Unpacking the ENG-RBZ saga three years on

by Mutumwa Mawere
On 31 December 2003, ENG Capital (Private) Limited, a company that commenced operations in 2001 having been established by three young black professionals led by Mr. Gilbert Muponda, whose name has been scandalised and villified in the Zimbabwean media as part of a political strategy spearheaded by Dr. G. Gono, the Governor of the Reserve Bank of Zimbabwe, whose first mission after appointment by President Mugabe was to selectively target black owned and controlled institutions to create an impression that Zimbabwean’s debilitating economic problems were a creation of economic and political saboteurs and their imperialist sponsors.

In 1980, Zimbabwe gained independence following a protracted liberation struggle against an exclusively race-based colonial construction that not only politically disenfranchised the majority of the population but economically excluded the majority from harvesting the fruits of economic progress. The post colonial dispensation was naturally going to be characterised by white fear and black hope given the history of the country and the context and content of the struggle for independence.
Blacks after the successful conclusion of the Lancaster House negotiations naively thought that their defining moment to shape their own destiny had arrived and their elected representatives and political elites would proceed to make good on the promise of independence.

The legacy of the colonial era had to be addressed and change was the order of the day. As we all reflect now, we can look back at missed opportunities and anyone who deeply cares about Zimbabwe, my country of birth, as I do, cannot afford to allow their heritage to be undermined and destroyed by a few who believe that God has annointed them to exclusively shape the destiny of the country.
As we begin this historic year in Zimbabwe’s story, we cannot remain indifferent to what the world sees as wrong in Zimbabwe. Zimbabweans and all its domestic and external friends are enjoined to come together for a common purpose and help restore hope again that the future can be as bright as it was in our minds and hearts in 1980.

Yes Zimbabweans have been abused both during the colonial era and, indeed, during the last 28 years. Although the colonial abuse generated with it an organised group of Zimbabweans who believed in change and that they had a part to play in it, independence brought with it its own dynamics and inertia and a sense that the future was someone else’s business.

During the last 18 months, I have taken a conscious decision to participate through my writings in the conversations about not only Zimbabwe but the rest of the continent in the firm belief that those who purport to love Africa must invest in the change they want to see and believe in. We have no choice but to tear the barriers of ignorance that divide us. We need to give Zimbabweans reasons why they should stand up and help lift the country from its current morass while politicians debate about new constitutions and threatening to boycott elections.

There can be no doubt that Zimbabwe’s moment for change has come and any idiot can smell it. Time has come for anyone who loves Zimbabwe to speak up and not allow the Idi Amin like characters to define who Zimababweans are. The future of the country cannot be owned by a few but belongs to citizens who today feel like they are prisoners in what should be their own home.

The future of Zimbabwe now appears to belong to the minority who believe that economic challenges are a vehicle for scaring citizens from owning their own future. We have to be honest about the choices that face Zimbabwe in this year of change and be allert to the challenges that confront the country. The time for dictators has to come to an end and the Zimbabwe brand has to be repositioned. Zimbabwe can only be changed by those who believe that it’s their business to shape tomorrow by today’s actions and a powerful message that change is coming has to be sent now.

The government of Zimbabwe is a collective project that must be owned by citizens and this cannot be said to be the case today. The need to take back the government and place it where it should belong cannot be overstated.

I have written about Gono and his antics since his appointment in December 2003 not because I dislike him personally but because the same reasons that spurred me to become a pioneer black big business player and focus my attention on deepening and broadening the empowerment process in Zimbabwe while seeking to demonstrate that blacks can rise to the occasion are the very reasons that have led me to voice my concerns about the direction or lack of it that he is taking the country. We have to ask ourselves whether Zimbabwe, a country that was already in the intensive care when Gono was appointed, has improved under his stewardship or the decay has been accelerated.

Gono has his admirers and supporters who passionately believe in him and the direction that he has taken. It is important that a conversation be pursued on Gono’s role in advancing the interests of the country. We all may not agree and that is fine with me but to accept to sit on the sidelines when we know that something better awaits Zimbabwe if only we can reach out for it and fight for it will be irresponsible.

