RBZ reform necessary and urgent

The Rt. Hon. Prime Minister of the
Republic of Zimbabwe
Mr. M. R. Tsvangirai
Munhumutapa Building
Samora Machel Avenue
HARARE
ZIMBABWE

Rt. Hon. Prime Minister, Sir,

RE: GOVERNOR GONO, MINISTER BITI and CENTRAL BANK REFORM

I refer to the above .

My name is Gilbert Muponda , I am a Zimbabwean born Entrepreneur currently living in exile. You may have never heard of me so I will give you some brief back ground .I was the first person arrested in the 2003-2004 so-called anti graft campaign by Gideon Gono immediately after he took over at the RBZ on allegations of fraud ,money laundering and externalization similar charges to what today the Governor is alleging against Honorable Minister Biti .

What followed my arrest was later to become the single most transformation period as the RBZ replaced the ZRP and the RBZ Governor replaced the ZRP Commissioner in directing who should be arrested and which charges must be preferred against those arrested .This is relevant since the Governor is clearly threatening Minister Biti with arrest ,court action at a time the Minister has asked for the RBZ to be reformed. The struggle between Gono and Minster Biti is not personal as Governor Gono is alleging. The matter is between Governor Gono against the Zimbabwe Economy.

Under Dr Gono’s leadership the RBZ reputation, standards and standing has been ruined. The local currency was eroded to the point that it had to be replaced by currencies from countries which Governor alleges are hostile to Zimbabwe. Governor Gono led the closure of Banks, arrest of individuals. As it is the international community is refusing to deal directly with the RBZ for as long as Governor Gono remains there. It is for these reasons which demand that Governor Gono be encouraged into retirement and gracefully allows a replacement to be named. Again his issue is not about MDC against ZANU its beyond that. Even ZANU people have experienced the vindictiveness and shallowness of his policies as this letter will later show .

As back ground information I describe my former business for you ,hopefully this will help you understand how Governor Gono single handedly destroyed the Financial sector leading to reduced Economic activity which in turn fast tracked the economic decline .
ENG Capital group had a market value of US$ 175 million, just before the RBZ descended on the Institution.

Below is a brief ENG Group Structure ;
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 LTD
- Amalgamated Health Services ? (Harare West Hospital )
- 15% of OK Zimbabwe Limited
- 15% of Zimplow Holdings Limited
- 20% Medtech Holdings Limited
- Hornet Re-Insurance PVT LTD
- Pearl Pension Fund Management
- 25 % Clan Holdings Limited
- 25 % Zimbabwe News Papers Group - Zimpapers Limited
- Allied Conveyor Belts PVT LTD
- Real Estate including (Anastasia Court, Belgravia House, Thaine Building)
- Various Listed ZSE Listed shares
- Treasury Bills
- GMB Bills
- Cargill Commercial Paper
- $ 4 billion - Alliance Capital Debenture (representing 123 million First Mutual Life shares)
- 23 Million First Mutual Life shares

ENG Group was liquidated and managed to repay its creditors.

Using the Anti-Graft mantra Governor Gono devised an unjust self enrichment scheme targeting business leaders arresting,harassing,intimidating,exiling and black mailing entrepreneurs . I would like to clarify the point about unjust enrichment using a real life example.

ENG assets included a parcel of 309 million Century Holdings ( Now CFX BANK) Shares sold to Network Investments and Kwangwari Enterprises which are investment vehicles in which Gono reportedly has interests. The 309 Century Holdings Limited Million shares in question were sold on or around May 13, 2004. Within the same week an announcement was then made that CFX Bank was taking over Century Holdings. The shares were sold to 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 Zimbabwe Stock Exchange asking for an investigation because we had agreed with the majority of creditors that the shares should not be sold but rather 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. Gono and his proxies became the new controlling shareholder of the new merged bank. Is this by design or accident?Gono then forced out the Mr Sean Maloney who had helped to put together the transaction. Part of the same shares snatched From ENG were later transferred to Premier Bank which is reportedly owned by Governor Gono .

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. A few individuals directly involved in the illegal sale of the ENG shares in Century later confessed that the beneficiary of the transaction was Governor Gono. This will be difficult to prove without a forensic audit of Independent Commission of Enquiry .And this will only be possible is Governor Gono is gracefully asked to recuse himself or go on paid leave whilst this is done. As a scholar of modern corporate Governance practices I believe the Governor will find this acceptable.

The purpose of my letter is not to seek vengeance or to be vindictive. It is to give you and others other facts which people may now be forgetting since the last 6 years have been very eventful for Zimbabwe.

ENG case was not in isolation . Many people lost jobs, businesses and careers whilst Governor Gono was hiding behind anti-graft campaign . Businesses destroyed or taken over Royal Bank, Intermarket, Barbican, Intermarket, Rapid, Sagit, Africa Resources, Century Bank, Trust Bank. And this all happened within a space of less than 6 months. Jobs were lost. Business people were scandalized, arrested or haunted out of the country.



