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'Mutapa Investment Fund mustn't become conduit for looting'

by Staff reporter
11 Mar 2024 at 09:09hrs | Views
AS prevalence of public sector corruption reaches alarming levels, the International Monetary Fund (IMF) has demanded that Zimbabwean authorities ensure the newly-established Mutapa Investment Fund (MIF)  - which inexplicably replaced the Sovereign Wealth Fund - plugs potential financial leakages through transparency and accountability systems amid fears that the new scheme is a grand heist.

This comes as the United States has imposed a new sanctions regime on President Emmerson Mnangagwa and 10 others, as well as three entities, accusing them of corruption and human rights abuses.

The government reacted to US remarks that Mnangagwa and his cronies are corrupt, demanding substantiation or withdrawal of the statements.

Zimbabwe is ranked by Transparency International as one of the countries with high levels of corruption in both public and private sectors.

Past reports by Zimbabwe's Auditor-General have also shown that Treasury could be losing significant revenue due to financial mismanagement.

Zimbabwe scored 24 points out of 100 on the 2023 Corruption Perceptions Index as reported by Transparency International. Zimbabwe's Corruption Index ranking averaged 24.58 points from 1998 until 2023, reaching an all-time high of 42.00 points in 1998 and a record low of 18.00 points in 2008.

After a recent visit to Zimbabwe on an Article IV mission led by Wojciech Maliszewski - which visited Harare from 31 January 14 February - to discuss the authorities' request for a Staff-Monitored Programme and commence 2024 Article IV consultations, the IMF demanded reforms and transparency on the dodgy MIF affairs.

"Structural reforms aimed at improving the business climate, strengthening economic governance and reducing corruption vulnerabilities are key for promoting sustained and inclusive growth and would bode well for supporting Zimbabwe's development objectives embodied in the country's National Development Strategy 1 (2021-2025)," the IMF said.

"In this context, the mission encourages the authorities to ensure that the corporate governance arrangement, transparency and financial reporting, and accountability oversight of the recently established Mutapa Fund are in line with international standards and good practices."

On 19 September 2023, Mnangagwa controversially promulgated Statutory Instrument 156 of 2023 (SI 156/2023) which changed the name of the Sovereign Wealth Fund of Zimbabwe to MIF. No official reasons have been given for the renaming of the fund.

State enterprises or parastatals now commandeered to be under the dodgy MIF include Defold Mine, Zupco, Kuvimba, Silo Investments (Grain Marketing Board commercial arm), the National Oil Company of Zimbabwe, the Cold Storage Commission, Petrotrade, POSB, NetOne Cellular, the National Railways of Zimbabwe Holdings and NRZ Ltd, TelOne, Arda Seeds, Zimbabwe Power Company, Powertel, Allied Timbers, Telecel Zimbabwe, Air Zimbabwe, Industrial Development Corporation, Cottco, AFC Limited and Hwange Colliery.

Critics said the effect of putting all the companies under one roof is to create a behemoth whose operations and transactions are not subject to public procurement laws, parliamentary oversight or disclosure to the public.

This, they said, undermines constitutional principles of good governance, transparency and accountability.

The fund's managers and employees are "sworn to secrecy", further making it opaque and vulnerable to corruption, while blocking access to information.

The fund will be able to transfer and externalise foreign currency without foreign exchange controls.

Lawyer and opposition politician Fadzayi Mahere said granting Mnangagwa carte blanche powers to appoint the sovereign wealth fund's board of directors would heighten cronyism and nepotism after the Zimbabwean leader recently appointed close family members, allies and clansmen into his executive.

Late last year, former Finance minister Tendai Biti said the MIF is unconstitutional, illegal and opaque, as well as murky and muddy to ensure that it is not transparent and accountable to facilitate looting on an industrial scale.

"The Mutapa Investment Fund is conceptually flawed; it is like an asset management behemoth created to house state enterprises and related assets illegally, make them fungible and easily transferrable. It's not a typical sovereign wealth fund as we know it. It's not like Norway's US$1.4 trillion Sovereign Wealth Fund, the biggest in the world, for sure," Biti told The NewsHawks in an interview.

"A normal sovereign wealth fund is a state-owned investment fund comprising of money generated by government surplus reserves or its resources to create wealth for current and future generations. It's a pool of assets owned and managed directly or indirectly by governments and invested in stocks, bonds, real estate, precious metals, or in alternative investments such as equity funds or hedge funds to achieve national objectives.

"For instance, before this Mutapa scam, we had created a proper sovereign wealth fund in 2014 because Zimbabwe has world-class deposits of gold, platinum, diamonds, chrome and now lithium. Yet these are non-renewable natural resources so we need to exploit them for current and future generations. Collect royalties and invest them in a sovereign wealth fund."

Biti says the changing of the SWF to MIF has created a conduit for industrial-scale looting.

"Mnangagwa's opaque structure is a scheme for a grand heist. We will witness unprecedented grand scale looting and industrial-scale corruption under this Mutapa Fund. The structure is flawed conceptually. It is also unconstitutional. It is illegal. It was established through a statutory instrument, a presidential decree, violating the constitution, laws and principles of separation of powers," he said.

Mahere said the entity is unconstitutional.

"The most concerning feature of the recent purported amendment to the Sovereign Wealth Fund of Zimbabwe Act by Mnangagwa is that it is unconstitutional in a number of respects," she said.

"As a starting point, the amendment was introduced by way of a statutory instrument, which violates section 134 of the constitution. The said section prohibits the enactment, amendment or repeal of legislation by way of a statutory instrument. Only Parliament can make, change or remove laws.

"It is no answer to this charge that the statutory instrument was gazetted purportedly under the Presidential Powers (Temporary Measures) Act - this statute itself offends section 134 of the constitution.

"In the event of a conflict, the constitution is supreme. It follows that Mnangagwa's statutory instrument that changed the Sovereign Wealth Fund of Zimbabwe was invalid, ultra vires the constitution and thus illegal as a matter of a law. It additionally breaches the section 68 obligation of all administrative authorities to act lawfully, reasonably and fairly."

Last October, Harare lawyer and businessman Frederick Nyamande took Mnangagwa to court following the promulgation of the controversial MIF which he argues allows the head of state to loot public resources. The matter is still pending.

Source - newshawks
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