HomeLocal NewsAn overview and effects of Zim’s weak anti-money laundering framework (III)

An overview and effects of Zim’s weak anti-money laundering framework (III)

Muchadeyi Masunda:Lawyer

THE first and second articles of this series described the framework for assessing the extent to which a country is capable of monitoring and controlling illicit financial flows and outlined the major findings of Zimbabwe’s 2016 Mutual Evaluation Report (MER) and the results of a re-rating, which Zimbabwe sought in 2019. This article — the third and last of the series — is an interview with Simba Makoni (SM). Among other things, Makoni considers the effects of Zimbabwe’s weak anti-money laundering framework on the country’s international image; the role of Sadc in preventing money laundering and other financial crimes; and the impact of Zimbabwe’s toxic political environment on its ability to implement AML systems and controls. Makoni is a farmer and founding partner and managing director of a business development consultancy. He is one of Zimbabwe’s most celebrated public figures and has held various cabinet roles, including that of Finance and Economic Development. He served as executive secretary of the Southern African Development Co-ordination Conference (SADCC), a post he held for 10 years and which culminated in the transformation of the Conference to the Southern African Development Community (Sadc).

Muchadeyi Ashton Masunda (MAM): What is your general impression from the findings outlined in Part I and II of this series?

SM: What emerges from the series is that Zimbabwe’s anti-money laundering (AML) measures are really very poor. We fall practically flat on the implementation of AML policies across the board. The 2016 MER report — and even the re-rating analysis carried out in 2019 — places the country in very low terrain.

MAM: Why is the country failing to meet international money laundering standards?

SM: Our dilemma is not that we are only lagging behind international money laundering standards, but that we continuously fail to adhere to even our own standards. The question is therefore not why we are failing but do we have the desire, the will and the capacity to meet those standards. The desire is not there, clearly, because fulfilling those standards is not an immediate contributor to the maintenance and entrenchment of power, which appears to be the primary motivation of our leaders. Zimbabwe’s leadership over the years has been long on words and short on actions. Whether we are talking about infrastructure development, financial sector reform or human rights, we say a lot, but do very little. That is our dilemma.

MAM: What effect is Zimbabwe’s weak AML framework having on the country’s ability to attract investment?

SM: The country’s ability to attract both foreign and local investment would be greatly enhanced if we had a system that gave comfort against money laundering and other illicit resource flows. There is no question about that. And being placed on the European Union’s list of high risk third countries is a potential body blow to our ability to attract investment.

But let’s be clear: the principal factor that discourages foreign investors, however, is not only weak AML legislation and controls but the country’s political, social and economic instability. The politics of power and control make the country unattractive to foreign investors. Even local investors have concerns about aspects of the environment in which they are being asked to invest. Whilst it would have been a positive factor for the country to have a robust AML regime, we cannot generate strong inward investment in the absence of a conducive macro-economic one. The priority for the country must therefore be to render the environment conducive for inward investment by promoting respect for law and order, respect for human rights and sound economic policies.

MAM: How does Zimbabwe’s image as a high-risk country for money laundering and corruption affect the country’s integration into the international economic system?

SM: Integration into the international economic system comes in various ways. In many ways, Zimbabwe is already integrated as we are buying and selling to the world minerals, agricultural products and modest finished goods, among others. I do believe, however, that Zimbabwe’s image as a pariah state, riddled with corruption, has significantly diminished its standing in international bodies like the World Bank, IMF (International Monetary Fund) and UNCTAD (United Nations Conference on Trade and Development). In the early years of independence, Zimbabwe’s voice was respected in these bodies. I have no doubt we can reignite that status if we conducted our national affairs in accordance with international norms. In that sense, the fact that Zimbabwe is considered a pariah state has more to do with our actions at home than with the actions of foreigners. Creating the conditions of fundamental respect for the rule of law, people’s freedoms and their human rights will make it easier for us to relate to the region, with our continental peers and with the global community.

There is a great deal of work to be done here at home — far more than outside our borders.

MAM: Why should the citizenry prioritise this over other more immediate concerns?

