Greed and Corruption - Farai Rwodzi and Interfin Bank path to ruin

Greed and Corruption - Farai Rwodzi and Interfin Bank path to ruin

As the Century/CFX-Interfin Commercial Bank (IBC) dispute continues it is necessary to keep track on how this has been developing. When Finance Bank of Zambia backed by Credit Suisse pulled out of their planned investment from CFX Bank after confirming the share ownership dispute it became clear CFX Bank brand needed to resolve the ownership dispute. However the then CFX management and Shareholders connived with Farai Rwodzi and Interfin Bank Zimbabwe to try and hide the tracks of the fraud committed against me when the bank was seized from me.

It is important to note that any successor Institution which will take over Century/CFX Bank assets and Infrastructure and ZSE seat will continue to have this Ownership wrangle stigma until the matter is amicably resolved.Farai Rwodzi and Interfin Bank by trying to lauder this fraud and covering up the illegal asset seizures have opened themselves to severe reputation risk which will affect their operations and ability to do business beyond Zimbabwe. Below is a note I prepared in 2009 in response to some propaganda from the THEN Government of Zimbabwe,CFX lawyers and Shareholders who were working in cahoots with Farai Rwodzi and Interfin Bank Zimbabwe preparing to sanitize their then anticipated takeover of my Bank CFX Bank –Zimbabwe-

“The Government of Zimbabwe’s attempted frivolous rebuttal to ENG Capital’s legitimate claim actually confirms ENG Capital’s ownership of the disputed 309 million shares and ownership of Century/CFX Bank. Their only purported defence is that you should have complained earlier or you are specified so you cant do anything about it. This is just hiding behind technicalities without any real or meaningful response to a legitimate claim.

It is common knowledge that I was detained, arrested ,tortured and specified. The legal counsel Mr, Ziweni, whom I hired to represent ENG Capital, suffered the same fate, was arrested, harassed, intimidated, specified and unfortunately died under mysterious circumstances.

As I languished in remand prison, the RBZ Governor, Gideon Gono, embarked on an orgy of ENG Capital asset stripping and with the assistance of the body politic gained political mileage with a sustained Muponda vilification crusade. As part of this asset stripping the 309 million shares were “bought” by Gono’s front Network Investments , Kwangari Enterprises and others.
Zimbabweans were made to believe that ENG was bankrupt and that its only assets were expensive cars. To the contrary ENG was a solid financial services company which owned a bank – Century and had other tangible assets that far exceeded the liabilities, concocted by Gideon Gono. The rebuttal by the Government’s lawyer confirms ENG Capital owned Century/CFX Bank.

Please note that the very person, Gideon Gono, who declared ENG bankrupt, is the same person who sought my specification and is the same person who then authorized the disposal of the 309 million shares. This same person was also the beneficiary of the irregular disposal of the 309 million Century /CFX shares in collusion with the Zimbabwe Stock Exchange who violated various regulations meant to protect investors in a public company.
The government further claims that, “The transaction was done in 2004”, and “in terms of the Prevention of Corruption Act, Muponda is not able to conduct any material transaction on his behalf in respect of any companies he has invested in.”
The above statement assumes that I seek relief and am pursuing my claim through the compromised and tainted Zimbabwean judicial system, which the same system is willing to be used by corrupt politicians to punish the innocent while sanitizing financial fraud by elected officials. This partisan court system was the same used strip me of my legal rights and used to brand me a criminal without due process or the prospect of Habeas corpus.

As you maybe aware I am seeking the return and or compensation for 309 million Century Holdings Shares which were fraudulently and corruptly sold to a group of politicians including RBZ Governor Gono, Ministers Goche and Gumbo. They were sold to their investment consortium which had several shelf companies including Kwangari Enterprises and Network Investments. The sale of the shares was done on or about 12 May 2004 through a pre-determined and fixed price transaction called a special bargain. As a result the current CFX Bank is a product of fraudulent merger of Century Bank (owned by my company ENG Capital) and a much smaller CFX Bank which somehow got naming rights on the resultant Bank. This “merger” was just to hide the corruption and fraud.

It is clear that the asset looting and expropriation in Zimbabwe is being done by senior Government Officials directly or indirectly through fronts. This is why some targeted sanctions have been applied on some of the politicians because they need to be stopped from their attempts to launder the proceeds from businesses they have looted and unjust enrichment schemes must be stopped. Those who are acting as their fronts, associates and conduits need to take note.

