News / National
George Guvamatanga gave company 'illegal' bank guarantee on $20 million loan
17 Apr 2025 at 20:32hrs | Views
Treasury secretary George Guvamatanga has been accused of providing an "illegal and unconstitutional" bank guarantee for a US$20 million loan to a seed company linked to command agriculture corruption.
Guvamatanga, in a letter to Ecobank, said Zimbabwe owed Valley Seeds US$191,578,835 as of February 2025. Ecobank, he added, had now agreed to discount this legacy debt "up to a limit of US$20 million" which would be advanced as a loan to Valley Seeds, with treasury paying it back in instalments of US$5 million in a 12-month period.
The treasury secretary stated that he had authority from the ministry to provide the guarantee, and went further to name himself as the principal executor of the guarantee "until the facility has been paid in full."
ZimLive showed Guvamatanga's leaked letter of guarantee to former finance minister Tendai Biti who described it as "pure looting, lumpen activity."
Biti also questioned how the country ended up owing Valley Seeds nearly US$200 million, and the massive discount on treasury bills the company was carrying to settle for just US$20 million.
"The Zimbabwean public is obliged to know how the government ends up owing almost US$200 million to a briefcase company such as Valley Seeds," Biti fumed.
Valley Seeds was a major player in command agriculture through which Biti says over US$3 billion was looted from the fiscus. Much recently, the company which is fronted by Zvishavane-born Themba Nkatazo, has provided the government with seeds for its pfumvudza/intwasa programme.
"This is arbitrage," Biti assessed. "There is no-one in his right mind who would have genuinely spent $200 million who could discount that for $20 million. The $200 million was never genuine. So Nkatazo is not losing $180 milion, he is gaining $20 million. It's extraction, it's part of command agriculture that was used as a vehicle for looting public resources in Zimbabwe."
Biti is familiar with Valley Seeds. As chairman of the Public Accounts Committee in his previous role ss Harare East MP, Biti summoned the company, along with others, to give evidence over its role in command agriculture.
He recalled: "They were not able to provide an explanation that was adequate and convincing to us.
"There are many companies that looted the government of Zimbabwe through command agriculture. They would raise invoices but there would be no evidence of the supply and delivery of material. Command agriculture was never audited forensically.
"Whilst there is proof and records that billions of dollars were siphoned from the ministry of finance directly, there is no evidence of delivery and performance by the many companies that benefited from command agriculture including the biggest beneficiary Sakunda, Valley Seeds, FSG and others."
Biti said Guvamatanga had no authority to sign bank guarantees using taxpayer dollars.
He explained: "The Public Debt Management Act of 2015 allows the minister not the secretary to issue guarantees to private individuals for their indebtedness but only the minister can do this. So a letter signed by the permanent secretary does not comply with the law, the minister can't delegate his obligations in terms of the Act, and the reason is simple: only the president can contract debt in Zimbabwe. However, the president can delegate and authorise the minister to borrow for and on his behalf, this is specifically provided by the Act.
"The minister cannot sub-delegate power which has been delegated to him. That letter is illegal, it can only be signed by the minister."
There are also restrictions on the minister's issuance of guarantees, said Biti, who is also a senior lawyer.
"Legally the minister can only give a guarantee if it promotes employment; is in the public interest or in the interests of the economy and I submit that this guarantee is not in the interests of the economy, it's pure looting, it's pure lumpen activity," he blasted.
"However, because every debt – and a guarantee is a debt – is a levy on the consolidated revenue fund, parliament must approve any debits or credits to the consolidated revenue fund which therefore means that before a minister issues a guarantee, parliament must approve. Parliament is the controller of the consolidated revenue fund through the budget and the minister needs to go to parliament to seek approval.
"In short what the permanent secretary has done is illegal and unconstitutional. The guarantee he has given to Valley Seeds is a levy on the consolidated revenue fund and the fund cannot be debited or credited without approval from parliament."
Treasury secretary George Guvamatanga's letter to Ecobank providing guarantees on a $20 million loan to Valley Seeds
The former finance minister said the huge debt to Valley Seeds was "also proof of printing of money by the government."
Said Biti: "The treasury bills are being discounted by a commercial bank. Ecobank is now at the centre of laundering, dry cleaning money that was siphoned from the state. You can see from the levels of discount, discounting $200 million for $20 million."
The requirement for parliament oversight in the management of public finances was reinforced by a March 23, 2023, judgement by Justice Munangati-Manongwa of the Harare High Court who said the minister of finance cannot provide a guarantee to a private person without parliamentary approval. The minister was given a year to amend the public debt amendment act so that it would incorporate the role of parliament but the change is yet to be effected.
