Gono in Catch-22 over ZABG

Shakeman Mugari

RESERVE Bank of Zimbabwe (RBZ) governor Gideon Gono could have got himself entangled in the dispute between troubled Zimbabwe Allied Banking Group (ZABG) and collapsed banks after he allegedl

y secretly blocked an independent commission of inquiry meant to solve the financial sector crisis that hit the banking sector last year.


The commission had been proposed by bankers at the height of the crisis in the financial sector last year.


Gono is now battling to extricate himself from the ongoing battle between the state bank and two collapsed banks – Trust and Royal – which were taken over by ZABG. Gono was the chief architect of the takeover.


However, the Supreme Court ruled last month that the takeover was unlawful, “null and void and of no force or effect”, throwing the state bank into a quandary. The ruling meant that without Trust and Royal’s assets, ZABG would be insolvent and unable to operate.


The court said the central bank must adjudicate on the problems between the state bank and the collapsed banks. The RBZ has however been evasive on the issue, fearing that an impartial decision would lead to the collapse of ZABG.


Sources say Gono is now in a Catch-22 situation in which he might be forced to make a decision that is likely to see the closure of his brainchild, ZABG. They say he is too entangled in the issue to be an impartial adjudicator in the dispute.


The sources, however, said Gono had got himself entangled in the crisis because he secretly blocked an independent commission of inquiry into the financial sector. The governor had initially agreed to “look into the issue” but later changed his mind.


“We had suggested the inquiry and Gono had agreed but he later changed,” said a source that attended the meeting where the commission proposal was discussed.


The bankers had suggested that the commission should be set up by parliament. According to the initial proposal, the commission was supposed to include members of parliament, bankers, depositors and the RBZ itself. It was also supposed to include the auditors, accounting organisations and law firms.


“At one of the meetings that I attended Gono had actually agreed to look into it but he later went on with his abrupt bank closures,” the source said. Some of the bankers who were vocal on the matter were actually grilled, said the source.


Parliament later again suggested a commission but Gono allegedly said he did not think it was necessary. “A commission of inquiry would have done a better job but Gono had other ideas,” the source said.


Experts say that a commission would have done an impartial job without compromising the central bank. Its absence has put the central bank’s credibility under spotlight, making it difficult for the RBZ to be an impartial adjudicator in the dispute.