As I have said there is an illusion and fallacious assumption that I wont be able to take action in Zimbabwe but depositors and investors must be cautious , be realistic and don’t take chances. ‘
This remains accurate. Farai Rwodzi and Interfin Bank will be exposed for what they are – a mone,asset and transaction laundering masquerading as a Bank.

Rwodzi & Interfin arrogant ,corrupt and generally greedy

There is need to clarify the root of the current dispute between Mr Farai Rwodzi of Interfin Bank Holdings Zimbabwe and myself. Mr Farai Rwodzi has become one of Zimbabwe’s leading robber barons by his greedy business behavior which has seen him being involved in every sector of the Zimbabwean business using political muscle and connections whilst arm twisting competitors and laundering the transactions to appear clean, legal and legitimate.

On 5 November I personally wrote to Mr Farai Rwodzi,Mr Raymond Njanike and Interfin Directors and share holders to stop meddling in the Century/CFX Bank.I clearly advised them not to invest in or buy Century/CFX Bank until the Bank ownership dispute is resolved.But because Mr Farai Rwodzi and Interfin Bank Zimbabwe are corrupt bullies who are greedy and believ they are above the law because of political connections they went ahead and took over the Bank and have now renamed my bank Interfin Banking Corporation in an effort to hide their takes of buying stolen property and trying to launder the deal to appear clean and legitimate.
The letter I wrote was widely circulated.It appeared on various newspaper including but not limited to www.Zimbabwe Metro.com ,www.zimeye.com ,www.zimguardian.com ,www.zimtelegraph.com and other newspapers .

The letter was clear and self explanatory.For the easy of reference I have attached the full version of the letter below .

“Letter to Interfin Bank Shareholders
Posted on November 5, 2009 | Category: Press Articles
The Shareholders
Interfin Holdings Limited
15th Floor, NSSA Building
Cnr Sam Nujoma St/Julius Nyerere Way
HARARE
4 November 2009
Attention: Mr. R. Njanike

Dear Gentlemen and Lady,

RE : PROPOSED INTERFIN ACQUISITION OF MY BANK – CENTURY/CFX BANK LIMITED

I refer to various media reports which suggest Interfin Holdings Limited plans to acquire a 51% stake in My Bank Century/CFX Bank. Further reference is made to the letter from my lawyers Gutu and Chikowero Attorneys at Law dated 2 November 2009 and my letter of yesterday to your Board of Directors. The purpose of this letter is to warn Interfin Financial Holdings Limited not to interpose itself in the CFX ownership dispute as you may regret that transaction. Interfin should not meddle in this as the consequences will be dire.Finance Bank of Zambia and its Swiss Financiers pulled out of this transaction because of the unresolved ownership dispute.How can Interfin ignore this?

(1) Current CFX Bank lawyers a flaunting around their “legal opinion” as fact. Firstly CFX Bank lawyers are compromised as they can not provide an Independent legal opinion in a matter in which they have an interest since they are representing the respondent. They have a conflict of interest and should have recused themselves in providing the legal opinion. It appears as though they just provided this “legal opinion” to earn fees knowing fully well that their opinion in this matter was not even worth the piece of paper it was written on.

(2) Their purported legal opinion is rather misplaced and misdirected in as much as it seeks to analyze current ENG legal status .The current status is immaterial since we are trying to correct fraud and theft which resulted in ENG being incapacitated.
(3) Further CFX Bank Lawyers are assuming that since I remain specified in Zimbabwe therefore I have no capacity to vigorously pursue this matter. This is fallacious and ill advised .I hope the same lawyers are aware that Financial markets do not operate in a vacuum and in the bigger scheme of things Financial markets are not controlled from Harare. As indicated previously no stone will be left unturned till justice prevails on this matter. This means all legal options are on the table and legal action is being pursued in several jurisdictions.

(4) CFX Bank lawyers are further peddling a tired lie that the shares were being sold to pay off ENG creditors. This totally ignores where the matter started and how it developed into a crisis. The original and official allegation was that ENG Capital was a brief case Company which had no meaningful assets. ENG and Myself were further demonized and smeared, that the only visible assets acquired were cars. Shouldn’t CFX Lawyers be addressing this anomaly. How can a brief case Company own 309 million shares in a Bank. How come the public was not clearly told that ENG owned a Bank .Why was there over focus on cars which made up less than 1% of ENG’s Capital base? Assuming for one moment that ENG had real problems ,why wasn’t it well advertised that even though ENG was having problems it owned a Bank and bidders would be invited to take over that Bank and pay a fair price? Why was the disposal being done clandestinely and under cover of darkness?