It is for this reason that I have decided to review a number of the cases that have been used to demonstrate that Gono’s intervention has been good for Zimbabwe. One such case involves the ENG saga. A lot has been written about the so-called scandal but we really have not heard from the other side and I was pleasantly surprised to receive an email from Mr. Gilbert Muponda, who was the founder of the group of companies that operated under the ENG banner.

He wanted his story to be known following the outburst of Mr. Charamba after the recent escape of Mr. Butau about the alleged role of the West in undermining Zimbabwe’s legitimate interests to intimidate and victimise its targeted individuals whereever they may be. This was what was reported in the Herald about ENG: “In 2004, ENG Asset Management director Gilbert Muponda, who was facing charges of defrauding investors of $61 billion, fled to the United States. His fellow director Nyasha Watyoka, however, chose to remain behind and face the music.”

Any rational reader who read the above would be entitled to draw the conclusion that Mr. Muponda defrauded investors of Z$61 billion and ran away making him a fugitive. However, in any functioning democracy one would be entitled to ask why the injured investors would choose to remain silent and the state steps into their shoes purporting to be the injured party.

Surely, the laws in Zimbabwe are sufficient to protect a genuine investor without any assistance of the police particularly where allegations of fraud are involved. Furthermore, if the injury was caused by ENG, the juristic person, then why target individual agents of the real beneficiary of the alleged fraud. A director of a company can only be sued in his representative capacity and ordinarily investors would have taken action against ENG and then, in the event, of fraud it would be up to ENG to take action against the directors.

In the case of ENG, it is interesting that the complainant was the state acting on its own without the consent of the investors who in the first place had voluntarily placed their funds under the control and management of ENG.

At face value it would appear as if investors reported this matter to the police and then the police acting on behalf of the affected investors proceeded to apprehend the accused. However, the facts that Muponda provided to me confirmed my worst fears about the state of affairs in Zimbabwe and why any investor should be worried about the security of not only their properties but their own freedom.
What is amazing about the ENG story is that it was the first victim of Gono who only after seven days in office descended on the institution. The media was then deployed to create the perception of criminality and national security injury. Muponda was transformed from an unknown quantity to a celebrated villain.

At all material times, the investors were missing in action. At the time of Gono’s appointment, the RBZ had no oversight over asset management companies and a lot of activity was taking place outside the control of the RBZ mainly because the role of an asset management company in any functioning democracy is to provide services and solutions to its principals. The assets belong to the principals and an asset management company is only entitled to a fee.

One must point out that Gono was the CEO of the Commercial Bank of Zimbabwe (CBZ) and was not a significant shareholder of the insitution and, therefore, as a person who rates himself highly he must not have been happy to know that people like Muponda, whose names were not familiar to the President, were shaking the market without any principal or godfather behind them. It was natural that Gono had to stop the leveraging that was taking place in the asset ownership business of Zimbabwe whereby indigenous people who would otherwise have no access to acquisition capital now had a new vehicle to access capital for the kind of transformation that has eluded the post colonial government of President Mugabe notwithstanding the posturing on empowerment and indigenisation issues.

It is also important to state that the government of Zimbabwe has never really come to grips with the empowerment challenges that the country confronts and the version of entrepreneurship that has been accepted by the political elites is the Gono type whose humble background and profile impresses many traditional politicians.

In fact, President Mugabe was on record at the Masvingo Congress of 2003 castigating the new breed of entrepreneurs who to a large extent had banking experience. Accordingly, when Gono was appointed his first target had to be the asset management industry. ENG was the most aggressive at the time with principals who were fairly young and independent. According to the ZANU-PF way of thinking, companies like ENG should have been nipped in the bud because their way of doing things, their age, their capacity to mobilise capital defied what is generally accepted as the liberation way of doing things.