We reached out to Guvamatanga who had not yet responded at the time of publication.
Guvamatanga, in a letter to Ecobank, said Zimbabwe owed Valley Seeds US$191,578,835 as of February 2025. Ecobank, he added, had now agreed to discount this legacy debt "up to a limit of US$20 million" which would be advanced as a loan to Valley Seeds, with treasury paying it back in instalments of US$5 million in a 12-month period.
The treasury secretary stated that he had authority from the ministry to provide the guarantee, and went further to name himself as the principal executor of the guarantee "until the facility has been paid in full."
ZimLive showed Guvamatanga's leaked letter of guarantee to former finance minister Tendai Biti who described it as "pure looting, lumpen activity."
Biti also questioned how the country ended up owing Valley Seeds nearly US$200 million, and the massive discount on treasury bills the company was carrying to settle for just US$20 million.
"The Zimbabwean public is obliged to know how the government ends up owing almost US$200 million to a briefcase company such as Valley Seeds," Biti fumed.
Valley Seeds was a major player in command agriculture through which Biti says over US$3 billion was looted from the fiscus. Much recently, the company which is fronted by Zvishavane-born Themba Nkatazo, has provided the government with seeds for its pfumvudza/intwasa programme.
"This is arbitrage," Biti assessed. "There is no-one in his right mind who would have genuinely spent $200 million who could discount that for $20 million. The $200 million was never genuine. So Nkatazo is not losing $180 milion, he is gaining $20 million. It's extraction, it's part of command agriculture that was used as a vehicle for looting public resources in Zimbabwe."
Biti is familiar with Valley Seeds. As chairman of the Public Accounts Committee in his previous role ss Harare East MP, Biti summoned the company, along with others, to give evidence over its role in command agriculture.
He recalled: "They were not able to provide an explanation that was adequate and convincing to us.
"There are many companies that looted the government of Zimbabwe through command agriculture. They would raise invoices but there would be no evidence of the supply and delivery of material. Command agriculture was never audited forensically.
"Whilst there is proof and records that billions of dollars were siphoned from the ministry of finance directly, there is no evidence of delivery and performance by the many companies that benefited from command agriculture including the biggest beneficiary Sakunda, Valley Seeds, FSG and others."
He explained: "The Public Debt Management Act of 2015 allows the minister not the secretary to issue guarantees to private individuals for their indebtedness but only the minister can do this. So a letter signed by the permanent secretary does not comply with the law, the minister can't delegate his obligations in terms of the Act, and the reason is simple: only the president can contract debt in Zimbabwe. However, the president can delegate and authorise the minister to borrow for and on his behalf, this is specifically provided by the Act.
"The minister cannot sub-delegate power which has been delegated to him. That letter is illegal, it can only be signed by the minister."
There are also restrictions on the minister's issuance of guarantees, said Biti, who is also a senior lawyer.
"Legally the minister can only give a guarantee if it promotes employment; is in the public interest or in the interests of the economy and I submit that this guarantee is not in the interests of the economy, it's pure looting, it's pure lumpen activity," he blasted.
"However, because every debt – and a guarantee is a debt – is a levy on the consolidated revenue fund, parliament must approve any debits or credits to the consolidated revenue fund which therefore means that before a minister issues a guarantee, parliament must approve. Parliament is the controller of the consolidated revenue fund through the budget and the minister needs to go to parliament to seek approval.
"In short what the permanent secretary has done is illegal and unconstitutional. The guarantee he has given to Valley Seeds is a levy on the consolidated revenue fund and the fund cannot be debited or credited without approval from parliament."
Treasury secretary George Guvamatanga's letter to Ecobank providing guarantees on a $20 million loan to Valley Seeds
The former finance minister said the huge debt to Valley Seeds was "also proof of printing of money by the government."
Said Biti: "The treasury bills are being discounted by a commercial bank. Ecobank is now at the centre of laundering, dry cleaning money that was siphoned from the state. You can see from the levels of discount, discounting $200 million for $20 million."
The requirement for parliament oversight in the management of public finances was reinforced by a March 23, 2023, judgement by Justice Munangati-Manongwa of the Harare High Court who said the minister of finance cannot provide a guarantee to a private person without parliamentary approval. The minister was given a year to amend the public debt amendment act so that it would incorporate the role of parliament but the change is yet to be effected.
We reached out to Guvamatanga who had not yet responded at the time of publication.
Source - zimlive