SM: Before we address the question of the citizenry, let us examine whether officials in key government institutions have a bearing on this subject. Unfortunately, the 2016 MER (Mutual Evaluation Report) clearly shows that the level of knowledge on AML issues in Government is very low. I would dare challenge any of the Cabinet ministers — except perhaps the Minister of Finance, RBZ (Reserve Bank of Zimbabwe) Governor and Minister of State Security – as to whether they know anything about FATF (Financial Action Task Force), ESAAMLG (Eastern and Southern Africa Anti-Money Laundering Group) or the 2016 MER report and the significant failings it reveals. With this in mind, it would be unrealistic to expect citizens who are struggling to put food on the table to be knowledgeable, aware and sensitive to this subject. The sad thing is that corruption and money laundering adversely impact the daily lives of all Zimbabweans. We need to shine a light on this subject — it is only by doing so that we can hope to move forward economically.

MAM: Sanctions are often used to justify the parlous state of Zimbabwe’s economy. Are sanctions having an effect on Zimbabwe’s ability to implement AML requirements?

SM: The anti-sanctions mantra fits very well into the modus operandi of our leaders who never take responsibility for our situation. They always find a scapegoat or someone else to blame. Of course, our position as a state that is subject to sanctions has an impact on our economy. And by extension, this impacts on our AML regime. But the real point is that regardless of external pressures, our economy is not working from within. When we are able to properly manage our affairs at home, to drive policies that benefit our people and meet their needs, when we are able to pay our teachers and doctors instead of financing luxury lifestyles for our leaders, then we will have the capacity to implement proper AML requirements.

MAM: If Zimbabwe strengthens its AML framework, can the country’s economy recover while sanctions are still in place?

SM: Without a doubt. And we can make real improvements. Our country’s economy has the potential to recover — even now under sanctions — if we deal appropriately with two issues: 1) if we put in place and implement macro-economic and monetary policies that enable economic actors to function effectively, and 2) if we sanitise our toxic politics. This would then put in place the conditions to implement better AML requirements.

MAM: How has the country’s toxic politics led to a failure to comply with AML standards?

SM: Toxic politics is the foundation of the parlous state of our country. Until we remedy our political ills, we cannot hope to create a prosperous future for all Zimbabweans. This is also true for AML legislation and controls — until we remedy the toxic political atmosphere of our political life, we will not be able to implement effective mechanisms to prevent criminal abuse of the financial system. Toxic politics lead to toxicity in everything else: economics, finance, business and even football administration.

MAM: Three out of five African countries listed in the FATF “grey list” are Sadc member states (Botswana, Mauritius and Zimbabwe). Does this help explain why Sadc continues to support the narrative that sanctions are the main source of Zimbabwe’s ailing economy?

SM: Firstly, I would like to say I am surprised that Botswana and Mauritius are on the ‘grey list’ as they lead Sadc on many other political and economic parameters. That being said, I want to disabuse us of the notion that Sadc is standing behind Zimbabwe in the anti-sanctions campaign. If you do not believe me, please check what happened on October 25, 2020 in the different Sadc capitals. Were there any measures, protests or processions in support of the anti-sanctions campaign? There were no manifestations in Dar-es-Salaam, where the anti-sanctions communiqué was signed. They even had to play statements from last year, by Presidents Hage Geingob, Paul Kagame, Uhuru Kenyatta, John Magufuli and Cyril Ramaphosa. This clearly shows there is no regional movement nor support behind Zimbabwe’s anti-sanctions campaign.

MAM: What role is Sadc playing — or should it be playing — in preventing money laundering and other financial crimes?

SM: It is 26 years since I left Sadc. The personalities and circumstances have changed. I do, however, strongly believe that the region could be a positive influence on Zimbabwe and its ability to deal with money laundering. What is needed is regional convergence on macro-economic, fiscal and monetary policies. This would place Zimbabwe in a stronger position to create a robust AML system. In the Sadc programme of finance and investment, there are a number of programmes dealing with this subject and they set out certain standards that each country must aspire to achieve. Zimbabwe is way out of line with those standards. Illicit financial flows and AML controls are clearly matters for SADC to address — they cannot be ignored. To be fair, Sadc has these matters on the agenda, but I am not sure to what extent this has had any practical effect on the individual and collective capitals of the region. I would encourage that those who are managing the affairs of the region should make it a high priority. The interdiction of corruption and money laundering in the region is critical to its international standing and to growth and development of Zimbabwe in terms of attracting inward investment, both from the region and the wider world.

The questions to Makoni were posed by Masunda, who generated the first and second articles of this series. Masunda is a senior legal practitioner as well as an international commercial and sports arbitrator. He contributed to this series in his personal capacity.

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