Prosecutions on a wide range of financial crimes are likely as investigations continue inside and outside Zimbabwe into the huge pool of unregulated liquidity estimated at $25 billion created within the mobile money system, and which was destroyed mid-last year in a series of decisive moves by the Reserve Bank of Zimbabwe and the Government.
A highly sophisticated network of cartels is now believed to have been manipulating the systems and, through what amounted to fake overdrafts and exploiting the laxity of mobile platforms not following rules of tying mobile balances to corresponding bank balances, were expanding money supply outside the ambit of the Reserve Bank and creating large pools of unregulated liquidity.
This in turn was used to fund the foreign currency black market and other speculative activities.
The Reserve Bank backed by Government smashed the system in the middle of last year.
All mobile balances were brought to account; individuals were allowed one mobile money account and a maximum of $35 000 transactions a week; merchants were allowed unlimited but one-way mobile accounts, able to receive customer payments but having to move these to their formal bank accounts to spend the money; and the agent lines were first frozen and then closed.
Mobile platforms were put under far tighter regulation and rules, having to connect their systems to the banking system.
Government has since engaged investigators from countries such as Italy and Belgium and has consulted authorities in South Africa, Mozambique, Botswana and Malawi among other countries.
Prosecutor General Mr Kumbirai Hodzi yesterday said that authorities were closing in on the cartels behind the dealing within the mobile money transfer companies that was halted last year.
He estimated that the extra money supply created in the unregulated dealings could have been as high as $25 billion, a significant fraction of the total growth in money supply and explaining why exchange rates were eventually worse than the First Republic’s deficit budgeting would have suggested.
The Second Republic fixed the deficit budgeting but the large pool of hidden liquidity had to be tracked down and drained as well before the resultant stability was achieved in August last year.
Mr Hodzi said the stability of the country’s economy and currency was beginning to be felt.
“This is through the sterling work that has been done by inter-agencies where everyone, including the Reserve Bank, the office of the Prosecutor General, police, the Zimbabwe Anti-Corruption Commission, the Special Anti-Corruption Unit, Zimbabwe Revenue Authority and the Procurement Regulatory Authority of Zimbabwe is cooperating.
“That is why the currency, for the last six or seven months, has been managed by the RBZ and other monetary authorities,” he said.
Mr Hodzi said they had engaged international consultants to help in dealing with the cartels and they had been warned to tread carefully as the syndicates were powerful enough to take on the State.
“Even our consultants in Italy were quite clear that if we treated the cartels in a negligent manner, they could try to bring down the State as they had the resources,” said .
Mr Hodzi said President Mnangagwa’s administration had a clear mandate of rebuilding the economy and was working to bust high level corruption.
Training and equipping of law enforcement agents was underway to complete the task. He lauded Treasury for allocating his office the biggest budget in the history of the country this year.
“Four prosecutors left today (yesterday) for India to learn forensic studies and another 12 were supposed to be sent to Italy but their mission was stopped due to Covid-19,” he said.
Mr Hodzi said there were a number of mansions being built and luxury vehicles being imported using ill-gotten wealth.
“We cannot allow a small part of spoiled apples to mess it up for our people.
“Zimbabwe should be a normal State. The State will use all its powers to protect the citizens,” he said.
Mr Hodzi said the “catch and release” trend was part of the cartels’ attempt to demoralise the State actors but they would remain resolute.