In fact, the thinking is that if President Mugabe does not know of something then it must be wrong. Equally, if Gono has not seen it and experienced it then it must be criminal. It is commoncause that the President does not trust the market and also people who work in the private sector. He genuinely believes that if a person is smart then he should be under his control afterall he can boast that even the likes of Jonathan Moyo, Simba Makoni, and others have been his proteges and there are many more that would die to be considered as cabinet ministers. The President is old fashioned to the extent that he easily takes pride in having a team that lies to him day-in day-out about what is going on.

Having been a personal banker to President Mugabe, Gono is one person who should know how he thinks about not only issues but about people in general. They often say that if you make the President believe that there are enemies out there, you will get the best of him.

Naturally, it must be the case that when the President was informed about ENG and the asset base they controlled, he must have been furious giving Gono the ammunition to go after them and prove the point that change is not good for Zimbabwe as long as it is being executed by people who have not been screened by the ZANU-PFpolitical process.

Given the above, it is important that we highlight the profile of ENG and its promoters. As stated above, the company was set up in 2001 by three young professionals who had a combined experience of 15 years in the financial services industry. The firm was set up to serve a niche market in provision of advisory services, asset management, corporate finance and private equity. It started as a greenfield operation financed by the founders.

The team was led by Muponda who holds a B. Com degree as well as diplomas in Structured and Corporate Finance. He began his career at National Merchant Bank (NMB), the first indigenous investment bank, and rose through the ranks to the position of Senior Manager – Corporate Finance. He then joined TN Financial Services, another indigenous institution, as Director of Private Equity before setting up ENG.

His co-founder was Mr. Nyasha Watyoka who holds a B. Com degree. Prior to setting up ENG, he worked for FlemingMartinEdwards, NDH and Interfin in the stock broking and research areas.
The third founding member of ENG was Elton Chitondo who holds a Business Accountancy degree and various certificates in accounting and Treasury Management. Prior to joining ENG, he was the head of Treasury at Astra Holdings.

It is evident that the three believed in the Zimbabwean promise and their stories would be a source of inspiration to any progressive nation. They were challenged to raise the bar and believed that through hard work, Zimbabwe would deliver to their expectation of leaving a heritage that future generations would look back on but this was to be shortlived.

Within days of the Masvingo congress and Gono’s appointment as RBZ Governor, Mr. Muponda said that teams of Reserve bank inspectors were deployed in the financial sector. He alleges that the members of the teams were drawn from various state security agents and had no banking experience whatsoever.

Their mission was to execute the mandate of the government to send a clear message that indigenisation was never meant to be democratic in as much as politics was meant to be exclusive. Mr. Muponda says that he went through hell while the interrogations were taking place. He specifically mentioned the name, Chiremba, as the leader of the team. Chiremba’s name has been mentioned in many court cases and he appears to be the right hand man of Gono.

Notwithstanding the fact that the RBZ had no jurisdiction at the time over asset management companies, it became evident that the real mission of Chiremba and his political masters was to close ENG and parcel out its portfolio of assets to designated persons. The grilling ensued and the inevitable chaos visited the industry.

At the time, ENG was the controlling shareholder of Century Bank and a team was also deployed to the bank. A combination of negative media coverage and the deliberate spin from the RBZ led to a run on the bank and investor panic.

The installation of the RTGS system allowed RBZ to control the movement of money by simply delaying money transfers and pretending to be scrutinising what the payments were for. These delays plus the fear and rumours induced by the State security officers lead to widespread panic in the market. And rumours started to circulate that so and so has now been arrested for parrellel market dealings. Whilst there were no actual arrest executives including ENG directors were being detained for long periods under the guise of investigations by RBZ officers (who according to Muponda were in fact were state security officers). And obviously the market heard these rumours and investors panicked and started widespread flight of deposits from most black owned financial institutions.

I set out below the structure of the ENG group of companies just to highlight the progress that Muponda had made in giving meaning to what Zimbabwe was meant to provide to its citizens if only its leaders understood the true meaning of change.

