ZIMBABWE’S fiscal and monetary authorities, as well as CBZ Bank executives have been making frantic efforts in the past week to contain a crisis triggered by revelations that the bank had been hit by a US$385 million penalty for facilitating United States sanctions-busting measures.
By Bernard Mpofu
Banking sector sources said several meetings have been held by officials from the Finance ministry, Reserve Bank of Zimbabwe (RBZ) and CBZ in order to deal with the problem.
A number of proposals are being considered to address the situation which includes government intervention; how the RBZ could assist and continued negotiations for the reduction of the penalty.
“There has been a frantic scramble to contain the crisis since last week. Top CBZ officials have been panicking over the issue and are involved in a series of engagements with the Ministry of Finance and the RBZ. CBZ is treating this crisis not only as a problem facing the bank, but as a national issue which needs the central government’s involvement,” a source familiar with the developments said.
“The bank’s depositors are also panicking and anxious. There are fears of a run on deposits engulfing the bank.”
As first reported by the Zimbabwe Independent last week, Zimbabwe’s biggest bank by asset base, CBZ has been slapped with a hefty fine of US$3,8 billion by the United States Treasury’s Office of Foreign Assets Control for thousands of financial transactions done on behalf of ZB Bank then under economic sanctions imposed by the US.
However, after mitigation and negotiations in recent months, the penalty was reduced to US$385 million.
In a pre-penalty notice to CBZ through its American lawyers Ferrari Law Partners, Ofac said CBZ — which has been issuing cautionary statements of late over this issue — had perpetrated 15 127 violations of US sanctions on Zimbabwe.
Ofac arrived at the figure after CBZ failed to make voluntary self-disclosure of the violations. Already, the sensational case has claimed the scalp of CBZ group chief executive Never Nyemudzo who was forced out last week.
Although he said he voluntarily decided to take a rest, the Ofac case was the root cause of the problem, not insider loans, shareholder displeasure or alleged fraudulent activities.
While there were many attendant opportunistic issues, the Ofac issue was the main cause of his departure. Nyemudzo’s case is different from that of former CBZ chairman Elliot Mugamu who was forced out following pressure from one of the group’s majority shareholders, the National Social Security Authority.