Where is the money?

By Eddie Cross

The list of people who have ‘externalized money’ and ‘should bring it back’ was finally published last week. No sign of the list of those who complied by the deadline of the 19th March, so we do not have a full picture and none of the main culprits were listed. For most Zimbabweans it was a damp squib.

Eddie Cross
Eddie Cross

But the wider issue which is not being addressed in any significant way is who benefited from the many scams and corrupt practices over the past 38 years and where might the residue be hidden. Other questions might be, how do we find it and then get it back to help with our current financial and fiscal problems? Just to emphasize the latter – our fiscal deficit (the gap between our State income and expenditure) in 2017 has been revised upwards to US$2,5 billion dollars. That is about two thirds of our total tax receipts, 13 to 15 per cent of our GDP – four times the sustainable level.

Transparency International estimate that corruption, in all its different forms, has cost Zimbabweans about US$80 billion since 1980. That is just over US$2 billion a year or about US$7 000 per capita. Compare that to our National Debt of about US$11,6 billion to external creditors and perhaps another US$7 to US$8 billion to local creditors. The value of the sums taken out of our economy by corruption, dwarfs everything. Certainly, it makes the Reserve Bank list look like chicken feed.

The corruption takes many forms – prior to the GNU we know that Noczim and the Reserve Bank were major conduits, when the GNU cut off those channels, the State turned to Marange. I obtained from workers at the diamond fields employed by Marange Resources and Mbada Diamonds, actual records of daily production and grades. From Mbada, even prices. I then took the capacities of the machines being used to sort the diamonds from the sand and computed that the total value of diamond production in 2012 was US$4 billion and I used these figures in a speech to the House of Assembly that year.

I estimated that the three main players had installed capacity which suggested that their production was broken down into 10 per cent Marange Resources, 20 per cent Mbada and 70 per cent Chinese/Military (Anjin). Since then I have estimated that between 2008 and today (10 years) total gross output of diamonds was about US$22 billion. If we assume 30 per cent was absorbed in operating expenses, then you come back to the US$15 billion that Mr. Mugabe claimed was ‘missing’. I have been astonished as to how well informed his office is on these matters. The question is who benefitted?

If I use my basic model of 1:2:7 for the three main players – the other 3 do not seem to have been significant. Then I come up with gross profits after operating costs of US$1,5 billion for Marange Resources over 10 years, US$3 billion at Mbada and US$10 billion at Anjin.

My own information is that the then Minister of Mines took US$800 million out of Marange before he was removed – who took the balance I have no idea, I have heard (talking drums) that Mr. Mugabe took all of his US$3 billion to the Far East while the vast sums taken through the Anjin/military alliance at Marange may have been split 50/50 – certainly the military were major beneficiaries – all you have to do is drive around the urban areas where military officers – some quite junior, have built million dollar homes.

Anjin has become a major regional player in many fields, hotels, military installations. In Maputo where their main regional office is, they use an executive jet to move around the region and are reputed to have large cash balances in China.

In the liquid fuel sector, for many years the State has used this means to take off very large sums. In 2014, when the world price of oil crashed from US$130 to US$140 per barrel to US$27, the retail price of fuel hardly changed in Zimbabwe. Despite having a regulator and State controlled bulk systems – especially the Beira/Harare pipeline, the retail price of fuel in Zimbabwe has remained at about a 30 to 40 per cent premium to the price in regional States.

Today, with prices of crude oil back at about US$65 per barrel – regional fuel prices are about US$1.00 per litre compared to US$1.37 for petrol and US$1.24 for diesel in Zimbabwe. Every cent per litre is worth US$1,2 million a month – today that represents an unexplained premium of US$30 million a month or US$360 million a year – our defence budget and health budget is not much more.

My own estimate is that up to US$1,5 billion dollars has been skimmed off the top of this complex international scam in the past three years. Given these numbers for visible corruption, the Transparency International estimate is not hard to believe. So, the question is ‘where is the money’? The long list of relatively small sums in the Reserve Bank lists does not represent anything like the answer. Not even a secondary list on the social media which includes both Mr. and Mrs. Mugabe, represents even a tiny portion of the sums involved.

In these circumstances the Reserve Bank list is a laugh. Most of the amounts are explainable and many are legal transfers. This attempt to shift the public debate on corruption away from the leadership to the private sector and a few Chinese companies is simply an embarrassment. Surely, we can do better.

Speaking to the Kenyan author of the book ‘It is our time to eat’ when he was in Harare last year, as the former Corruption Tsar in Kenya, he advised, do not go after the individuals – prosecutions are very difficult and expensive, go after the money.

If we adopted that principle, then we must seek the help of outside agencies who have the capacity to track the money. The USA has a global system that requires all transactions above US$10 000 to be reported. However, like the satellite system that tracks our every move and conversation, simply to turn the system on and ask it to identify transfers from a small, insignificant country like Zimbabwe, takes political will. I have little doubt that if a new Government comes to power in August 2018, that an appeal to the international Community, to find the money, even to the Chinese, will yield results.

But before we can speculate on how much and where, we need to recognise the principle of ‘easy come, easy go’. Much of the money may be spent or simply lost. The fortune of Mabuto in the Congo was never found, out of the billions the State only recovered less than 10 per cent. Remember the wholesale theft of Jewish wealth hidden in Switzerland from Germany. Banks love secret accounts. So, do not hold your breath – what we need to do is stop it happening and make sure that anyone caught doing it in future faces the harshest penalties we can dream up. China executes them.

In the Ivory Coast yesterday, the President, E D Mnangagwa, called for a free, open economy. That is one solution and we should get on with that. We signed the Africa Free Trade and Movement Agreement at the AU Summit in Kigali – perhaps it is time we stopped traveling for a while and concentrated on getting these high-sounding principles implemented at home. A transparent, open market economy with real competition in every sphere would do more for the ordinary Zimbabwean than we can imagine. It is time to get on with this agenda and to stop chasing butterflies