(5) ENG was sufficiently liquid and solvent to meet its liabilities but despite all this its cheques were being bounced and dishonored. This act alone of bouncing and dishonoring cheques of a Financial Institution creates panic and an impression of a Bankrupt Institution. It must be noted that First Mutual Life and National Discount House, being ENG counter parties in fact sued Zimbank for irregularly dishonoring ENG cheques at a time when the ENG account was fully funded and had sufficient funds to meet its liabilities. This clearly confirms a well calculated campaign to close down ENG and grab its assets.

(6) I am sure you were told that ENG CAPITAL had many cars, and these cars were the only assets that ENG had. The correct and accurate facts are that ENG was a Group of Companies of which the Companies had Directors, Managers and employees and the cars were for the use of these members of staff who ran the various companies which made up ENG CAPITAL.

(7) 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
- River Drilling 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

This is relevant as it proves beyond any doubt that ENG was a solid Group of Companies. It was targeted out of greed by plotters including Senior Politicians who wanted to loot and grab assets.

(8) This mêlée was nothing more than a ploy to infringe upon my citizenship rights and strip me of my assets; a well orchestrated political game to deny perceived enemies of Senior Politician’s financial freedom.

(9) My battle against civil asset forfeiture is one for the preservation of freedom and property. This is an important area as Zimbabwe seeks to portray an image of a stable state with the rule of law and private property rights are protected and preserved.

(10) All facts indicate to a grand miscarriage of Justice.

(11) A miscarriage of justice occurred as ENG and its directors now bear the burden of proving their innocence. The preponderance of evidence, which means that the RBZ only must make a better case – however slight, than the property owner – ENG.
(12) The 309 Century Financial Holdings Limited Million shares in question were sold through Fidelity Stock brokers 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 a Senior Politician’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.

(13) As ENG Co-founder, Contributory and Shareholder, I wrote to the Zimbabwe Stock Exchange Chief Executive Mr Emmanuel Munyukwi 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 Century /CFX Financial Holdings million shares were somehow clandestinely sold and that transaction enabled CFX Bank to take over Century Holdings Limited.

(14) This allowed the reverse listing of CFX Bank on to the Zimbabwe Stock Exchange. Without those 309 million Century Holdings Limited million shares owned by ENG the CFX/Century merger would have never happened. Senior politicians and their proxies became the new controlling shareholder of the new merged bank. Is this by design or accident? Senior politicians then forced out Mr. Sean Maloney who had helped to put together the transaction. Mr. Sean Maloney had to leave the country under unclear circumstances . Part of the same shares snatched From ENG were later transferred to Premier Bank Financial Holdings which is reportedly owned by a Senior Politician. There has generally been shuffling of shares which is normally associated with covering tracks of an illegal and irregular transaction.

(15) 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 Zimbabwe Stock Exchange Committee 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. Within a few days of raising the challenge of the CFX/Century shares Justice Minister specified me without affording me a hearing or an enquiry as required by the Constitution of Zimbabwe . There was specification at the instigation of senior politicians who were eyeing assets held by ENG including Century/CFX Bank. The specification was meant to harass, cow, intimidate and silence me from raising further complaints and challenges regarding ENG assets specifically these 309 million shares in Century/CFX Financial Holdings.

(16) Since the ENG shares in Century /CFX Bank Financial Holdings were irregularly transferred the Bank ownership remains in dispute. The ENG shareholders and contributories filed and sought a high court order to stop the transfer of the shares until the dispute had been resolved . The shares were still clandestinely transferred despite the pending high court application to resolve the dispute . After filing for this order My Lawyer the late Oscar Ziweni was also specified by the Minister of Justice and threatened ,harassed and intimidated until he went into hiding. However the point remains ENG Founders, Shareholders and Contributories still lay claim to these shares and stake in Century/ CFX BANK which were looted by Senior Government officials.

