US$1.3b RBZ debt row: Gono responds

via US$1.3b RBZ debt row: Gono responds – NewZimbabwe 03 February 2015

FINANCE minister Patrick Chinamasa torched a storm Monday when he urged legislators to approve plans to have government takeover the Reserve Bank of Zimbabwe’s US$1.3 billion dollars.

Asked by MPs whether he was prepared to name and demand that officials who benefited from the RBZ’s $200m farm mechanisation scheme pay for equipment they received, the minister suggested that legislators “let bygones be bygones”.

Fuelling the fires further, Zanu PF MP and former top RBZ staffer Munyaradzi Kereke demanded investigations, claiming that the money the central bank owes listed hotel and retail giant Meikles Limited had been inflated.

Chinamasa appeared before the David Chaphika-headed budget and finance committee of Parliament with current RBZ boss John Mangudya.

Responding to the storm in a statement Tuesday, Gideon Gono, who was RBZ chief when the central bank carried out the quasi-fiscal activities blamed for ballooning the debt said:

“I’m constrained from commenting much by the laws and ethics of banking which do not permit discussion of bank-client affairs in public or with unauthorized persons.

In addition, my contractual obligations as a former Governor preclude me from commenting in detail and with specifics on matters which a sitting governor is capable of dealing with at the bank.

However, the little I can say is that I stand on the side of truth and fairness to all RBZ stakeholders who include taxpayers, the ministry of finance, the general public, creditors, local and international bankers, investors, workers and government in its widest definition in as far as the RBZ debt takeover matter is concerned. I’m not one sided as some people are showing themselves to be.

Hon. Kereke and Chapfika are right in demanding answers to issues they are not clear about. I support them, not because they are correct in their postulations as the legitimate spokespersons on the validity, accuracy or otherwise of the debt, no, but for their determination in wanting every penny of the $1,3billion debt explained. That kind of stance enhances the credibility of the final outcome of debates and indeed the standing of the August House itself.

The required explanations can be done very easily without going into details or breaking the country’s confidentiality laws. I am also one who supports the notion that no single cent that cannot be satisfactorily explained should be taken over by the State for anyone’s benefit. Hon Chinamasa and RBZ Governor Mangudya are also to be applauded for their efforts to explain the debt and pushing for its takeover.

Unfortunately, it is not fair for the nation or for legislators to expect these two fine gentlemen to satisfactorily explain a $1,3 billion debt, the majority of which they were not party to i’s contraction.  Both Hon gentlemen (Minister and Governor) run the risk of being taken to the cleaners by people who want to confuse very simple matters of commerce and turn them into some scandal of sorts for their ulterior motives. Unfortunately, it does not always follow that in a class, the children who make greatest noise or speak the loudest on every subject are necessarily the brightest on exam day.

I offer myself to the people of Zimbabwe through the legitimate channels and arms of Parliament to appear before any Committee, or joint committees of Parliament, to explain the simple make-up of the debt in question, breaking it down into:

Pre-independence debt, debt that was accrued between 1980-2000 such as IMF/World Bank/ADB debt during ESAP days; the so-called Miekles, Anglo-American/Malaysian and other debts of 1998-2000; then the 2003-2008 and post 2008 debt figures all of which combine to make the $1,3billion debt in question.

Indeed, such clarification would also zero in on principal and interest components; zero in on whether such borrowings were authorised or not and to what use the funds were put. I am sure that when these fundamental components of the matter are well explained, honourable legislators will be better guided to decide.

As it is now, emotions are unnecessarily evoked on such issues as mechanization and some such issues. Against the above debt, it is essential to highlight to legislators the other side of the RBZ balance sheet i.e. the assets side… the debtors’ side. How much does or did Government owe the RBZ and has government (taxpayer) paid the RBZ what it owes?

What is the value of non-core assets held by RBZ which today can be auctioned to the highest bidder and raise no less than $1 billion? Are legislators taking that into account? Shouldn’t such assets be transferred together with the debt to the government for the benefit of taxpayers?

All this and other matters relevant to the RBZ debt take over can be availed to legislators if they call upon people with the requisite knowledge and are honest and truthful about RBZ state of affairs than is currently being presented.

In accounting, what is before law makers is called a single-legged transaction. It does not balance. I am not naive to expect invitation to the Budget and Finance Committee to shed light on these crucial issues because my appearance will make a few people there uncomfortable.

Soon the thesis will be that Gono is seeking relevance or entry into Parliament through the back door. And some will suspect that I want to break the confidentiality clauses of banking by revealing unnecessary stuff.

There is nothing financial to reveal about anyone or any institution other than to try and assist a process that is getting messy at the altar of ignorance and misrepresentation. Zimbabwe ought to cherish good accounting practices and fair commerce.”