system with RTGS if they did not use it in two weeks. But now what we are saying is that if you have your money in your own nostro, you will have access to it all the time. This will be different from RTGS accounts, where people find it difficult to access their cash.
We have actually made it cheaper for people to set up money transfer agencies. We put the licence at $500, which when we announced it, we did not specify whether its RTGS or US dollars.
What we need is a proper exchange bureau and the challenge that was there back then was that people found it easy to be on the black market and be on the streets. What we need to do now as RBZ is go back to the public through various platforms to promote this idea.
Q: What is the latest on separation of FCA accounts and RTGS accounts?
A: The monetary policy statement said this would begin on November 1. Banks have been working on it to ensure that they start separating the accounts by that date.
If you earn your forex, it will get into your forex accounts. So what it means, in other words, is that banks are working on the individual accounts to separating the RTGS and forex accounts for each customer.
Some banks were already doing it. What is important about this policy is that we want those with foreign currency to have easy access to their money when they want it.
Q: How much RTGS money has the RBZ mopped up through the statutory reserve requirement?
A: We have now mopped up $1,5 billion, which is through the seven percent savings bond.
Q: There have been reports of some companies diverting foreign currency which has been allocated for critical imports to the black market. What is your response?
A: I saw that on social media when one Member of Parliament posted it. But he never laid any charge against a particular culprit.
If he comes to us and says that this is happening, then we will take action. We do not know who he is talking about. I am not dismissing it and we do welcome such ideas. If he has proof, it is okay if he comes with it so that he can investigate it.
The allegations may also lead us to other organisations that have been accused of being part of the swindle.
Q: There are suspicions of fake bond notes circulating. Do you have information on that?
A: I have also heard about it from the grapevine, but if it's there, it's not on large-scale.
Q: Confidence is key in all that you are trying to do. Some people have lost confidence in the RBZ. What are your doing to restore public confidence?
A: Confidence appears at many levels.
The immediate challenge that we are facing is that of our directors. We have to be as transparent as possible and this is why we have asked them to go home while we take this action.
The Governor has said that the public will be kept informed, so the central bank will not hide anything.
The second issue is about how we manage the monetary system. It's about ensuring whether there is financial stability in the system. That is why we came with the idea to have separate foreign currency accounts so that those with forex can have access to their money without any hassles.
So if we can maintain this stability, people will begin to have trust.
***
Q: The public would like to know who is conducting the investigations of the four suspended directors and how the probe is being conducted.
A: In general, you might have seen what happened at (the Zimbabwe Revenue Authority) when the general manager was suspended. It is always the board that investigates when senior managers are under probe. I am sure that the board will make an announcement soon. This is an issue that is at a higher level than us, the management.
At this stage, we are not saying the four directors are corrupt: it is just alleged that they are corrupt.
All I can say is that our board is meeting to have a discussion on this issue and they will let the public know. It is a board issue that I am not fully qualified to talk about.
Q: Why did it take a social media post from Mr William Mutumanje (Acie Lumumba) to suspend four senior directors? Does this not imply the RBZ was all along sleeping on duty?
A: Corporate governance requires that once something has been mentioned and people named, you cannot ignore it and you have to take action.
Particular names were mentioned in a public space, so it is difficult for you – if you are the central bank, if you want to maintain integrity within the system – not to take any action.
We are not saying they are guilty, but we are saying if they were named by that official who at the time had a strategic post at the ministry. We have to investigate it.
We, thus, had to say let's put them on suspension until we investigate the matters at hand. It is important that we protect the integrity of the institution.
Q: Globally there are standards for tracking financial transactions. Why is it that the RBZ never acted when people were moving millions of dollars that were traded on the black market?
A: We do have the suspicious transactions policy. We actually spelt it out in one of our recent Monetary Policy Statements.
We are saying that banks must report any such suspicious financial transactions before they take place. We have a department that deals with that at the RBZ and that is the Financial Intelligence Unit.
In this particular situation, it's difficult for us to divulge much more information because the director of this unit is one of the people who has been suspended. So we need to dig into that.