In conclusion Interfin Holdings Limited should consider itself warned. Interfin should stay clear of CFX Bank until this matter is resolved. There are entities and individuals in Zimbabwe who erroneously believe they are above the law. They have the mistaken belief they can grab, loot, steal assets and get away with it. In the process they try to launder their loot through various disposals and restructurings such as the ones that were done at Century/CFX Bank. This is being fully documented. CFX Bank has had more than 5 Managing Directors in a space of 2 years .This shows the instability brought about by being a disputed asset whilst the looters try to pull “ strings” from behind the scenes.

For the sake of transparency I am copying this letter to the following ;
Minister of Finance Zimbabwe

Reserve Bank of Zimbabwe Governor – Dr Gono
Zimbabwe Stock Exchange CEO – Mr Emmanuel Munyukwi
CFX BANK Board of Directors

Zimbabwe Parliament -Budget, Finance and Investment Promotion Members Below
Hon Zhanda , Hon. Beremauro, Hon. Bhebhe A, Hon. Chinyadza, Hon. Cross, Hon. Khumalo ,M Hon. Madzimure, Hon. Mashakada, Hon. Matshalaga, Hon. Mudiwa, Hon. Muguti, Hon. Mukanduri, Hon. Ndava, Hon. Nyaude. Committee Clerk- Mr Ratsakatika
My full contact details are below should you need any clarification.
Yours Faithfully,

Gilbert Muponda
Toronto ,Canada
1-416-841-5542
1-647-994-5542

Email – gilbert@gilbertmuponda.com
http://www.facebook.com/muponda
Skype ID – gilbert.muponda

Exiled businessman warns Farai Rwodzi & Interfin Bank Zimbabwe over its takeover of disputed bank

http://www.swradioafrica.com/News290710/exiled290710.htm



By Lance Guma
29 July 2010

An exiled Zimbabwean businessman, who says his bank was illegally seized by the government in 2004, has condemned the recent takeover of that same institution by Interfin Financial Services Limited.

Gilbert Muponda says he owns Century Bank through his ENG Capital investment company, but was forced to flee the country at the height of a controversial crackdown on the financial sector in 2004.

Prominent businessmen like James Makamba, Mutumwa Mawere, Nicholas Vingirai and James Mushore, among others, were persecuted on various allegations, including black market trading.

Six years down the line Century Bank now known as CFX Bank has been taken over by Interfin Bank. A furious Muponda told Newsreel; ‘Interfin is now liable to my claim due to their attempt to cover up the ownership dispute by rebranding and changing CFX Bank operations. This is clear money and transaction laundering being executed by Farai Rwodzi and Interfin Bank.” Rwodzi is the CEO.

In November 2009 Muponda successfully used an internet campaign to block a major financial institution from buying the disputed bank. One of the world’s biggest banks, Credit Suisse, through the Finance Bank of Zambia, had sought to buy the struggling CFX Bank.

But using an aggressive internet campaign dubbed ‘Return Muponda’s Bank’ he made enough noise to scare Credit Suisse away from the deal. Internet banners picked up by Google, plus letters and articles circulated online, were enough to finally discourage the deal from going through.

When Muponda and his colleagues left the country there was a belief that they had engaged in underhand financial deals, including running away with investor’s money. But on Thursday he told us the government at the time was desperate to find scapegoats in the business community, to blame for the country’s economy collapse. “I was turned into a corruption poster boy and spent 4 months in prison without trial,’ he said.

So what was the case all about? Muponda said; “We did not have a political godfather. Despite claims we stole people’s money and did not have assets to pay them back, we got bail in court after proving the company had Z$200 billion in assets against total liabilities of Z$61 billion. After being granted bail I was told I could start the company again but only if we got a political godfather within ZANU PF.”

Muponda, through his lawyers, has now written to the new owners of the bank telling them the transaction will expose them to ‘reputational risk’. He said that warning is still in force as he seeks compensation for his shares ‘fraudulently’ seized. He said CFX Bank was struggling to mobilize sufficient business to return to profitability because ‘all market participants in Zimbabwe are fully aware of my claim and the high reputational risk that comes with ignoring the claim.’

http://www.swradioafrica.com/News290710/exiled290710.htm

Rwodzi and Interfin Bank refining the money laundering art

Interfin Bank Zimbabwe and Founder Mr Farai Rwodzi are attempting to sanitize and launder their take over of a disputed asset/Bank. The company controversially acquired a controlling stake in the disputed Century/CFX Bank last year after shareholders of the financially-distressed banking institution either ignored or failed to take up their rights in a $10 million equity offering underwritten by the acquirer. CFX Bank became distressed after negative publicity emanating from my claim and legal action I was pursuing after 309 million Century Bank Shares I owned through my Company ENG Capital were fraudulently transferred and converted at the time of the merger between CFX Bank and Century in 2004

In money laundering, the proceeds of crime are run through the financial system to disguise their illegal origins and make them appear to be legitimate funds. In this case Interfin took over a disputed asset as in buying stolen property and are trying to clean up the transaction and remove any trace from the initial fraud that was committed against me.

