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Money laundering allegations: Forensic commission of inquiry urgently needed



LEGAL think-tank Veritas has called for a forensic audit and commission of inquiry into the Reserve Bank of Zimbabwe (RBZ)’s alleged involvement in money laundering activities and illegal quasi-fiscal operations dating back to more than two decades ago which have seriously damaged its image.


 The RBZ has since 2000 been carrying out quasi-fiscal activities across sectors of the economy, such as health, infrastructure, education and agriculture, in mostly unsuccessful attempts to promote economic growth, according to Veritas.

For instance, in 2008, the RBZ funded the farm mechanisation programme, and gave loans at concessionary rates to resettled farmers, companies and statutory bodies outside the national budget, which were never audited and were seldom repaid.

The programme, among others, was not authorised by the Reserve Bank of Zimbabwe Act or any other law, and sank RBZ into debt. This saw Parliament pass the Reserve Bank of Zimbabwe (Debt Assumption) Act of 2015 through which the government would place the debt burden on the shoulders of taxpayers.

“The identity of the debtors, the amount of their indebtedness and what steps have been taken to recover the amounts they owe, have never been clear. But what was clear was the resentment of taxpayers who ultimately had to bail out the Bank,” Veritas said. With an already tainted record, RBZ has suffered another blow in the Al Jazeera Gold Mafia series, which shows how it has been helping criminal gangs clean dirty money through illegal purchase of gold in Zimbabwe and externalising the money to banks in the United Arab Emirates.

 In one of the investigative documentary episodes, Kenyan smuggler Kamlesh Pattni bragged of smuggling gold with the central bank’s collusion.

 “We have our own licence clearing at Dubai Airport. We have permission of the central bank of Dubai. We have permission of the Reserve Bank (of Zimbabwe). We have the money laundering clearing certificates. We will show you all that, we will show you.”

 Pattni has RBZ authority to move US$3 million into Zimbabwe a week, and generated US$168 million in 2020. The government pays an 18% bonus on the proceeds of his exports.

Senior officials from Fidelity Printers and Refiners have been on Pattni’s payroll. Former general manager Fradreck Kunaka and the company’s head of gold operations Mehluleli Dube were allegedly paid US$30 000 and US$3 000 in monthly bribes respectively to facilitate illicit transactions and gold smuggling activities.

 Zimbabwean gold baron Ewan MacMillan, who calls himself “Mr Gold”, also said that he had been approached by the RBZ as a way of stopping mineral leakages and busting sanctions.

The RBZ’s response to these allegations has not been entirely consistent. Central bank governor John Mangudya issued a statement calling them “sensationally wild, false and malicious” and said: “It is unbelievable that such bizarre claims, allegedly made by pri[1]vate individuals who have no relationship with the Bank whatsoever, have been elevated to gospel truths and published with reckless abandon.”

He concluded by advising the public “to dis[1]miss the false allegations with the contempt they deserve”, and said: “The Bank remains confident that the truth cannot be hidden, and that the truth shall prevail.”

 Veritas has called for an audit of the central bank. “The Reserve Bank is a vital cog in the country’s economy, and it is essential for it to maintain a spotless reputation for competence, fiscal responsibility and probity. In the interests of transparency and accountability, an investigation should be undertaken to ascertain precisely what the Bank and its subsidiary companies have been and are doing and whether their activities have been lawful,” said Veritas in an analysis.

Veritas said there is a need for a forensic audit and investigation into the RBZ’s involvement in the smuggling allegations.

“The Minister of Finance and Economic Development could order an investigation into the Bank’s activities in terms of section 38 of the Reserve Bank of Zimbabwe Act.

“The section gives persons conducting an investigation power to demand documents and answers from all officers, employees and agents of the Bank; anyone refusing to supply such documents and answers on demand can be imprisoned for up to three months.”

Veritas said another option is to rope in the financial comptroller’s office for a forensic audit of the bank’s financial statements and those of its subsidiaries — which include Fidelity Printers and Refiners. “Section 309(2) (b) of the Constitution says that at the request of the Government she (Auditor-General) must carry out a special audit of the accounts of any statutory body or government-controlled entity.

“And section 6(1) (a) of the Audit Office Act gives her the function of auditing the accounts of public entities on behalf of the National Assembly. So she could conduct a forensic audit at the direction of either a government Minister or the National Assembly,” Veritas said.

Veritas said President Mnangagwa can appoint a commission of inquiry to investigate the activities of the RBZ and its subsidiaries. With Mnangagwa tainted, and his name mired in the scandal, Veritas said the audit can be done by reputable audit firms “so that all stakeholders — international markets, multi-lat[1]eral financial institutions and the general public — are satisfied that the exercise has been con[1]ducted thoroughly and fairly”.

“An audit or investigation conducted in any of those ways would have sufficient legal authority to uncover wrongdoing on the part of the Reserve Bank and to override any right to secrecy conferred by section 60 of the Reserve Bank of Zimbabwe Act,” Veritas said.

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