THE Reserve Bank of Zimbabwe (RBZ) has launched an investigation into the conduct of at least 15 foreign-owned companies, which have allegedly externalised millions of United States dollars, according to top central bank sources.
Although both RBZ and corporate sources declined to disclose the names of the companies under investigation, the Zimbabwe Independent understands that most of them are in the mining, manufacturing, construction and retail sectors, including Chinese and South African firms.
The exact amount of money externalised is yet to be fully quantified but sources said it runs into millions of US dollars.
The investigation, which is being undertaken by the RBZ’s Financial Intelligence Unit (FIU), is likely to be protracted, as has long been the case when dealing with foreign exchange plunderers.
RBZ governor John Mangudya refused to give details, saying: “I can confirm that one of the roles of the FIU is to do precisely what they are doing.”
Economist Ashok Chakravarti in 2018 said the government has seen close to US$5 billion being siphoned out of the country since the dollarisation of the country’s economy in 2009.
These revelations come as government announced yesterday in its 2021 budget plans that the Zimbabwe revenue Authority (Zimra) will, with immediate effect, undertake a comprehensive audit of all VAT registered operators, with a view to account for all sales in foreign currency.
Finance minister Mthuli Ncube said in his budget statement that: “In addition, non-compliant operators will be excluded from participating in the weekly foreign currency auctions”.
Sources said the FIU started the probe last month after noticing that the companies in question were making incessant demands for foreign currency, which are not commensurate with their local investments for which they would have requested it.
“There is an ongoing investigation focusing on forex externalisation. It is about two months now since the anomaly was discovered. It appears that unscrupulous companies have been illegally moving millions of dollars out of the country under the guise of importing raw materials but this is not reflected in the local investments and this comes at the expense of the Zimbabwean economy,” an official said.
“Let me give an example. Let’s say a company has a subsidiary in Zambia or Seychelles, what they do is request for foreign currency under the pretext that they want to import critical raw materials, but then once that money comes through, it is moved to a subsidiary in that country. At the end of the day we don’t see any investments or imports to match the forex allocated,” the source said.
“What we have also observed is that we have seen increases in cases where companies merge with foreign firms and this becomes an opportunity for them to move money. We have three cases under investigation, whereby companies externalised about US$80 million, which was later brought back into the country as investment capital,” the source said.
Banks which facilitate the payments are also being probed, according to the sources.
“The fraud involves a number of local banks which facilitated the transaction and failed to inform the central bank about the movement of the cash outside the country and once investigations are completed, reports will be made to police for further action,” the source added.
In terms of RBZ arrangements, companies wanting to import finished products or raw materials approach their banks and request payment of certain specific amounts to their foreign trading partner through the bank’s nostro accounts.
Nostro accounts are accounts that banks hold in foreign currency with another bank outside the country.
The bank would then request approval from the RBZ, which then does its allocations depending on the available foreign currency reserve.
However, recently, many companies have faced serious challenges accessing foreign currency, resulting in competition for the scarce forex, which sources say encourages unscrupulous practices.
“So the RBZ is continuing its search for everyone involved in this malpractice. At the moment, about 15 companies are now being investigated for financial crimes. Already the FIU has filed reports for three companies involved in forex externalisation and these will be analysed closely for possible action,” the source said.
“The RBZ and its partner agencies are making headway in cracking down on illicit financial activities. Evidence of this improvement is the number of illegal forex externalisation cases already being finalised. Most of the culprits are in mining, manufacturing and agriculture,” the source further said.
The Independent also spoke to an executive at one of the companies being investigated, who confirmed the probe.
“It is true that we have been placed under an investigation for possible externalisation of funds. Officials from the FIU paid us a visit last month and collected the information they required and documents but we are yet to hear from them. We are still waiting for them to come back to us,” the executive, who spoke on condition of anonymity, said.
In March 2018, President Emmerson Mnangagwa named and shamed corporates and individuals that failed to return over US$1 billion they externalised following the lapsing of a three-month amnesty, although some of the companies later argued they were wrongly implicated.
Meanwhile Ncube said: “VAT Registered Operators’ systems should be interfaced with the Zimra server with effect from December 1, 2020, failure of which no operator will be issued with a Tax Clearance Certificate.
“Furthermore, the revenue authority will, with immediate effect, undertake a comprehensive audit of all VAT Registered Operators, with a view to account for all sales in foreign currency.”