The list is rather long but it includes such luminaries as Dr Makoni, Mutumwa Mawere, James Mushore, Emmanuel Fundira, Otto Chekeche, Godfrey Jowa, Norman Sachikonye, Victor Chando, Durajadi Simba, Jeffrey Muzwimbi, William Nyemba,Nicholas Vingirai, Francis Zimuto , James Makamba, David Butau,Minister Chris Kuruneri,Nyevero Hlupo, Chris Goromonzi,John Moxon. Mr Prime Minister all these men above a true patriots who chose to set up businesses in their own country instead of neighboring countries where they had similar opportunities and incentives. Is this normal to see a whole generation of entrepreneurs scandalized and lose all credibility and all at the same time all based on accusations raised and directed by one man?

The names of these individuals have been ruined way beyond what the Governor is suggesting about his name or standing in society. When will the Governor step up and offer apologies to those he has wrongly accused in the process destroying businesses and jobs. Whilst for the sake of progress we must let by gones be bygones this remains impossible if the Governor seeks to raise false and malicious charges against a Minister who is simply trying to do his job.

A few years ago Governor Gono rushed to President Mugabe to protect him from the then Minister of Finance Herbert Murerwa. As you may recall Minister Murerwa’s crime was that he simply suggested that Zimbabwe required more than removing zeros from the Zimbabwe Dollar if the Economy was to recover. Governor Gono won the power struggle then and Minister Murerwa was sacked. And Governor Gono continued to print money and removing zeroes every six months . The result of such policy is clear for all to see, Zimbabwe does not have a national currency ,which is limiting the country’s ability to implement a credible economic recovery plan .


Mr Prime Minister you may recall at the instigation of Governor Gono Barbican Bank ,Royal Bank and Trust Bank were expropriated under a cloud of confidence with no compensation paid to its owners. This may now be in a process of being reversed but the damage to the nation’s reputation and impact on entrepreneurial development is long term. Zimbabwe needs to send a strong signal to the International community that Property rights will be protected .A starting point would be to reform the RBZ as a confidence building measure and the retirement of Governor Gono will go a long way in building confidence .

A few weeks ago Governor Gono admitted and confessing to raiding private foreign currency accounts belonging to various individuals and organizations .In particular he admitted to taking without permission US$ 7 million belonging to the Global Aids Fund .Now when the Governor of such a respectable institution admits to dipping his fingers in the till the International Community will be predictably reluctant to donate, finance or assist such a Central Bank .The way to start rebuilding confidence of such an institution is to retire or re-deploy those responsible for the reputation destruction .

What are the implications on foreign investor sentiment when they see such hostility to local investors? These are respectable and pioneer first generation entrepreneurs who find themselves scandalized and somehow classified criminal even though there is no clear evidence against them. The reform of RBZ and departure of Governor Gono is not a personal matter but rather national matter that’s long overdue if Zimbabwe’s Economic recovery is going to be realized.

Governor Gono used the exact same tactic and its modified versions to justify looting NGO fore accounts , arrest business people and grab companies and assets whilst blaming the business people of corruption and externalization. Externalization is Gono’s favorite but exhausted suppression tool which he has used for self enrichment whilst victimizing rivals or those holding independent and divergent views.

Not too long ago Governor Gono accused former Guruve North Member of Parliament had to flee Zimbabwe after Governor Gono had mis-directed the Police to arrest the Honorable Member .Recently Butau was cleared by the courts . It is important to note Butau’s troubles began when he tried to investigate Governor Gono’s conduct of the Quasi Fiscal Activities which had replaced normal parliamentary approved Government spending.

It must be noted that David Butau was facing similar charges to what the Governor now alleges against Minister Biti.This pattern of behavior is disturbing to say the least. Why is it that when Governor Gono is facing an investigation or probe those trying to carry out the reform, probe immediately become suspects and the Police is invited by Governor Gono? Is Governor Gono hiding something? If he is not as I suggested earlier he should go on a paid leave whilst the RBZ is probed ,investigated or audited.

A different but related point Mr Prime Minister please may you mention the contents of this letter when you meet His Excellence President Mugabe . It is important that His Excellence be made aware directly of some of these happenings as a lot of the unjust self enrichment schemes are being done in his name. It is therefore imperative that His Excellence be briefed and advised on the risk of trying to protect Governor Gono to hold on to the post of Governor . Any action to protect Governor Gono at this juncture will only be interpreted to give credibility to the claims that Governor Gonos’ unjust self enrichment schemes were designed for the benefit of His Excellence a point which I believe The President may not be aware of.

Mr Prime Minister this matter is not personal nor is it a vendetta against Governor Gono. It is a matter of national survival and revival. Currently Zimbabwe can not even re-introduce the Zimbabwe dollar for the fear that the Governor will again indulge himself and ruin the currency by excessive printing .The Governor being the Patriot that he claims to be must surely see that its not wise or fair to hold the whole nation to ransom just because he wishes to cling on to the Governors’ office .As a confidence building measure you could even allow your GNU partners in ZANU PF to name an acceptable individual to replace the Governor.

Gilbert Muponda

Cc ; HE President Mugabe
Hon TL Biti
Governor Gono