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Looters give Mnangagwa govt first test

by Staff reporter
04 Mar 2018 at 17:47hrs | Views
The new government of President Emmerson Mnangagwa, which has pitched the fight against corruption on top of its agenda, faces its first test in two weeks time when the extended deadline for those who externalised money and assets comes to an end.

Mnangagwa issued a three-month moratorium in December last year — which expired on February 28 — within which period those who funnelled foreign currency and other assets outside the country's borders must bring them back.

He has since extended the deadline by two more weeks to give laggards more time to comply with the directive or face the full wrath of the law.

But controversy now surrounds the manner in which government is handling the process, amid allegations that Zanu-PF bigwigs and other senior government officials who are said to be the chief culprits might get away with it.

Government is seeking to recover a total of $1,3 billion externalised in the form of money and assets, but so far only $250 million has been returned — representing a compliance rate by value of 45 percent.

According to Mnangagwa, the $1,3 billion is from 1 166 recorded cases of externalisation, while the recovered amount relates to 105 cases processed by the Reserve Bank of Zimbabwe (RBZ).

"Thirty cases valued at $50 million of immovable assets in various countries were reported to the RBZ whilst 210 cases valued at $287 million pertained to externalised funds that were used to procure imports. These cases processed give a success rate of 45 percent by value," Mnangagwa said.

"...The bulk of 771 cases or 55 percent by value that did not take heed of the amnesty pertain to non-remittance of export proceeds (328 cases valued at $215, 8 million), externalisation by foreigners, (213 cases valued at $375 million), non-acquittal of imports (153 cases valued at $75, 1 million) and Panama papers and others valued at $150 million.

"As a result of this positive response, the RBZ has requested for additional time to validate and finalise the amnesty process before government proceeds to name and shame those who did not take heed of the amnesty and to proceed to take legal action against such cases."

Analysts canvassed by the Daily News on Sunday were adamant yesterday that the $1,3 billion would not be recovered in full because of the legal shortcomings involved and the factional narrative underpinning the way Mnangagwa's administration has been tackling corruption.

Former Finance minister Tendai Biti said the whole process lacks legal clarity, adding that while externalisation involves the illegal transfer of foreign currency outside the country, in the Zimbabwean context the issue of foreign currency was redefined in 2009 when the country adopted the multi-currency system, which saw the legalisation of the use of the United States dollars, the South African Rand and the British pound among a basket of other currencies.

He said there was therefore need for the government to revisit the law in that respect, adding that without a legal framework, people do not know what exactly they are supposed to do.

He told the Daily News on Sunday yesterday that the public has the right to know the names of the people who were involved in the externalisation process as this did not affect individuals but the country as a whole.

"That is the problem (that government has not been naming those that externalised funds) because the evidence that we have is that top chefs are the ones who externalised the funds they got from diamonds. There is need for full disclosure because the public needs to know. They are simply trying to cleanse themselves through the process," Biti said.

Economic analyst Christopher Mugaga said there was little hope that all the externalised funds would be brought back into the country because of the controversy surrounding what is meant by externalisation.

"I don't think a lot of money will come back because when these amounts were reportedly externalised, we had a liberalised system. Government is in a fix here and can only use a carrot not a stick to get the money back. There is no legal instrument to support this process and because of that we cannot look forward to people returning the money," Mugaga said.

He said the moratorium has the effect of worsening the situation if it's not handled properly, adding that government cannot use a heavy hand to deal with the perpetrators as this might scare away investors.

Describing the whole process as a poisoned chalice, Mugaga said government cannot also name and shame the perpetrators publicly as this could be interpreted as victimisation, further stating that there might be difficulties for Mnangagwa to deal with his close associates.

Another economic analyst Kipson Gundani said Mnangagwa might not use a heavy hand to deal with those that externalised funds considering that the country is heading towards elections, but will seek to use a polite way of dealing with the issue to create friends rather than enemies.

Gundani, however, posited that the process was a good initiative that will positively assist the country.

"Obviously, it has a positive effect, because it was a leakage, this money is sitting somewhere and if we bring it back, it means growth will take place locally," he said.

Political analyst Shakespeare Hamauswa said the main challenge is that no one will be able to know the disaggregated data of the returned funds.

"But I think every dollar counts to the economy and the strategy will work if measures against externalisation are put in place. The culture of doing business also should change to provide incentives for local savings," said Hamauswa.

"In addition, externalisation was a reaction to a risky domestic environment which requires immediate attention. On the other hand, Ngwena (as Mnangagwa is affectionately known) is not likely to name and shame those in his camp especially those from the military who now consider themselves Kingmakers. In the past, he has protected suspects so he will do the same to those who support him".

Source - dailynews