News / Local
'Forex rentals at blackmarket rates illegal'
14 Oct 2021 at 01:21hrs | Views
PROPERTY owners and managers demanding rentals in foreign currency, without giving tenants an option to pay the equivalent in local currency using the auction rate, risk being arrested as the fight against economic sabotage intensifies, Prosecutor General Mr Kumbirai Hodzi has warned.
Concurring that the practice had grown partially because of lack of enforcement, he said enforcement would now be done with his office having already assigned necessary staff to work in teams with other agencies to clamp down on these practices.
Some landlords, while setting rents in foreign currency, are giving tenants an option of paying in local currency but at exchange rates close to the black-market rates.
Others simply force the tenants to buy foreign currency on the black market.
In both cases, tenants are in practice being forced to pay in foreign currency, in violation of the laws of the country that recognise the Zimbabwe dollar as legal tender.
Big names in the real estate business, in some cases, are the chief culprits in the enterprise, seen as doubly criminal since they usually pay tax in local currency despite having collected rent in US dollars.
The taxman is being deprived of the US dollar tax while neither declare their incomes nor pay taxes.
In an interview, Mr Hodzi said such conduct borders on economic sabotage and the culprits will soon be arrested.
"That is economic sabotage. It is a violation of the law. Local currency is the legal tender and people must accept it in transactions.
"It is illegal to charge rent strictly in foreign currency and the law will take its course. No Government will allow such lawlessness.
"The perpetrators must be warned that action will be taken against them. It's now a rampant problem which is abusive in nature.
"Most of the tenants were not reporting their landlords because they don't want to cause friction. They are forced to pay under duress but we will come with a legal regime that will bring the lawlessness to an end," said Mr Hodzi.
"Landlords are trying to force dollarisation through the backdoor. It is causing untold suffering to the tenants because most people are being paid in local currency.
"They were taking advantage of the fact that there was no enforcement in the past. Now the prosecution, the police and the courts will enforce the law and deal with the culprits. We will apply the law and effectively prosecute the culprits," he said.
The PG said stakeholders in the fight against illegal foreign currency dealings will meet and come up with an effective strategy of arresting and prosecuting the perpetrators.
Recently, a crack team of 15 experienced prosecutors was set up to work with seasoned investigators to come up with watertight dockets and so effectively prosecute economic saboteurs abusing mobile money platforms to weaken the local currency.
Besides assigning some of his top staff, Mr Hodzi has also roped in experts from a swathe of sectors of the economy to assist in technical areas where criminals use more sophisticated strategies.
The saboteurs started by transferring huge amounts of money from corporate bank accounts into mobile money agent lines and bulk payment lines to buy up the foreign currency offered on the streets, and many are still being prosecuted.
"But even with these payment systems being abolished or curtailed for more than a year the central dealers have managed to find other legitimate systems for their illegal activity.
The cartels have become authorities in setting the black market rates, usually without any basis on what that particular market can generate, so pushing up prices of goods and services.
So far a number of top managers at several companies were arrested for allegedly moving billions of dollars in illegal foreign currency deals last year. The deals involved transferring huge amounts of money from corporate bank accounts into mobile money agent and bulk payment lines.
Each of the eight companies moved amounts ranging from $59 million to over $300 million through their Steward Bank accounts into dozens of EcoCash agent lines that were later used as conduits to mop up foreign currency by black market dealers.
The companies and their directors were hauled to court, charged with contravening the Exchange Control Act.
The central bank's Financial Intelligence Unit started by publishing 30 names of suspected illegal foreign currency dealers who reportedly transacted suspiciously, moving substantial amounts of money on mobile money platforms.
Two weeks later, another list of 47 suspected foreign currency dealers was also published in the Press, after investigations showed the funds they transferred were suspicious.
They were all banned from operating bank and mobile money accounts.
Concurring that the practice had grown partially because of lack of enforcement, he said enforcement would now be done with his office having already assigned necessary staff to work in teams with other agencies to clamp down on these practices.
Some landlords, while setting rents in foreign currency, are giving tenants an option of paying in local currency but at exchange rates close to the black-market rates.
Others simply force the tenants to buy foreign currency on the black market.
In both cases, tenants are in practice being forced to pay in foreign currency, in violation of the laws of the country that recognise the Zimbabwe dollar as legal tender.
Big names in the real estate business, in some cases, are the chief culprits in the enterprise, seen as doubly criminal since they usually pay tax in local currency despite having collected rent in US dollars.
The taxman is being deprived of the US dollar tax while neither declare their incomes nor pay taxes.
In an interview, Mr Hodzi said such conduct borders on economic sabotage and the culprits will soon be arrested.
"That is economic sabotage. It is a violation of the law. Local currency is the legal tender and people must accept it in transactions.
"It is illegal to charge rent strictly in foreign currency and the law will take its course. No Government will allow such lawlessness.
"The perpetrators must be warned that action will be taken against them. It's now a rampant problem which is abusive in nature.
"Most of the tenants were not reporting their landlords because they don't want to cause friction. They are forced to pay under duress but we will come with a legal regime that will bring the lawlessness to an end," said Mr Hodzi.
"Landlords are trying to force dollarisation through the backdoor. It is causing untold suffering to the tenants because most people are being paid in local currency.
"They were taking advantage of the fact that there was no enforcement in the past. Now the prosecution, the police and the courts will enforce the law and deal with the culprits. We will apply the law and effectively prosecute the culprits," he said.
The PG said stakeholders in the fight against illegal foreign currency dealings will meet and come up with an effective strategy of arresting and prosecuting the perpetrators.
Recently, a crack team of 15 experienced prosecutors was set up to work with seasoned investigators to come up with watertight dockets and so effectively prosecute economic saboteurs abusing mobile money platforms to weaken the local currency.
Besides assigning some of his top staff, Mr Hodzi has also roped in experts from a swathe of sectors of the economy to assist in technical areas where criminals use more sophisticated strategies.
The saboteurs started by transferring huge amounts of money from corporate bank accounts into mobile money agent lines and bulk payment lines to buy up the foreign currency offered on the streets, and many are still being prosecuted.
"But even with these payment systems being abolished or curtailed for more than a year the central dealers have managed to find other legitimate systems for their illegal activity.
The cartels have become authorities in setting the black market rates, usually without any basis on what that particular market can generate, so pushing up prices of goods and services.
So far a number of top managers at several companies were arrested for allegedly moving billions of dollars in illegal foreign currency deals last year. The deals involved transferring huge amounts of money from corporate bank accounts into mobile money agent and bulk payment lines.
Each of the eight companies moved amounts ranging from $59 million to over $300 million through their Steward Bank accounts into dozens of EcoCash agent lines that were later used as conduits to mop up foreign currency by black market dealers.
The companies and their directors were hauled to court, charged with contravening the Exchange Control Act.
The central bank's Financial Intelligence Unit started by publishing 30 names of suspected illegal foreign currency dealers who reportedly transacted suspiciously, moving substantial amounts of money on mobile money platforms.
Two weeks later, another list of 47 suspected foreign currency dealers was also published in the Press, after investigations showed the funds they transferred were suspicious.
They were all banned from operating bank and mobile money accounts.
Source - The Herald
