 Exiled businessman Mutumwa Mawere exposes Gono's growing vindictiveness Related Stories |
04 January 2008
By Mutumwa Mawere
The recent escape of Hon. David Butau from Zimbabwe amid allegations of exchange control violations has attracted media attention both domestically and internationally but the matrix of facts and legal issues surrounding this complex political and economic matter are murky.
Having followed the Butau issue closely, I thought it would be beneficial to attempt to unpack the facts so that informed opinions on the developments in Zimbabwe can be made. It is evident that the Reserve Bank of Zimbabwe (RBZ) is the central player in the matter.
Butau’s problems seem to have started when Dr. Gono, the Governor of the RBZ, threatened to expose the cash barons in a television interview that was a follow up to the address he made at the ZANU-PF extraordinary congress held in December 2007 in which he alleged that senior members of the party and government were economic saboteurs for personal benefit.
The revelations by Dr. Gono about the rampant corruption naturally raised expectations that heads will roll and the executive branch of the government would take an active interest in arresting the acknowledged problem. However, the President and his cabinet have now exclusively outsourced the task of economic management to Dr. Gono who appears to be accountable to the President alone.
Concerns have been raised about the conduct of the RBZ under Gono but it appears that power has now been centralized and the RBZ is now the undisputed center of gravity. So when Dr. Gono offered to expose the transgressors, it would only take a fool to ignore the implications.
Strangely enough, he indicated that he was only prepared to disclose the names to the Budget and Finance Parliamentary Portfolio Committee, chaired by Butau. Initially, Butau, who as it turns out knew more about the motives of Gono than met the eye, refused to convene the requested meeting but then it emerged that he was a wanted man himself raising the question why Gono had singled his portfolio committee fully knowing that he was the Chairman.
The context of Gono’s revelations has to be appreciated. For the past 60 days, Zimbabwe has been facing a cash crisis and Gono had assured the nation that everything was under control. As the festive season approached it became evident that there was nothing to mitigate the worsening cash crisis. In the face of policy bankruptcy and implementation confusion, Gono opportunistically provided an explanation to the nation that the problems were causally linked to the criminality of certain high profile individuals.
Adding one plus one it became evident that Butau was one such individual and the offer by Gono to disclose the names to an allegedly tainted Butau’s committee could not have been in good faith but an attempt to divert attention from the core problems.
If anyone was in doubt of Gono’s powers, the Butau saga has removed any doubt that Gono is the law in Zimbabwe.
If you are on his target list, you better escape before injustice visits you. Butau is not the first victim of Gono and one only has to look at the predicament of ENG directors, Makamba, Kuruneri, the NMB crowd, Tregers, Muderedi, and others. The connecting dots in all these cases are the foreign exchange violation allegations.
By targeting selected individuals, Gono has successfully repositioned the Zimbabwean political and economic crisis as nothing more than a creation of Zimbabwe’s external enemies using their domestic surrogates which fits in conveniently with President Mugabe’s thesis that were it not for the land reform program, Zimbabwe would be a performing country.
The external enemies have already been identified as the UK, Australia and the USA in the main with their Anglo-Saxon cousins supported naturally by their domestic political stooges in the form of the MDC. The role of business in undermining the sovereignty of Zimbabwe is a subject that Gono has taken up as his main theatre of operation.
It is no wonder that during his tenure Gono has proceeded to centralize power at the RBZ and effectively put in place measures whereby all foreign currency is now under his control. This has allowed him to be a law unto himself. He virtually decides who should be classified as a criminal and given his modus operandi all business persons are de facto criminals anyway for transacting at generally accepted black market prices for foreign exchange deals.
Through the various schemes that he has put in place, he knows everything about all exporters as well as domestic producers. He controls the banks and shareholders have been reduced to nothing under his tenure.
Against the above background, one has to appreciate the predicament of Butau. What wrong did Butau do? What is the case against him? The police who are allegedly looking for him appear not to know what they want him for. According to Wayne Bvudzijena, the chief police spokesman, Butau is on the wanted list for the purposes of investigating alleged exchange control violations. The moment you hear the police are looking for you for exchange control violations then you must know that Gono is right behind the police.
Although the real facts on the Butau matter are not known to the public, the Herald reported a related matter involving Mr. Joseph Manjoro, a finance and administrative executive with Clarion Insurance Company, who pleaded guilty to charges of illegally dealing in foreign currency involving more than Z$2.1 trillion. The Manjoro case is no different from the allegations against Dorothy Mutekede who was convicted of illegally dealing in foreign currency. The two appeared before provincial magistrate, Mr. Mishrod Guvamombe whose outrage at the conduct of the police and the RBZ in obstructing justice has been well reported.
