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FinGaz

      COSATU moves to barricade Zim

      Njabulo Ncube
      11/4/2004 7:59:03 AM (GMT +2)

      THE Congress of South African Trade Unions (COSATU), stung by last
week's humiliating deportation of its top officials, is mobilising civic
groups in the region to seal entry points into Zimbabwe for four days - a
move that could trigger a diplomatic rift between the two countries.

      The proposed blockade, being coordinated in conjunction with Amnesty
International in Johannesburg, South Africa, is pencilled for December 4 to
8 2004, according to information obtained by The Financial Gazette.

      The organisers claim this would be in protest at alleged human rights
abuses, "bad governance, lawlessness, lack of press freedom, and meant to
demand change."

      They said they sought to close the Beitbridge border post at Musina,
South Africa, and other entry points into Zimbabwe from Mozambique, Malawi
and Zambia, effectively barring haulage trucks and other cargo from driving
into Zimbabwe.

      Although Amnesty International could not immediately comment on the
envisaged four-day border posts blockade, notices advising Zimbabwean and
regional civic organisations, including the Zimbabwe Congress of Trade
Unions (ZCTU), which invited COSATU on a botched-up fact-finding mission
last week, have been sent to concerned groups.

      COSATU, the South African labour union, is a close ally of South
Africa's ruling African National Congress (ANC). The ANC leader Thabo Mbeki
is at the centre of a delicate mediation in the long-drawn political
bickering between the ruling ZANU PF and the Movement for Democratic Change
(MDC).

      This is not the first time the militant labour union, which President
Robert Mugabe's government accuses of having been infiltrated by shadowy
apartheid and Rhodesian forces, has tried to intervene in the Zimbabwean
crisis.

      Mid last year COSATU threatened to mobilise its affiliates in the
northern provinces which border Zimbabwe to demonstrate around the
Beitbridge area to "highlight the plight of the Zimbabwean people". The mass
demonstrations however flopped.

      It also made demands for an interim government in Zimbabwe and the
drafting of a new constitution on the basis of which fresh elections should
have been conducted. This was after the MDC, born of the ZCTU, COSATU's
local counterpart, complained bitterly that ZANU PF had stolen both the
presidential and parliamentary elections.

      The machinations by COSATU could be a double-edged sword for both the
Zimbabwean and South African governments. Apart from putting its fragile
alliance with the ANC under considerable strain, it could also be a litmus
test for Mbeki's much criticised foreign policy on Zimbabwe. The Zimbabwean
government sees Mbeki as a key ally in the face of an increasing
international backlash against perceived human rights violations.

      The planned blockage would certainly anger the Zimbabwean government,
which has since categorically stated that COSATU can be "king-makers
elsewhere and not in Zimbabwe", and would want its wings clipped.

      It was not immediately clear however, how Mbeki would deal with the
situation. Last year, the pipe-smoking South African leader refused to budge
to COSATU demands to force a re-run of the Zimbabwean presidential
elections. Instead, he pushed ahead with his policy of quiet diplomacy when
there was a chorus for a radical push to effect regime change in Zimbabwe.
Mbeki's position has always been that Zimbabwe is not an extension of South
Africa but a sovereign state.

      Harare yesterday indicated it will ruthlessly deal with anyone who
joins the blockade from the Zimbabwean side and promised to take up the
issue with Pretoria should COSATU maintain its defiance.

      Kembo Mohadi, the Home Affairs Minister who ejected the COSATU
delegation last Tuesday night, talked tough yesterday, warning that any
Zimbabwean found participating in the blockade would be dealt with according
to the laws of the country.

      "If it is COSATU that wants to close the borders, we wonder what they
are desperate for. In any case, to close traffic into Zimbabwe will be a
violation of international laws of freedom of movement," said Mohadi in
telephone interview.

      "We are not going to allow anyone to interfere with our borders
internally. We will deal with whomever tries. But if they close from
outside, we will take it up with the respective governments to deal with the
issue," he added.

      ZCTU president Lovemore Matombo, although distancing his organisation
from the planned regional initiative, said the expulsion of COSATU had
infuriated many unionists in the region and abroad.

      "We are not party to anything that will cause problems for the country
but the issue of COSATU's deportation has caused a lot of anger. There are
campaigns every where to show that Zimbabwe is a pariah state. We are going
to make some contact with COSATU again as we have both agreed that there is
a problem in Zimbabwe," said Matombo.

      "Any move that we are jointly going to make will only be taken after
serious considerations. We are yet to do that as ZCTU and our South African
counterparts."

      Matombo, however, hinted that the closure of borders could be a COSATU
initiative working with other aggrieved parties that he did not name.

