BY VENERANDA LANGA
PARLIAMENT has demanded that Reserve Bank of Zimbabwe (RBZ) governor John Mangudya make public the schedule of beneficiaries whose loans were taken up by the Zimbabwe Asset Management Company (Zamco) amid allegations that the scheme only benefitted political elites.
Zamco, a company established by government to buy non-performing loans (NPLs) in a bid to clean up the books of banks which faced collapse, bought at least a billion dollars in bad debts, adding to the country’s mounting debt.
Harare East MP Tendai Biti (MDC Alliance) and former Finance minister, who leads the Public Accounts Committee on Monday quizzed Mangudya on why the debts which Zamco accepted were not approved by Parliament, and why the central bank was always lending to government without Parliament approval to the extent that the current overdraft facility to government was at $2,99 billion.
“We have had a situation where government has been running deficit financing, and as a committee, we are concerned by the new TBs (Treasurery Bills) that have been levied on the Consolidated Revenue Fund without the Finance ministry coming to seek condonation from Parliament,” Biti said.
“Parliament also wants to know the criteria used to decide which NPLs go to Zamco because we hear the criteria is based on political muscle and the list of the people that have benefited from Zamco are political heavyweights, and you need to hand over the list to Parliament in two weeks,” he said. In his response, Mangudya said Zamco cleared 1 160 NPLs from banks at a value of $1,13 billion since 2014, adding that to date $460 million was repaid, giving a net amount of $832 million still outside payment.
On why RBZ was not seeking condonation from Parliament on NPLs and government’s overdraft facility, which resulted in $7 billion TBs issued, Mangudya said all these were included in the budget statement which MPs passed without also doing due diligence.
“The Finance minister Mthuli Ncube brought the budget to Parliament wherein he was clear that he was limiting Zamco to $1 billion and no MP asked where the figures were coming from, and so it will be remiss on my part to say that the Zamco figures did not come before Parliament,” Mangudya said.
Zamco chief executive officer Cosmas Kanhai said the Zamco NPLs were issued on a willing-buyer, willing-seller basis. But Biti said he must explain why ordinary people failed to get the loans while political heavyweights had theirs taken over by Zamco.
“Our criteria are clear in that the loan has to be a NPL, the bank has to be willing to sell the NPL,” Kanhai said.
Biti then asked why Mangudya had not wound up Zamco as recommended by Ncube in his budget statement when he described it as a toxic instrument which must be wound up.
“As far as we are concerned, Zamco has done very well for this economy. Without Zamco, the economy would have collapsed including companies like Rio Zim, Star Africa and others. When you (Biti) were Finance minister banks were charging 50% to 75% interest rates and there is no company that can perform in a US$ environment at 50% interest rates,” Mangudya said. He then said he was not the author of Ncube’s statement and cannot further explain why Zamco must not be disbanded.
Buhera Central MP Matthew Nyashanu (Zanu PF) asked Mangudya to explain why almost $1 billion loans were borrowed from Afrexim Bank without the central bank seeking Parliament condonation.
Mangudya said the total exposure was $985 million, with Afrexim Bank ($641 million), PTA Bank $152 million and other loans Banco de Mocambique ($25 million), PTA Insurance Corporation ($9 million), African Development Bank ($15 million) and others, adding that these were in US$.
When Biti insisted that the committee was not concerned about the nature of the loans, but that the RBZ acquired $1 billion loans without Parliament approval, Mangudya said he was empowered by the RBZ Act to do so. But Biti said the Constitution in section 2 required Parliament condonation, and was the Supreme law.
Mangudya’s defence was that section 7 of the RBZ Act stipulated that he should get the Finance Minister’s consent, adding that the Attorney-General’s Office had also okayed the loans saying it was legal to do so.
Biti, who pointed out that section 327 of the Constitution stipulated that Mangudya can be sued for not seeking Parliament condonation and that the loans were not valid, the RBZ governor then admitted the error, saying that in the future they will ensure Parliament condonation was sought.
Asked to apologise to the nation by Biti, Mangudya responded: “Go to yourself (Biti) during your tenure as Finance minister – I have files that show you signed loans without first coming to Parliament.”
But Biti said Mangudya was out of order, adding these were issues that happened during former RBZ governor Gideon Gono’s tenure, and not his (Mangudya’s) tenure.
Paurina Mpariwa (MDC Alliance PR MP) then asked Mangudya to explain how government got $2,9 billion TBs from the RBZ without Parliament approval.
Biti said he must explain whether that was money which was raided from depositors’ accounts or from the RBZ balance sheet.
“It was from our balance sheet and RBZ service bonds that were at $3, 2 billion and bigger than the $2, 9 billion. It came from investments which was $3, 2 billion versus $2, 9 billion. The answer is no, I did not take from people’s deposits,” Mangudya said.
He was further grilled for failing to adhere to legal provisions that he should not borrow more than the stipulated 20% limit of the previous year’s debts.
Asked whether he slept on duty, Mangudya responded: “I do not supervise the minister. Parliament would not have approved this budget if there was not enough money, and now Parliament says there was no compliance. The actions do not comply with the law and we all erred.”
Mangudya said the country has $500 million US$ reserves, but the committee queried how he had the guts to lend $2,9 billion to government above the $500 million reserves the country had, which contravened the RBZ Act?
The RBZ governor said there were sufficient reserves, including gold and other assets to cover the liabilities, adding that they were backed by investments.