The central players in the two cases are Mr. Jonathan Kadzura and David Butau who it appears are both well connected to Gono. The facts are that the RBZ in its well documented quasi-fiscal activities promised to procure tractors for the farmers in line with its purported sanctions busting mandate. Having convinced President Mugabe that Zimbabwe’s Western enemies would derail any attempt to make the land reform successful, Gono has managed to position himself as the chief sanctions busting agent.
Under this framework, Gono needs instruments to execute the mandate. He prefers to work with his strategic friends who hold positions that can cause problems for him if persons occupying such positions are not sufficiently compromised in as much as the President and First Lady have already been mesmerized by Gono’s capacity to be creative and innovative with state resources.
Butau occupied a position that could potentially be dangerous for Gono not only because of the oversight role of the Portfolio Committee that he chaired but because parliament is the only organ of the state that has representatives from the opposition. With the President in his pocket, it was only inevitable that Gono would want Butau to also be under control lest his shenanigans in the RBZ would be exposed.
If this happens, ZANU-PF cannot remain in power primarily because Gono’s quasi fiscal activities are a real threat to the constitutional order and if the public were to know what has been happening this will be explosive.
All of Gono’s enemies have been neutralized or externalized through the active use of the law enforcement authorities. He now controls ZIMRA, the Anti-Corruption Commission, the Police, and the Price Monitoring Commission (although he appeared to be against price controls).
The court in Manjoro’s case heard that it was the RBZ that contracted a commodity broking company known as Flatwater Investments Private Limited to procure tractors for the Government's Agricultural Mechanisation Programme. Flatwater Investments got $2 120 650 000 000 in October last year from the RBZ and gave it to Manjoro who sourced the needed currency from individuals and not from the normal channels involving the banking system.
The RBZ was fully aware that Manjoro would buy the foreign currency in the illegal black market otherwise it would not make sense for it to allocate Z$2.1 trillion to a commodity broking company without going to tender. If there was any doubt that the black market is being fueled directly by the actions of the RBZ this is one such example of the irresponsibility of the bank. By using Manjoro instead of the banking system, the RBZ was effectively undermining the very system that it was established to supervise and monitor. One cannot say that individuals like Manjoro come under the oversight of the RBZ. It is not clear how Flatwater was selected and who was responsible for identifying the company on behalf of the RBZ.
It has now been established that Manjoro transferred some of the money provided by the RBZ to companies linked to David Butau -- Squareaxe Pvt Ltd received $575 billion through its ZB Bank account while Nyamasoka Farm got $262,5 billion through CBZ. It is not clear whether Gono personally was informed by Manjoro of this transaction but it is highly unlikely that he would have been kept in the dark. Indirectly, through Manjoro it appears Butau was in the loop of this illegal transaction whose motivator was the RBZ using channels that any law abiding RBZ would rather avoid.
The transfers by Manjoro were an integral part of the purported RBZ sanctions busting activities involving the use of nominee companies that would not be detected by Zimbabwe’s Western enemies. On several occasions Gono has justified the use of these shadowy companies in conducting government business because of the sanctions regime that he blames for the deteriorating governance standards.
In any normal democratic order one would not expect a central bank to be involved in procurement of tractors let alone use companies like Flatwater when the country has legitimate tractor dealers. The funds transferred to Butau’s companies were then used to procure the foreign currency required by the South African suppliers of the tractors.
Having paid the Zimbabwean dollar equivalent to Butau’s companies, it is alleged that US$357,000 was paid to Michigan Tractors on behalf of Flatwater Investments.
Manjoro is alleged to have pocketed Z$20 billion from the transaction.
It is now the state’s case that Butau violated the exchange control regulations by facilitating the procurement of the foreign currency at black market rates. This makes Butau one of the casualties like Kuruneri who mistakenly thought that Gono was his friend and helped with US$500,000 in a fuel transaction only to find himself accused of violating exchange controls.
How other Zimbabweans are doing what Butau is alleged to have done with impunity? Why has Butau been targeted? What does he know about Gono’s role in such opaque transactions?
Butau now finds himself on the increasing fugitive list that is daily updated by the RBZ. When will Gono stop playing games with the future of Zimbabwe? Why would the police not investigate the circumstances leading to Flatwater getting state funds in the first place? If Flatwater was not meant to violate the law by accessing foreign currency through the black market then surely someone should explain the basis on which the RBZ accepted the mandate to procure tractors without providing the required foreign currency.
Surely Gono is aware that Zimbabwean currency is not acceptable by foreign suppliers as payment. Why would the RBZ, an institution that has the capacity to extort foreign currency from exporters at official exchange rates, outsource that function to a non authorized dealer? Could it be that Butau was set up and Manjoro was just a pawn in the game? Could Butau just like Kadzura have been in the loop when the deal was constructed?
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