THE Joint Operations Command (Joc) has applied intense pressure on the Reserve Bank of Zimbabwe (RBZ)’s investigating arm, the Financial Intelligence Unit (FIU) to firmly deal with illicit financial transactions threatening to collapse the economy.
Well-placed government officials yesterday said a heated Joc meeting held recently in Harare described the financial situation as a “national security matter” that requires an urgent robust tackling to contain inflationary pressures.
Joc consists of securocrats drawn from the army, police, the Central Intelligence Organisation (CIO) and prison services. Over the years, the securocrats have proved to be a force to reckon with in decision making in important issues that affect the day-to-day running of the country.
The security chiefs’ concern over arbitrage and rent-seeking behaviour draining the foreign currency auction system of the scarce United States dollar is likely to witness a fresh clampdown.
The tumultuous behind the scenes events at the forex auction have contributed towards the continued depreciation of the local currency and fuelling inflation. The erosion of workers’ earnings poses a security threat, according to some of the thorny issues raised by Joc.
Having a disgruntled population during an election season could have attracted the hawks’ eye of Joc commanders as forex parallel rates skyrocket.
Black market forex rate has soared to US$1:ZW$240 while the official figures stand at US$1:ZW$124. The problem is that most retailers are pegging prices of goods and services at forex parallel market rates.
The intervention of Joc in the financial crisis matter will likely to culminate in the fining, freezing of more corporate bank accounts and arrest of high profile figures involved in foreign currency exchange-rate manipulation, sources warned.
A high level security official said Joc had no kind words for the FIU during the recent closed door meeting. The law enforcement agents’ bosses who attended the meeting suggested that the FIU be put under the CIO.
The CIO is considered sophisticated as it has the human capital with requisite investigative prowess to combat complicated white collar crimes.
A highly placed source close to the developments said: “Three weeks ago there was a Joc meeting. Joc basically called FIU to order.
“Intelligence demanded that FIU be moved to the President’s Office (CIO) because the forex black market is undermining the economy. Some quarters in government are saying it is becoming a potential security threat.”
He went on to say, “So Joc is saying if FIU is failing to deal with the companies and people manipulating foreign currency exchange, give us the powers to act. What this means is that FIU is going to become more brutal because they need to protect their reputation.
“They (CIO) wrote a position paper arguing for the take-over of financial intelligence from RBZ. They are saying FIU is not doing enough because these companies are committing crimes and no action is being taken.
The security bosses sought to understand why the FIU was ineffective in executing its duties. There was an argument that the FIU has enough teeth guided by law to deal with the issue of financial indiscipline.”
The FIU this week froze bank accounts for four companies for alleged money laundering activities which are still under probe.
The affected entities are Transerv, Electrosales, Halsted Brothers Ltd and Enbee Store, who could be the first victims of a sting operation by FIU after being jolt into action by Joc.
The FIU has been engaged in running battles with unscrupulous businesses and bankers. This has seen the investigating arm of the apex bank penalising several big corporates.
Vice-President Constantino Chiwenga recently issued a chilling warning against foreign currency exchange-rate manipulators.
Chiwenga claimed that the government had honoured business demands but efforts to revive the economy were derailed by economic saboteurs.
He threatened to take action against those externalising funds.
Last week a Chinese restaurant, Shangri-La, was slapped with a US$30 000 fine for pegging prices way above official exchange rates.
The FIU has in the past frozen mobile money accounts to control the liquidity flow and root out currency saboteurs.
The majority of financial transactions were conducted on mobile platforms with Ecocash accounting for about 95% of the volumes and the remainder being NetOne’s OneMoney.
There are indications that transactions valued at more than US$75 million were executed on agent lines even though the nature of their businesses did not support such huge money movement.
The FIU last year cracked the whip on money remittance services in a move that led to the tightening of screws and limits on withdrawals.
A circular late last year announced financial controls aimed at ensuring that financial institutions are not used as conduits for money laundering, terrorism financing and other illicit transactions.
In doing so, RBZ through FIU set a maximum withdrawal threshold of US$500 per transaction and up to US$2 000 per calendar month for a customer with a bank account with the sending institution.
For walk-in customers with no account with the institution, the maximum withdrawal threshold has been set at US$250 per transaction, up to US$1 000 per calendar month.
To ensure sanity in this sector, FIU said domestic foreign currency remittance services were permissible for person-to-person transfers. Corporate entities are expected to use inter-account transfers for business payments.