Zimbabwe financial crisis require public hearings

By Gilbert Muponda

The first article that I wrote suggesting the need of a public or parliamentary hearings on Zimbabwe‘s regular financial crisis seem to have been misunderstood by many. My belief is by sharing my experience with a wider audience more Zimbabweans will become aware what is happening and will contribute in whatever way they can. This article seeks to clarify the relationship between Gono, ENG and CFX Bank. The way Gono looted ENG assets can not go undocumented. My view is that Zimbabwe’s current problems can’t be left to politicians alone. I am not a politician and I don’t wish to be one. I have chosen the business arena as my theatre of operation .

The ENG Capital (PVT) LTD (ENG) brand is dead and gone in Zimbabwe .ENG (Zimbabwe) has been liquidated and fully paid all claims against it. I have no further financial or other interest in the matter. This article is being published as a matter of public record for the fair tracking of what made up ENG (Zimbabwe) and the controversy surrounding the company and its assets. The hope is to ensure the assets are fully accounted for and those keen on case studies have all relevant facts before making conclusions. The ENG case makes a perfect case study for me as I have accurate information of what transpired and the hope is it will encourage other executives to share their experiences which will aid the development of a more conducive business environment in Zimbabwe.

ENG was the controlling shareholder of Century Holdings Limited a bank holding company listed on the Zimbabwe Stock Exchange. Our responsibility was to fully account for the assets owned by ENG .A very sensational and dramatic view painted was that ENG directors only bought cars and had no "assets" to represent investor funds. One of the biggest assets ENG had was a 52% stake in Century Holdings Limited which was bought for at least $ 35 billion. This was a material amount given the allegation that $61 billion was "missing".Obviously ENG had assets worth way more than the alleged missing funds .According to Directors valuation ENG assets were worth $ 240 billion ( independent valuation $ 185 billion) against claims of $ 80 billion. This explains why ENG has in fact managed to pay off all creditors and investors despite its assets being deliberately under valued and being looted.


At the centre of the ENG assets in dispute is a parcel of 309 million Century Holdings Shares sold to Network Investments and Kwangwari Enterprises which are investment vehicles in which Dr Gono reportedly has interests. The 309 Century Holdings Limited Million shares in dispute were sold on or around 13 May 2004.And within the same week an announcement was then made that CFX Bank is taking over Century Holdings. The shares were sold to Dr Gono’s reported consortium for Z$ 2,9 billion when ENG had spent $ 35 billion to accumulate the shares, thereby prejudicing ENG, Creditors, Investors and contributories of at least Z$ 32,1 billion.


As ENG contributory and shareholder I wrote to the ZSE asking for an investigation because we had agreed with the majority of creditors that the shares should not be sold but rather be swapped with creditors and investors instead of selling them at an unreasonable price. But the 309 million shares were somehow clandestinely sold and that transaction enabled CFX Bank to take over Century Holdings Limited .This allowed the reverse listing of CFX Bank on to the Zimbabwe Stock Exchange .Without those 309 Century Holdings Limited million shares owned by ENG the CFX/Century merger would have never happened. Dr Gono and his proxies became the new controlling shareholder of the new merged bank. Is this by design or accident? Is it not normal to request for hearings when allegations of such a serious nature are being leveled against the Central Bank Governor. Or should he not feel obligated to clear the air by having an independent hearing to verify the allegation?


ENG directors and contributories asked the high court to set aside the sale of the shares and the matter action is still before the courts in Harare.
We asked the ZSE to investigate. They refused. We asked the brokers for the identity of the buyer of our shares. They refused .The brokers indicated they were under serious pressure from individuals they couldn’t identify to maintain total secrecy on the identity of the buyer. We also approached the company secretary and company transfer secretaries .They were all non-co-operative and expressed some fear if they disclosed the principals of the transaction .I would like to take this opportunity to ask your readers (who seem well informed) who was the buyer of those 309 million shares? And why was the deal done as special bargain and not a normal trade?


My intention is not to make allegations but to have ENG assets fully accounted for .As it appears we have the same interest with readers, creditors, investors, staff and business partners in ensuring transparency and accountability. I welcome the assistance of some of your readers who seem informed in confirming the true identity of the buyer of the 309 million shares.


Research and investigation has revealed Dr Gono worked with 3 cabinet ministers to form the Kwangwari Enterprises and Network Investments consortium that was used to take over ENG stake in Century Holdings which was then used in the merger with CFX Bank and the subsequent listing of CFX Bank on the Zimbabwe Stock Exchange. As an effort to launder the transaction a quick merger was consummated with CFX Bank as a way to cover the movements and track of those shares. The company name was quickly changed; rebranded and massive credit lines were immediately availed to the new entity.

The newly created CFX Bank fell into hard times immediately after the merger which was carried out before a proper due diligence since it was a quick transaction meant to launder and hide the ENG shares looted. It must be noted that other Banks such as Trust, Barbican and Royal Bank were taken over for similar circumstances but Dr Gono because of his newly acquired interest in Century /CFX Bank temporarily placed it under curator ship before injecting public funds to safe guard his interest.

Given the publicity of the ENG matter was it prudent for the central Bank Governor to “acquire” ENG related assets or subsidiaries? Would it be acceptable for a person in position of influence to buy an asset for $ 2.9 billion when there is clear evidence that the asset’s market value is much higher and it was purchased at a much higher price of $35 billion? Should the central bank Governor be allowed to invest in the financial sector where he is also in a position to influence policy thereby becoming referee and player?

The above shows the challenges that young entrepreneurs face in their efforts to realize their dreams. Whilst such risks are normal in many emerging markets Zimbabwe is now going into a league of its own. This trend has to be confronted if Zimbabwe is to attract any meaningful investment and stop brain drain. The call for public and parliamentary hearings is not a stunt but a necessity that can go a long way to allow the public to be well informed about how the enemies of the state are manufactured whilst those behind the actions loot assets in the similar manner that productive farms have been disrupted. In the next article I will clarify the latest stunt in which Gono purports to “fire” the CFX Bank management.

Gilbert Muponda is a Canada based entrepreneur. He can be contacted gilbert@gilbertmuponda.com .