Ordinarily, and as far as I know, all suspicious transactions have always been reported.
My suspicion is that a lot of these things are done in cash, I am talking about cash barons on the black market. These are people who do not use bank accounts but they have no access to cash.
Q: It appears you are shifting blame from the RBZ. At what point does the RBZ lose track of such transactions?
A: The limit from the central bank has always been that you can't withdraw more than $10 000 for corporates and you cannot withdraw more than $1 000 per day as an individual.
As far as we know at the RBZ, those limits were respected.
Of course individuals were withdrawing less because of the cash flows at the banks, but in general, people respected those limits. What should be understood is that the money on the black market is hard to follow-up in terms of allowing and not allowing it to be supplied onto the parallel market.
Q: Does this mean that it is the banks that are responsible?
A: No, I am not shifting the blame to the banks: the banks followed the regulations that we gave them.
I do not think the money on the black market comes directly from the bank. I say so because banks make reports to the RBZ on the movements that take place in different accounts. So if there is one that is suspicious, they have to notify the RBZ; we are not saying the banks were in the parallel market.
Q: How do you explain to the public that we have freshly minted notes that flood the black market, especially in light of a widely held perception that the RBZ uses these bond notes to buy US dollars?
As the Governor has already said, we have no policy to supply the black market.
Q: With the operation to clampdown on money changers underway, what plans do you have to encourage opening more money bureaux de change and dissuade people from going to the black market?
A: Now that you have a separation of the accounts, it is likely that the bureau de change business will work.
The policy to encourage them has been there, but it has not been effective because there was lack of clear separation between RTGS and nostro accounts.
This meant that if people got foreign currency into their banks, it would go into the same system with RTGS if they did not use it in two weeks. But now what we are saying is that if you have your money in your own nostro, you will have access to it all the time. This will be different from RTGS accounts, where people find it difficult to access their cash.
We have actually made it cheaper for people to set up money transfer agencies. We put the licence at $500, which when we announced it, we did not specify whether its RTGS or US dollars.
What we need is a proper exchange bureau and the challenge that was there back then was that people found it easy to be on the black market and be on the streets. What we need to do now as RBZ is go back to the public through various platforms to promote this idea.
Q: What is the latest on separation of FCA accounts and RTGS accounts?
A: The monetary policy statement said this would begin on November 1. Banks have been working on it to ensure that they start separating the accounts by that date.
If you earn your forex, it will get into your forex accounts. So what it means, in other words, is that banks are working on the individual accounts to separating the RTGS and forex accounts for each customer.
Some banks were already doing it. What is important about this policy is that we want those with foreign currency to have easy access to their money when they want it.
Q: How much RTGS money has the RBZ mopped up through the statutory reserve requirement?
A: We have now mopped up $1,5 billion, which is through the seven percent savings bond.
Q: There have been reports of some companies diverting foreign currency which has been allocated for critical imports to the black market. What is your response?
A: I saw that on social media when one Member of Parliament posted it. But he never laid any charge against a particular culprit.
If he comes to us and says that this is happening, then we will take action. We do not know who he is talking about. I am not dismissing it and we do welcome such ideas. If he has proof, it is okay if he comes with it so that he can investigate it.
The allegations may also lead us to other organisations that have been accused of being part of the swindle.
Q: There are suspicions of fake bond notes circulating. Do you have information on that?
A: I have also heard about it from the grapevine, but if it's there, it's not on large-scale.
Q: Confidence is key in all that you are trying to do. Some people have lost confidence in the RBZ. What are your doing to restore public confidence?
A: Confidence appears at many levels.
The immediate challenge that we are facing is that of our directors. We have to be as transparent as possible and this is why we have asked them to go home while we take this action.
The Governor has said that the public will be kept informed, so the central bank will not hide anything.
The second issue is about how we manage the monetary system. It's about ensuring whether there is financial stability in the system. That is why we came with the idea to have separate foreign currency accounts so that those with forex can have access to their money without any hassles.
So if we can maintain this stability, people will begin to have trust.
Source - zimpapers
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