The 309 million Century Bank Shares I owned through my Company ENG Capital were fraudulently transferred and converted at the time of the merger between CFX Bank and Century in 2004 and Interfin Bank proceeded to take over CFX ignoring the disputed ownership of FCFX Bank and the attendant reputational risk. I even wrote to Credit Suisse to dissuade them from taking up shareholding in CFX FS. Credit Suisse has 40% shareholding in FBZ.

The ownership dispute was triggered by the special bargain sale of 309,000,000 shares on 12 May 2004 but the total shares claimed by me and my Company is 900,000,000 the balance was transferred in peace meal fashion to avoid detection of the fraud and transaction laundering that was being perpetrated. CFX was nothing more than a forex trading shop which was used to swallow Century Bank as a cover up of the illegal seizure of the Bank. I lost Century Bank shares owned through ENG Capital after they were “fraudulently” converted into CFX Bank which took over Century Bank assets and Branch network.

Money laundering is not a single act but is in fact a process that is accomplished in three basic steps. These steps can be taken at the same time in the course of a single transaction, but they can also appear in well separable forms one by one as well.

Although money laundering often involves a complex series of transactions, it generally includes three basic steps.

The first step is the physical disposal of ill gotten cash/asset. This Interfin have done by handing over CFX bank licence to the RBZ whilst holding on to the assets ,infrastructure and network from the disputed CFX Bank This placement might be accomplished by depositing the cash in domestic banks or, increasingly, in other types of formal or informal financial institutions.

The second step in money laundering is known as layering, carrying out complex layers of financial transactions to separate the illicit proceeds from their source and disguise the audit trail. This phase can involve such transactions as the wire transfer of deposited cash, the conversion of deposited cash into monetary instruments (bonds, stocks, traveler's checks), the resale of high-value goods and monetary instruments, and investment in real estate and legitimate businesses, particularly in the leisure and tourism industries. This has already been done through a celebrated stock markert listing.This may later haunt the ZSE as it may develop a reputation on money laundering listings such as this one by Mr Farai Rwodzi and Interfin Bank Zimbabwe

Interfin Holdings reverse listed on the Zimbabwe Stock Exchange (ZSE) using the infrastructure and legal structure taken over from my bank.

Interfin Holdings is currently the holding company of Interfin Merchant Bank, Interfin Securities, a stocks trader on the ZSE, Interfin Asset Management Limited and Altfin Holdings Limited. This structure easily enables money laundering with Interfin appearing to be a legitimate business.The key to this is that this is not the first or last questionable transaction which Interfin have done.

Altfin Holdings is a holding company for a portfolio of insurance units that include the flagship operation, Altfin Insurance, a short term insurance company in Zimbabwe that has a presence in sub Saharan Africa, and Altfin Life, a life assurance business recently added to the group. Given the current attempt to launder the CFX transaction one wonders what else has been laundered through Interfin. What else has been hidden and passed out as clean and honestly earned money.

The last step is to make the wealth derived from the illicit proceeds appear legitimate. This is what Interfin and Mr Farai Rwodzi are trying to do by reverse listing their Interfin Banking Corporation (IBC ) whilst killing the original CFX Bank brand.This integration might involve any number of techniques, such as using front companies to "lend" the proceeds back to the owner or using funds on deposit in foreign financial institutions as security for domestic loans. Another common technique is over-invoicing or producing false invoices for goods sold--or supposedly sold--across borders. This appears to be another technique that Interfin is mastering with their reported Namibia and “International” expansion.

All the qualities,hallmarks and acts of a money laundering scheme are present in the Interfin model and the reverse listing by taking over CFX Bank and discarding its license and brand whilst taking over its assets, infrastructure and ZSE listing spot on the bourse. The following clearly happened at the direction of Mr Farai Rwodzi and other shareholders need to be aware of the on going reputational risk that will come with transactions of this nature.

