Grand Heist: Mutapa Investment Fund, a launchpad for massive looting

The decision by President Emmerson Mnangagwa to rename the Zimbabwe Sovereign Wealth Fund into Mutapa Investment Fund has been described as an astonishing creation of a launchpad for large scale looting of Zimbabwe’s natural resources and economic wealth.

Mnangagwa, on 19 September, through the Statutory Instrument 156 of 2023 (SI 156/2023), invoked his Presidential Powers to temporarily amend the investment laws to rename and upgrade the old Sovereign Wealth Fund and transfer the shares in the 20 State-owned enterprises to the Mutapa Fund.

The President exempted the Mutapa Investment Fund from the provisions of the Procurement Act. This means that the funds held under the Mutapa Investment Fund can be spent without due procedure and without public scrutiny.

Human rights lawyer Siphosami Malunga said: “The unconstitutional Mutapa Investment Fund in Zimbabwe, is not a Sovereign Wealth Fund but an untransparent, unaccountable, personalised funnel for appropriation and privatisation of Zimbabwe’s entire public wealth and resources and the greatest national heist since Cecil John Rhodes.”

He literally transferred the government shareholding in a large block of 20 State-owned companies to the Mutapa Investment Fund, the upgraded and renamed Sovereign Wealth Fund.

The companies that were placed under the Mutapa Investment Fund include Defold Mine, ZUPCO, Kuvimba, Silo Investments (GMB 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.

While establishment of the fund aligns with global trends advancing management of capital markets, observers have, however, come out guns-blazing accusing Mnangagwa of unconstitutionally creating a platform for looting by removing any chances of public scrutiny, a critical aspect of good corporate governance.

A sovereign wealth fund, according to Mt Pleasant MP Fadzayi Mahere, is a state-owned investment fund comprised of money generated by the government through, for example, surplus reserves from state-owned natural resource revenues, trade surpluses, bank reserves that accumulate from budgeting excesses, foreign currency operations or money that accrues from privatization projects.

Mahere argues that Zimbabwe’s latest version of the fund is too shadowy as it gives Mnangagwa unfettered power to appoint the Chief Executive Officer, the Chief Investment Officer and all eight members of the Mutapa Investment Fund Board.

The President may consult the Minister but he is not bound by anyone’s recommendations.

This, according to Mahere, increases chances of elite looting of the fund.

To remove chances of necessary public scrutiny, Mnangagwa through the 156/2023, took away the obligation to table the Board’s reports before Parliament. The Board only tables reports to the President and the Minister of Finance.

“SI 156/2023 allows the Fund to transfer forex pertaining to investments made by the Fund into and out of Zimbabwe without restriction or delay.

“This exemption is arbitrary and capricious in light of Zimbabwe’s stringent exchange control laws and currency regulation that apply to all other sectors, especially the private sector.

“The potential for abuse and externalization of forex through this vehicle looms large,” Mahere said in an analytical article she published on Monday.

“Mr Mnangagwa’s illegal amendment to the Sovereign Wealth Fund of Zimbabwe Act through SI 156 of 2023 further violates the constitutional principles of public financial management enshrined in section 298 of the Constitution.

“Section 298 states that in all aspects of public finance, of which the management and conduct of a state-owned and controlled fund is one, there must be transparency and accountability.”

Addressing delegates during the Zimbabwe Economic Development Conference (ZEDCON 2023) in Victoria Falls, Finance Ministry permanent secretary George Guvamatanga said the provision of exemptions were already in place before the promulgation of the Statutory Instrument.

He added that the exemption applies only to the Fund and not to any of the other entities listed on the schedule.