ENG HOLDINGS GROUP STRUCTURE
- SUBSIDIARIES
- ENG CAPITAL INVESTMENTS PVT LTD
- ENG ASSET MANAGEMENT PVT LTD
- ENG REAL ESTATE
- ENG NOMINEES PVT LTD
- ENG PRIVATE EQUITY (PVT) LTD
- ENG CAPITAL ADVISORY SERVICES
- ENG STRUCTURED FINANCE
ADDITIONAL MAJOR ASSETS OWNED
- Century Bank Holdings ( now CFX bank)
- Leasing Company of Zimbabwe,Century Asset Managers)
- Century Discount House
- Hybri Micro-Finance Institution
- Care Insurance PVT LTD
- RestCel Insurance PVT LTB
- Amalgamated Health Services – (Harare West Hospital )
- About 10% of OK Zimbabwe Limited
- 15% of Zimplow Holdings Limited
- 20% Medtech Holdings Limited
- 15 % Clan Holdings Limited
- Allied Conveyor Belts PVT LTD
- Real Estate including ( Belgravia House,Thaine Building)
- Various Listed ZSE Listed shares
- Treasury Bills
- GMB Bills

We all know that Muponda, like Makamba, Butau, Makoni, Vingirayi, Nyemba, Manyanga, Zimuto, Chekeche, Mudekunye, Kamushinda, and others could not defend themselves against the machinery of the state that was deployed against them and chose to leave their beloved country fully knowing like the late Joshua Nkomo that only Europe can guarantee security. We all know that Joshua Nkomo had no choice but to flee to England when the state was used in the quest for a one party state and leader construction. Dumiso Dabengwa and others were pioneers in the long list of post colonial injustice and the only difference is that they chose to unite with ZANU-PF presumably for personal benefit.

Given this background, one can understand why competent and highly skilled Zimbabweans chose to leave their beloved country. President Mugabe’s views that are captured on video about justice and why the British system of justice cannot be trusted in the case of Zimbabwe where the security agents are presumed to be only source of reliable intelligence should scare anyone person who cherishes freedom and justice. He is on record saying that he does not trust the courts and would rather have the accused rot in prison why the police are trying to investigate the case.

In the case of ENG, we now know that after three years there has been no conviction and no investors is on record having lost any money from the ENG saga. It makes it important as Zimbabweans approach the elections to reflect on the real motives underlying Gono’s onslaught against black institutions and individuals.

I have been reminded by Mr. Muponda to quote what the judge said after the placement of Watyoka on remand for more than two years without a trial date so that people can make their own judgments about what Gono represents: "As much as this court appreciates that the charges against the accused are very serious, a remand of two years in my view, is unreasonable. This court has given the State three chances to furnish the accused person (Watyoka) with his trial date, but obviously, the State has failed. The State has now failed to bring the accused person to trial within a reasonable time. I am of the view that the interest of justice will not suffer any prejudice if the accused is removed from remand. The State has failed to serve him in the two years. It was Watyoka who actually suffered the prejudice due to the State's failure to set his matter down for trial. His (Watyoka's) preparation of the defence may have improved and the delay may have led to disproportionate delay and mental torture. Further remand is therefore refused. State to proceed by way of summons for prosecution if more evidence arises."

The most improbable things are now expected and predictable in Zimbabwe. History will not judge our generation correctly if we refuse to fully appreciate the depth of the Zimbabwean crisis and the role that people like Gono are playing in making the country sink deeper into hopelessness. After speaking to Muponda, I began to realise that the change that has been promised over the last 8 years that ignores the plight of people like him is not the change that I can believe in. I cannot understand why eminent lawyers like Biti and Ncube would sit and negotiate with Chinamasa and forget to mention the externalisation of the very points of light like Muponda that Zimbabwe needs to lift itself from the humanly created quagmire.

If Muponda and his team could manage in barely three years to build an empire of the size and magnitude shown above, I cannot understand why Zimbabweans are comfortable doing less to change their circumstances and complain that they lack leaders when reservior of leadership is obviously large. For too long Zimbabweans have been trusting the wrong messengers of hope when change will only come if the truth is told without fear or prejudice.