• the need to conceal the origin and true ownership of the proceeds;
• the need to maintain control of the proceeds;
• the need to change the form of the proceeds in order to shrink the huge volumes of cash generated by the initial criminal activity of corruption and influence peddling.

Whilst Mr Farai Rwodzi and Interfin may get away with the listing on the ZSE for now in the long run they will have huge reputational risk emanating from the CFX Bank ownership dispute which they are trying to sweep under the carpet and rename and rebrand the problem.

This article appears courtesy of GMRI CAPITAL – www.gmricapital.com . It is original content generated for 3MG MEDIA.

Gilbert Muponda is an Investment Banker and Founder of GMRI CAPITAL . He can be reached at; www.ZimFace.com and www.facebook.com/muponda

Email: gilbert@gilbertmuponda.com . Skype ID: gilbert.Muponda

Twitter ; http://twitter.com/gmricapital

Phone: 1-416-841-5542

Zimbabwe Diamonds must be certified before being sold

Zimbabwe Diamonds must be certified before being sold

Zimbabwe’s discovery of diamonds has become the proverbial case of the gift and the curse. The discovery came when Zimbabwe was in desperate need of a solid revenue flow after years of being shut out of the International Capital markets due to political instability and poor Governance. Recent Kimberly Process (KP) failed to agree on allowing trade of Zimbabwe’s diamonds. Obviously this has disappointed many Zimbabweans who have come out strongly criticizing the KP as “an extension of Western Imperialism”. This is most unfortunate and is misleading as it ignores material facts and KP guidelines on how it should certify diamonds. Zimbabwe’s diamonds must be properly certified and accounted for before being sold to ensure that the country as a whole gets to benefit not just a few individuals who have clandistinely privatized national institutions and behave as if they own public resources and Institutions.

“Under the terms of the KPCS, participating states must meet ‘minimum requirements’ and must put in place national legislation and institutions; export, import and internal controls; and also commit to transparency and the exchange of statistical data. Participants can only legally trade with other participants who have also met the minimum requirements of the scheme, and international shipments of rough diamonds must be accompanied by a KP certificate guaranteeing that they are conflict-free.”

The current threats to sell diamonds outside the KP process is the most ill advised idea since Independence in 1980.Diamonds have a very limited market which is confined to Western nations. China and India are emerging diamond markets but they are not yet the dominant markets for diamonds. This means should Zimbabwe decide to sell outside the KP process it will be selling to a far smaller and limited market since the bigger Western Market will boycott these gems. This will result in a bigger loss for the country since the diamonds will be sold only to a fraction of the available market.

Secondly the idea of puling out of the KP is pushing Zimbabwe towards trading in the black market of diamonds and other precious minerals. A country which is seeking to rebrand and rebuild can not be directly trading in the black market and hope to attract investment in the process.

Thirdly whilst Zimbabwe seems to be in a hurry to sell diamonds it is clear there is lack of proper Institutional capacity to monitor the quantity of diamonds being mined and how the proceeds are being handled. It is still yet unclear as to which Government body gets what and how this money will be injected into the Economy. There appears to be a rush to go somewhere but the destination is unknown. Instead of rushing to trade Zimbabwe should focus on putting in place proper systems to fully account for all the diamonds and comply with other KP requirements to ensure maximum benefits to the whole nation.

Whilst Zimbabweans are clummering to be allowed to sell the diamonds it appears no serious thought has been given to any value addition to the rough diamonds. Its clear countries like Israel and Holland are important players in the diamond industry but is unclear whether they have any meaningful diamond mines of their own? The lesson in this is clear. Wise and Creative nations have managed to monopolize the trade through value addition and created thousands of jobs and billions of dollars in revenue when they do not own any serious diamond mine. So Zimbabwe instead of forcing to sell and trade rough diamonds should instead focus on building a proper diamond industry to include polishing, cutting and jewelery making. This is where the money is and not just selling rough diamonds.

Should Zimbabwe insist on selling diamonds they should be certified to ensure the country gets the best price from the highest bidder. Avoiding the KP will only serve the interest of those who are keen on privatizing a national resource to avoid accountability and transparency. This action will only serve to confine Zimbabwe to poverty. Africa has just about too many resource rich nations such as Angola, Nigeria, Sudan which however remain very poor due to the persistent lack of transparency of resource exploitation by those in power. Zimbabweans must resist joining this club of resource rich nations which remain highly indebted and poor through schemes such as this proposed KP withdrawal being done in the name of “earning money for the country”.

