Reserve Bank gave Zanu PF $800m

Vincent Kahiya

RESERVE Bank of Zimbabwe governor Gideon Gono is probing the disbursement of $800 million to a Zanu PF shelf company by the RBZ last year.



Helvetica, sans-serif”>In an interview this week, Gono said he was not aware of the transaction until the Zimbabwe Independent brought it to his attention. The transaction did not take place during his tenure as governor. He however said the central bank was not washing its hands of the matter as he takes responsibility for “all transactions” done by his predecessors.


The Independent has it on good authority that Gono on Tuesday summoned prominent lawyer Edwin Manikai as part of the probe into the disbursement of the loan. Manikai’s legal firm, Dube, Manikai & Hwacha, has been fingered in the report as being instrumental in the formation of the briefcase company, Smoothnest, which allegedly received the $800 million from the RBZ.


The RBZ has been disbursing loans under the productive sector facility (PSF) to distressed companies to boost productivity. A Zanu PF politburo report on the party’s enterprises cites Smoothnest as the recipient of a loan from the Reserve Bank. There is no RBZ facility catering for such a disbursement.


It is not clear whether the party, through Smoothnest, has repaid the RBZ loan.


The report, compiled by a team probing the party’s decaying business empire, says Smoothnest, described in the document as a “shelf company”, applied for and got the money when Zanu PF was preparing to raise funds for its conference held in Masvingo in December last year.


The four-member team which prepared the report interviewed the party’s secretary for administration Emmerson Mnangagwa who made the startling revelation about the loan from the central bank.


“Zanu PF wanted to raise $2,1 billion for the Masvingo conference and requested the money from the party company (M&S Syndicate Pvt Ltd),” the report says.


“There were 38% shares in Southern Africa Reinsurance Company and the party decided to offer the shares for sale. (The shares were however not sold.) A shelf company (Smoothnest) was then formed by Dube, Manikayi (sic) & Hwacha. Smoothnest applied to the Reserve Bank and they were given $800 million,” the report said.


Gono this week said under normal circumstances the RBZ “does not advance loans to individuals but transactions were made through financial institutions”.


“The central bank also advances loans to (the) government of Zimbabwe. Based on this observation, a transaction such as this one would be an anomaly,” he said.


The curious loan from the central bank is one of numerous murky deals highlighted in the report, which has caused serious ructions in the ruling party.


Party sources this week said there were also concerns that the money raised from the RBZ might not have been used to finance the staging of the conference. The report, in a rather intricate way, explains how the party also raised money from other sources over and above the $800 million.


“$1 billion was also paid to Smoothnest by First Bank as a loan and the money was deposited into the NDH Special Investment Account where it raised $811 million which was withdrawn by Mr D Pandya (a director of several Zanu PF-linked companies),” it said.


“Cde (David) Karimanzira (secretary for finance) managed to raise $1,2 billion from donations, so the $811 million which was withdrawn was re-invested (in) NDH and raised $38 million.”


This arrangement is also curious as Smoothnest also warehouses Zanu PF shares in both First Bank and NDH. This means a bank in which Zanu PF has major influence extended a loan to a Zanu PF company, Smoothnest. The money was deposited into NDH where Zanu PF also holds sway and yielded $811 million. The interest was reinvested to produce an additional $38 million interest. Thus the party raised $849 million in interest from a loan provided by First Bank in which Zanu PF held a 27% stake.


Meanwhile, the RBZ is expected to name and shame companies which accessed PSF funds and converted part of the loans into dividends to shareholders. Gono this week confirmed a number of companies cutting across all sectors of the economy had diverted RBZ loans to pay dividends.

“An example of this development is the payment of dividends where PSF loans have been called back in full and are due for payment by 30 November 2004,” said Gono.


“Both the Reserve Bank and issuing commercial banks have the joint responsibility of ensuring that borrowed funds are used for their intended purposes.”

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