THE central bank’s quasi-fiscal operations over the past five years opened loopholes for corruption as both public and private interests took advantage of lapses in implementation to enrich themselves.
Gideon Gono, the Reserve Bank of Zimbabwe governor, stitched together a number of facilities to keep the country limping and to bust economic sanctions.
The central bank undertook quasi-fiscal projects and introduced projects such as the Productive Sector Facility, Basic Commodity Supply Side Intervention (Bacossi), Local Authorities Reorientation Programme (LARP), the Farm Mechanisation Programme and the Agricultural Support Enhancement Facility.
Under these programmes, parastatals, local authorities and government departments and ministries relied heavily on the central bank for financial assistance to discharge their statutory mandates.
Many of the operations were abused by corrupt individuals and public officials within and outside the central bank for personal gain.
Several people have been arraigned in court for abusing the RBZ’s facilities and at least one central bank divisional boss is on the run.
Other facilities to boost agricultural production like subsidised fuel and inputs were also abused by farmers who sold them on the black market for quick returns.
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This month, the Anti-Corruption Commission said it was hunting for the RBZ’s Agricultural Mechanisation and Small to Medium Enterprises Support divisional head, Mordecai Masakwa, to explain the recovery of farm equipment and inputs at a church and two houses in Harare.
The equipment and inputs, which include three tractors, 41 tonnes of fertiliser, 30 tonnes of soyabean seed, 11 electricity generators, 10 motorcycles, 50 assorted garden tools, 21 knapsack sprayers and eight cultivators, were allegedly diverted from the Farm Mechanisation Programme.
John Banda, who impersonated a senior police officer, was arrested in connection with the case and has since appeared in court where the state said it suspected that the equipment and inputs were released improperly from Bak Storage in the capital.
Two weeks later, a Harare businessman, Anderson Mwashita – the managing director of Westgate Investments (Pvt) Ltd – was found guilty by the High Court of theft by conversion for swindling the RBZ out of more than Z$1,5 billion in 2005 that was earmarked to buy two tractors and a CAT grader for Chegutu Municipality.
Mwashita was fined Z$450 000 and ordered to pay US$91 762 as restitution to the central bank.
His company had won a tender to supply the tractors and graders to the municipality at a cost of Z$2,2 billion to be paid by the RBZ, which deposited Z$1,5 billion – 70 % of the contract price – into the firm’s account.
Mwashita failed to deliver the tractors and grader and could also not refund the central bank.Besides the abuse of the Farm Mechanisation Programme and the LARP, the RBZ’s Bacossi and vehicle acquisition schemes also fell prey to corruption.
The Bacossi programme was introduced by the central bank in July 2008 to sell basic commodities in the form of food hampers to the public at affordable prices.
Former radio and television personality Tichafa Matambanadzo and his business partner Raymond Chamba were recently hauled before the courts on allegations of defrauding the central bank of Z$150 140 which was meant to buy food hampers under Bacossi.
Matambanadzo and Chamba’s company, Subvented Solutions (Pvt) Ltd, were approached by the RBZ in November last year and contracted to supply 1 151 food hampers comprising salt, maize-meal, laundry soap, candles, petroleum jelly, toothpaste, bath soap and margarine. Â
The RBZ transferred Z$150 140 into the firm’s account and later advised the company to cancel the order and reimburse the money on the grounds that the central bank no longer required the goods.
Matambanadzo and Chamba allegedly did not comply and withdrew the money for personal use.
The duo is on US$500 bail each and will appear in court on Tuesday for further remand.
Questions have been asked why the RBZ had approached the two’s company instead of manufacturers of the goods it wanted.
The central bank’s vehicle acquisition facility to benefit parastatals, government departments and ministries to alleviate their transport blues was also abused by public officials.
A senior official in the Media, Information and Publicity ministry is on the run after he was implicated in a scandal where the RBZ vehicles were sold using fake registration papers.
Clyde November, the acting director of finance, human resources and transport in the ministry, is also wanted by police for his alleged role in the sale of the cars.
His accomplices, Isaac Chigumadzi (34), employed as a driver and Blessing Mphawanyera (21), who is a freelance salesperson, were convicted last week by Harare regional magistrate Stephen Musona on two counts of stealing two vehicles valued at US$29 000.
Between February 12 and 16, 2008 the RBZ handed over 79 various cars to the ministry.
In April last year, the two who were accused of acting in cahoots with November and went to Production Services in Harare where they drove away with a Mazda B1800 valued at US$17 000, which they sold to Francis Dewe Mutyavaviri for US$8 500.
Two months later, the trio went to the ministry’s parking area at Munhumutapa Building, where they drove off with a Mazda BT 50 worth US$12 000.
They sold the car for US$8 000.
Mphawanyera is also facing charges of stealing three more vehicles valued at US$54 000 belonging to the same ministry.
Several other RBZ vehicles are reportedly not accounted for.
The introduction of quasi-fiscal operations by the central bank was largely blamed for hyperinflation in the country. Gono defended the move arguing that these were extraordinary measures meant to address extraordinary circumstances and realities on the ground.
Gono said this position would be confirmed by the bank’s external auditors as part of their due-diligence of the central bank’s financial records.
He said the operations were embarked on as survival interventions in the national interest.
But multilateral financial institutions like the International Monetary Fund and the World Bank said the quasi-fiscal activities had interfered with monetary management and the independence and credibility of the RBZ. The institution estimated that losses from the activities had in 2006 alone amounted to about 75% of the gross domestic product because they were financed by money printing or issuing RBZ securities.
Soon after President Robert Mugabe re-appointed Gono to serve a second term at the helm of the central bank, the former CBZ chief executive officer said the RBZ would cease quasi-fiscal operations and concentrate on its main function of inflation control and financial sector stability with effect from January 2009.
He said: “As I accept this extended call of national duty, I pledge to maintain a very tight monetary policy stance, anchored on the comprehensive realignment and streamlining of the Reserve Bank’s functions in a manner that leaves monetary authorities with the core responsibilities of inflation-targeting, management of the national payments systems and safeguarding financial-sector stability.”
Gono said under the thrust, the central bank would establish a stand-alone, self-funding and well-capitalised developmental institution to manage “all the work-in progress” under the previous quasi-fiscal desks of the bank, as well as meeting other developmental programmes as they arise.
“I also wish to take this opportunity to once again re-affirm the bank’s position and assurances to stakeholders that all the bank’s quasi-fiscal outlays since December 1, 2003 have been fully amortised such that there will be absolutely no penny to be transferred as a burden on the fiscus, and hence the taxpayers,” he said.
Gono said this position would be confirmed by the bank’s external auditors as part of their due-diligence of the central bank’s financial records.
BY CONSTANTINE CHIMAKURE
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