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HomeNewsWhere Is The Money? Zimbabwe’s Foreign Currency Looters

Where Is The Money? Zimbabwe’s Foreign Currency Looters

HARARE: Twelve months after the government of Zimbabwe vowed to launch an investigation to recover money that has been looted and stashed in foreign banks as a result of illicit financial flows, Zimbabwe is facing serious financial shortages.

By Michelle Chifamba

Illicit financial flows are the illegal movements of money or capital from one country to another, when funds are illegally gained or transferred across an international border.

According to the Zimbabwe Coalition for Debt and Development (Zimcodd), lost revenue through illicit financial flows is having far reaching consequences on the fulfilment of social and economic rights.

It hinders government’s ability to fund critical areas such as health, education, water and sanitation, and food security for the general population.

According to Zimcodd and the United Nations High Level Panel on Illicit Financial Flows from Africa, the continent loses over US$50 billion annually from illicit financial outflows.

Zimcodd Program Manager John Maketo in an interview said, “Recent research from Action for Southern Africa (ACTSA) revealed that US$8.8 billion is lost from Southern Africa, including Zimbabwe, on an annual basis through illicit financial outflows.”

“As a result of the externalized foreign currency ordinary people are suffering,” said Maketo.

“A significant number of urban population lives in slums. Over the past one and half year period, an estimated 7,000 children have dropped out of school [in Zimbabwe] due to the fresh wave of hyperinflation that has eroded the value of the local currency and cause an increase in the prices of all goods,” he added.

November 2017 marked the beginning of President Emmerson Mnangagwa’s administration.

Then, the government sought to polish its credentials and lure foreign investors through its ‘Zimbabwe is Open for Business’ policy.

Soon after assuming the presidency, Mnangagwa launched an investigation into foreign currency looters who had stashed millions of US dollars in foreign banks, causing the country to suffer economic blockades due to the scarcity of the foreign currency.

A list of the people and companies that had moved funds offshore illegally was compiled by the RBZ and was made public by several national newspapers, including The Herald, The Standard, Daily News and Newsday.

The so-called looters list indicated that Zimbabwe had lost over US $1 billion. It implicated the names of both individuals and firms labelled for externalizing foreign currency to foreign banks.

According to the list- an estimated 157 individuals externalized money to foreign banks, while others made fake transactions, the list showed. The list also included Chinese nationals, retail and diamond mining companies active during the Robert Mugabe era. The list made public by the government shown is shown here. (link)

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But it was criticized by opposition party leaders for leaving out those who had ties with the President.

In March 2018, MDC-T secretary for finance and economic affairs Tapiwa Mashakada wrote an article that appeared in the Zimbabwean Newspaper.

Mashakada wrote that the list was disappointing as it failed to name the actual individuals who externalized foreign currency.

“There was a conspicuous absence of Zanu PF officials who have been looting natural resources. The list was dominated by companies, who due to the shortage of foreign currency in the country kept money offshore in order to finance imports, and service offshore financial obligations such as loans,” he was quoted as saying.

Mashakada did not respond to requests for further comment.

According to the list, nine of the diamond mining companies that operated in the Marange diamond fields and were evicted after their licences expired were involved in illicit financial flows.

According to the media reports, Marange Diamonds, externalised approximately US$54 million, Canadile Miners US$31.3 million, Mbada Diamonds US$14. 7 million and Jinan US$11 million.

The bulk of the money was believed to be externalized to China, Botswana and South Africa through non-repatriation of export proceeds, payment for goods not received in Zimbabwe or funds externalized to foreign banks in cash or under spurious transactions.

Among the companies on the list that we tried to contact for this story, three companies Pacific Cigarette, Schweppes Zimbabwe, River Range, they said they approached the RBZ soon after the list was published and resolved their matters.

The Confederation of Zimbabwe Industries (CZI), which represents the country’s manufacturing sector  defended many of the companies on the list.

CZI president Henry Ruzvidzo said, “Most of the companies appeared on list for various reasons and most of the issues were resolved at company level. At the time when the list was published, as a result of technical and bureaucratic issues in processing the invoices for retaining the foreign currency most companies ended up on the list. The issues were resolved by the companies when they approached the central bank.”

Youths within the ruling party Zanu-PF, early this year announced during a press conference that they had a separate list of foreign currency looters aligned to the president.

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They claimed to have a list that was ready to be released that contained the names of party officials involved in the externalization of foreign currency.

One case that has seen action by authorities is businessman Farid Shahadat. He was reported in the some media to have externalized more than US$1 million. He was arrested by the police for money laundering.

Shahadat’s case was before the courts on allegations that he opened foreign bank accounts, including in Botswana, and deposited a total of US$ 1 197 580, into his foreign bank accounts.

According to court records Shahadat was released on bail.

It seems, Shahadat’s case is so far the only one that has been tried for money laundering.

A legal expert and former prosecutor who spoke on condition of anonymity said the problem with law enforcement in Zimbabwe is that they arrest to investigate, instead of investigation to make arrests.

“The issue of the businessman that was arrested for money laundering and released on bail, there is a possibility that when he was arrested they did not have enough evidence to go for trail and prosecute, within a 6 month period, without going for trial the accused may apply to have his name removed from remand,” the prosecutor said.

When contacted, RBZ Public Relations Officer Alson Mfiri said he submitted the questions with regards to investigations into the list to relevant departments, the Financial Intelligence Unit that carries out financial audits. But no response had been received at the time of publication.

Zimbabwe Economic Society president Clever Mumbengegwi said the RBZ should by now have issued a statement on how far they have gone with the investigations concerning the looters list.

“It seems there has not been much investigation that has been done by the RBZ since the list was released. I think after the list was published there was not enough evidence to prosecute both the individuals and the companies that appeared on the list,” Mumbengegwi said.

Zimcodd’s Maketo said, “The 1.4 billion externalized funds acknowledged by government was sufficient to finance the entire budget for education, health and transport infrastructure.”

This story was produced by @263 Chat . It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.

 

 

 

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