BANK chiefs are seeking an urgent meeting with Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono to thrash out issues raised in his new Monetary Policy Statement released last month.
The move comes as the RBZ’s supervision and surveillance division, working in collaboration with the Central Intelligence Organisation (CIO), has stepped up its investigations into the money-spinning financial sector.
The “detectives” have been tasked to find out exactly who owns what at the banks, including personal assets and how they came to accumulate the properties. The system was done in Kenya resulting in cases of fraud being unearthed in that country.
Several banks, especially those whose headquarters are located on Harare’s Samora Machel Avenue, have had their premises visited and essential details noted by the investigators.
Insiders said luxury vehicles found in the basements of some reputable banks would be accounted for and duty paid for when the exercise is over.
The Minister of State for Science and Technology Olivia Muchena speaking at a breakfast meeting to discuss Gono’s policy statement probably let the cat out of the bag when she said the financial system was “totally scandalous and should not be allowed to continue operating like this”.
Muchena criticised Kingdom Financial Holdings Ltd (Kingdom) for its decision to hike minimum personal savings accounts for customers from $25 000 to $250 000 with immediate effect.
She said this was extreme arrogance and would not be allowed to happen in Zimbabwe.
“We watch the world going by in leaps and bounds while we are busy laundering money and not being engaged in technological improvement,” she told business executives gathered in Harare last month.
Insiders told businessdigest that while the bankers were “generally satisfied” with the governor’s new monetary statement they felt some issues needed political rather than economic treatment.
The bankers are also worried that the poor political relations between Zimbabwe and the international community are severely affecting their ability to access credit lines thus worsening the country’s economic malaise.
“However, the tone of Gono’s statement seems to be saying we (bankers) are all just corrupt and are taking advantage of our customers,” one banker said. “This is unfair and we would like to air our concerns and help the governor do his very difficult work.”
Panic buttons were struck soon after Gono presented his monetary statement in which he threatened to come down hard on wayward banks that he accused of becoming more of commodity brokers than financial institutions.
“Where persistent and serious managerial deficiencies are detected, the bank concerned will be directed to restructure their top management and treasury operations, and if the situation persists, the Reserve Bank will insist on the restructuring of their board as a condition for accessing the liquidity support facility,” Gono said.
The RBZ’s supervisory and surveillance division, which has beefed up its investigations unit, is currently investigating market information that some banks were buying luxury vehicles, properties, fridges, and even bricks to resell later at exorbitant prices using their asset management companies.
Gono, in his statement, said the mushrooming of “numerous unregulated” financial entities such as asset management companies posed a great risk to sound corporate governance practices within the financial sector and the Zimbabwe Stock Exchange.
Trust Banking Corporation Ltd (Trust) this week said the prevailing liquidity crisis in the market and the recent attempted $7,7 billion fraud at its bank had led to speculation about its liquidity position and that it had been placed under curatorship.
The bank said this was “unfounded market speculation” which was “incorrect and malicious”.
It said its books were in order and it had informed stakeholders that forged documents had been used to try and swindle the bank of funds, which were transferred into bank accounts held with other financial institutions.
So far $5,5 billion has been recovered from the scam.
An RBZ source said the supervision of the banking system encompassed on and offsite operations of banking institutions, including building societies, discount and finance houses.
He said the RBZ had also intensified its monitoring and compliance efforts to ensure adherence to exchange control regulations and restore confidence in the financial sector.
Zimbabwe’s financial sector has been reaping billion-dollar profits despite the economic slowdown in all other sectors.
A survey by Transparency International Zimbabwe released in November concluded that 62% of Zimbabweans perceived that there is rampant corruption within the banking sector with “most bank employees involved in illegal transactions involving foreign currency”.
In its 2003 Article IV Consultation with Zimbabwe on June 6, the International Monetary Fund (IMF) underscored the importance of an early and decisive tightening of monetary policy to contain inflation and establish policy credibility.
IMF directors noted that strengthening banking supervision and determination in dealing with problem institutions would be prerequisites for the successful introduction of the planned deposit protection scheme.
In September, speaking at the funeral wake of the late Vice President Simon Muzenda, President Robert Mugabe gave the business community in general and bankers in particular, a tongue-lashing, accusing them of concentrating on profiteering while the economy was going through a bad patch.
Mugabe said his government would deal severely and specifically with “corrupt bankers”.
In December, less than two weeks before Gono’s Monetary Policy Statement, the Minister of Finance and Economic Development Herbert Murerwa in his year 2004 National Budget Statement repeated the threat, saying banks would now be held responsible for any “wrongdoing or abuse of the country’s financial system”.
Insiders, however, contend that the only way Gono will be able to deal effectively with the financial institutions is when the RBZ Act is changed.
“Otherwise his hands are tied,” economic commentator Eric Bloch has said. “All this pepped up talk by Gono won’t do anything to solve the economic problems as long as the RBZ Act remains the same.”