This article appears as courtesy of GMRI Capital ( http://www.gmricapital.com ) prepared for 3MG MEDIA

Gilbert Muponda is a Founder and CEO of GMRI Capital ( http://www.gmricapital.com ). He can be reached at;

Email: gilbert@gilbertmuponda.com . Skype ID: gilbert.Muponda

Twitter ; http://twitter.com/gmricapital

Facebook ; http://www.facebook.com/muponda

Use of Presidential Powers to Protect RBZ a dangerous precedent

The recent announcement to use Presidential powers to block creditors from suing the Reserve Bank of Zimbabwe (RBZ)sets a dangerous precedent which will poison the business environment in Zimbabwe. The RBZ is a separate legal entity which has rights and obligations. It can sue and can be sued, the law is clear in that regard. Whilst there maybe need to preserve the RBZ it should be done through the normal procedure such as the appointment of a Curator or Judicial manager who will assess the Institution’s true and accurate financial position before developing a repayment plan on how creditors can be repaid. The RBZ has both assets and liabilities but these remain a mystery and un-quantified the use of Presidential powers only deepens the mystery over these debts and how they were incurred.

A judicial manger should be appointed to compile a comprehensive list of all creditors and debtors. The RBZ may be in a position to fully repay all its creditors if all the debtors who owe the Institution are held accountable. At this stage its premature task the Treasury to inject fresh capital before the RBZ books are properly audited with debts and assets properly accounted for.

The RBZ needs a fresh start to regain its credibility and to become an effective Authority over the financial sector. The best way to do this is to make the RBZ accountable and transparent this is how public and investor confidence can be regained not the reliance of some ad-hoc as per need rule bending and shifting as demonstrated by the ill advised use of the Presidential powers. The reliance on Presidential powers to protect state related entities in the long run damage their credit rating and ability to do business with Private entities. This is undesirable given Zimbabwe’s desperate need to attract foreign and private capital.

The Government gazette released on Friday 25 June 2010, states that any legal proceedings against the RBZ will be suspended for the next six months. The regulation means that all RBZ creditors who have been seeking recourse in the courts to force the RBZ to pay its debts will not be entertained in the courts in the next six months. This will likely cripple suppliers who are owed millions after supplying farming equipment, vehicles and other farming inputs.

According to media reports “The regulations were cited as the "Presidential Powers (Temporary Measures) (Amendment of the Reserve Bank of Zimbabwe Act) Regulations , 2010" titled 63B Legal Proceedings against Bank. The Presidential powers in Zimbabwe were notoriously used to detain entrepreneurs, take over banks and take over businesses. Their repeated use to solve commercial and business matters raises questions about Zimbabwe’s business operating environment. The frequent use of these regulations scare potential investors and raise the country’s political risk profile. The net effect is increased risk premium on capital cost which makes it difficult for Zimbabwe domiciled businesses to access global financial markets.

"The State Liabilities Act [Chapter 22:13] applies with necessary changes to legal proceedings against the Bank, including the substitution of references therein to a minister by references to the governor," read the gazette released on Friday 25 June 2010.

"These regulations apply to proceedings against the Reserve Bank of Zimbabwe that are pending on the date of commencement of these regulations.". Whilst this move may temporarily stop creditors it will not solve the underlying problems bedeviling the Zimbabwe Central Bank. The RBZ remains undercapitalized to carry out its functions. It can not pay its staff salaries. Its not in position to pay retrenchment packages in an effort to reduce its reported 4,000 plus workforce.

The Government of National Unity must be seen to be moving away from the past practice whereby the Government was constantly meddling in business, commerce and financial sector undermining confidence and scaring potential partners and investors .Zimbabwe should move in line with International practice and allow the Central Bank to develop some level of independence based on transparency and solid financial foundation. This can be done through full accountability of the RBZ’s current financial position and a real attempt made to ensure that those who owe the RBZ come up with repayment plans for the vehicles , inputs and equipment they accessed under various schemes.


This article appears as courtesy of GMRI Capital ( http://www.gmricapital.com ) prepared for 3MG MEDIA

Gilbert Muponda is a Founder and CEO of GMRI Capital ( http://www.gmricapital.com ). He can be reached at;

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