BY SHAME MAKOSHORI
BUSINESS executives made desperate attempts from last week Friday to worm their way out of arrests for violating foreign currency exchange regulations, but the government turned a deaf ear as it vowed to continue cracking the whip.
High-level sources, who tipped the Zimbabwe Independent of the arrests, made startling revelations this week detailing how business made frantic efforts to stop the arrests, arguing this would destabilise the economy.
The business leaders, according to fresh details at hand, made a passionate plea to settle the matter without it spilling into the courts.
But police had already prepared dockets against some top executives.
The state had to send a strong message to contain the volatile forex exchange crisis, through the Reserve Bank of Zimbabwe’s (RBZ) investigating arm, the Financial Intelligence Unit (FIU) and the police.
Arrests of errant company bosses are likely to continue as the government tries to bring stability to the volatile foreign currency market.
However, as a war of words erupted between the government and business over who was to blame for the currency decimation, the ZRP, under a campaign code named “Operation Pangolin”, was rounding up hundreds of black market dealers.
“Operation Pangolin involves the police, the Reserve Bank of Zimbabwe and other stakeholders,” police spokesperson assistant commissioner Paul Nyathi said.
“Investigations are still continuing, but these companies were running high-value transactions on social media. Most of them are not real companies, but were only established to trade on the black market. Some of those involved have been arrested, but some are still on the run. One suspect was found with two sacks full of local currency in his car. The amount is still undisclosed, but he has disowned the car.”
Some of the company directors have already appeared at the Harare Magistrates Court facing charges of violating foreign exchange regulations.
“The state believes that the nefarious forex activities by some of the businesses were causing runaway inflation which has seen prices of goods and services skyrocketing, plunging many into economic challenges,” a source told the Independent.
“Business is making it hard for the people by profiteering. Government is on the side of the people. If people are not happy, their anger is directed at unscrupulous business. Everything that government does is to rein in excesses by the private sector,” the source said.
“Business is saying the rate is being manipulated by the RBZ when they are the ones who are bidding low. We should maintain that moral pressure on business to be sensitive to the macro-economic stability in the economy. That push is coming not only from government, but from all quarters of the economy. It’s non-negotiable,” he said.
Even the Zimbabwe Anti-Corruption Commission (Zacc) chairperson Loyce Matanda-Moyo this week told the Zimbabwe National Chamber of Commerce (ZNCC) 2021 annual congress in Victoria Falls that the private sector was corrupt.
“I think the private sector is the major culprit of corruption in Zimbabwe,” Matanda-Moyo said. “We only started in government because we realised that if we started with the private sector, there was going to be an outcry to say, why start with us (private sector) not the government. Private sector corruption is really causing damage to the economy.”
Last week, the Independent was the first to report that top executives and directors from about 20 big companies were facing arrest following investigations by the RBZ and government into massive multi-million-dollar fraud involving the country’s foreign currency auction system.
Some major corporates are accused of fleecing the forex auction system through tendering fake bills of entry to access cheap funds which they later funnelled to the parallel market.
The extensive probe unearthed 10 financial institutions with a jaw-dropping ZW$2 billion (about US$22,8 million) stash, trading on the parallel forex market.
The RBZ has been playing a cat-and-mouse game with companies which saw some firms being blacklisted from participating on the forex auction system.
Ten directors and 371 runners have either been arrested in the past weeks or are on the run, in what the police described as a well-knit black market network which can potentially ground the frail economy.
The developments also explain why cash being injected into banks by the apex bank has been scarce on the official market, where financial institutions have recently been relying on electronic platforms.
But the massive push into the black market has precipitated extensive depreciation of the Zimbabwean dollar.
The battering caught the attention of authorities last week, sparking off threats to arrest big and small business leaders to stem a potentially disastrous second collapse of the domestic currency.
Zimbabwe’s biggest lobbies were making frantic efforts to persuade the government to stop a crackdown on big business, after the FIU and Zimbabwe Revenue Authority (Zimra) investigations nailed top executives.
The first notable casualty in the crackdown is Access Capital founder and former Premier Banking Corporation chief executive officer Raymond Chigogwana.
Access Capital, seen on the market as one of Zimbabwe’s biggest recent success stories, was part of about 10 financial institutions facing charges of buying foreign currency through an army of 370 parallel market runners.
These were also under pressure to reveal the identity of the big names behind a market that now threatens the economy.
A list of firms accused of illicit dealings include Juso Global’s alleged dark market trade involving ZW$277 million (about US$3,1 million), which was funnelled through 40 runners.
Another firm, Kay Mudoni was allegedly trading US$150 million (about US$1,7 million) on the parallel market, while Capital Profit Investments is accused of deploying ZW$180 million (about US$2 million) to buy foreign currency, which the police said was traded to desperate productive sectors at extortionist rates.
According to the police allegations, Dream High traded through a ZW$140 million (about US$1,6 million) war chest, Kererati Private Limited set on ZW$68 million (about US$773 000), Pitanium Capital traded through ZW$174 million (about US$1,9 million), while Chigogwana’s Access Capital had ZW$185 million (about US$2,1 million).
The police list also included Linsa Capital, which allegedly had ZW$177 million (about US$2 million) to deploy into the black market, while another firm called Chemmodities is alleged to have had ZW$278 million (about US$3,2 million) floating on the backstage markets.
Another firm, Vision Credit Source is alleged to have had liquid cash of up to ZW$199 million (about US$2,3 million) trading on the parallel market.
Firms, starved of foreign currency on the under-fire forex auction system, have trooped to the black market where rates are extortionist.
The parallel market rate was at US$1:ZW$120 most of the first half of this year.
But prices have run amok, as firms pass on the cost of foreign charges to consumers, leading to fresh inflationary pressures.
The Independent was told that as of Friday last week, about 24 dockets, including those from investigations parallel to Operation Pangolin had been prepared, with eight of them ready for prosecution.
The number had increased this week, as the FIU and Zimra got fresh mandates to raid suspected delinquent firms in scenes reminiscent of brutal dawn raids on executives in 2007.
Raids also mounted by police in several big firms unsettled business leaders this week, triggering a backlash from the Confederation of Zimbabwe Industries (CZI), which said the government must review bad policies before blaming companies.
Re-introduced in 2013 after pockets of United States dollar shortages emerged, the Zimdollar struggled to hold its ground in the past few months, especially after the foreign currency auction system ran into serious liquidity problems.
Sources said after attempts to seek a ceasefire, captains of industry, RBZ and government met on Monday. All parties undertook to carry out everything in their power to end the carnage on the domestic currency.
But industrial lobbies said this week they were shocked after the government mounted fresh arrests.
In separate statements, the CZI and the Confederation of Zimbabwe Retailers (CZR) confirmed that CEOs were under tremendous pressure this week as the campaign intensified.
“CZR has noted the latest developments in the market that have culminated in the arrest of business executives on allegations of violation of exchange control statutes,” CZR president, Denford Mutashu, said on Wednesday.
CZI president Kurai Matsheza blamed bad policies for the problems affecting the economy.
“Bad policy blurs the lines and results in criminal activity co-mingling with legitimate business survival decisions in a forex mispriced system,” the CZI president said.