      As the news of the intended closure by the powerful COSATU and its
allies filtered through, industry feared it could affect the flow of fuel
into the country at a time when the southern region was already reeling from
a resurgence of winding fuel queues.

      "We have trucks that come via Beitbridge from South Africa but if
Beitbridge is closed, we will look at other open avenues, " said Masimba
Kambarami, the president of the Zimbabwe Petroleum Marketers Association.

      Pattison Sithole, the president of the Confederation of Zimbabwe
Industries, a majority of whose members are on their knees, said any day
lost would not augur well for industry.

      "I don't know if it will succeed but any delay will impact on the
movement of materials. Any day lost in business has an impact," said
Sithole.
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FinGaz

      Murerwa under pressure to ease tax burden

      Felix Njini
      11/4/2004 8:01:08 AM (GMT +2)

      ZIMBABWE'S Pay As You Earn (PAYE) tax, arguably the highest in the
world, is likely to be relaxed anytime soon, as the government responds to
competing demands from the economic and political fronts.

      Acting Finance Minister Herbert Murerwa has been under immense
pressure to ease the tax burden on the suffering masses and boost aggregate
demand for goods and services. Highly-placed sources said the government was
almost conceding to a review of the PAYE tax amid expectation that relief
could come on the presentation of the 2005 national budget slated for
November 25 2004.
      Analysts said the government's move was intended to boost workers'
aggregate demand and give an electric jolt to the slump in industrial
production, which has been partially blamed for falling demand.
      Consumer demand has fallen drastically over the past five years in
line with a decline in purchasing power. Massive job cuts and company
closures have compounded the situation. The high personal tax is pegged at
45 percent, while companies are being taxed at 30 percent. Economic analysts
this week said contribution from personal tax had risen from 27 percent of
the total revenue between 1990 and 1995 to 38 percent in 2001.
      In the 2004 national budget mid-term review, Murerwa said individual
taxpayers had contributed $1.2 trillion to the national fiscus, nearly 39
percent of revenue, while that from the corporate world was only $321.1
billion, or 11 percent of total revenue.
      Zimbabweans, compared to other workers in the region, are the most
taxed. In South Africa, a worker earning up to R32 222 (Z$2.3 million) per
year is exempted from paying tax. For pensioners, the tax-free threshold is
R50 000 (Z$3.6 million) per month.
      The highest tax rate, applying to workers earning more than R225 000 a
year, is about 40 percent. In Botswana, individual taxpayers contribute only
14 percent.
      "Personal tax levels are lagging behind the inflationary trend. The
minimum tax should be based on the poverty datum line and no worker earning
less than $1.5 million should be taxed," said Godfrey Kanyenze, a labour
economist.
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FinGaz

      Tsvangirai trial gobbles $1bln

      Njabulo Ncube
      11/4/2004 8:02:46 AM (GMT +2)

      THE 18-month long treason trial of Morgan Tsvangirai, leader of the
Movement for Democratic Change (MDC), gobbled up nearly $1 billion from the
opposition party's coffers.

      MDC insiders said yesterday conservative estimates showed that the
country's main opposition party, whose leader was acquitted on charges of
high treason by the High Court last month, had spent 10 million rands (about
$800 million at the auction rate) on the trial.

      Tsvangirai engaged celebrated South African lawyer George Bizos. Bizos
also represented South Africa's former president and icon Nelson Mandela at
the famous Rivonia trial in 1964.

      A coterie of local and international legal practitioners also assisted
Bizos in the trial, which generated regional and international interest.

      David Coltart, the MDC legal secretary, said that the trial proved
very expensive for the party as its financial coffers had been depleted by
its numerous forays to the courts against the government.

      "It's thousands of millions. It could be over a billion dollars. These
are conservative estimates. We are yet to come up with a definitive figure,"
said Coltart.

      "There were other costs involved apart from paying the lawyers. It was
a very expensive trial that took a lot of people's time."

      Coltart said most of the funding for Tsvangirai's trial had come from
party members' subscriptions and donations from well-wishers. "Of course we
also utilised monies we got from the Political Parties (Finance) Act," he
said.

      The government has indicated it will appeal against Tsvangirai's
acquittal by Judge President Paddington Garwe within the next few weeks.
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FinGaz

      Political vultures circle over Bennett's seat

      Zhean Gwaze
      11/4/2004 8:03:22 AM (GMT +2)

      ZANU PF political vultures are circling over the Chimanimani
constituency, which is soon to be declared vacant following Roy Bennett's
arrest over contempt of Parliament.

      Bennett, the opposition Movement for Democratic Change (MDC)
legislator, was slapped with a one-year jail sentence for flooring Justice
Minister Patrick Chinamasa and Minister of Anti-monopolies and
Anti-corruption Didymus Mutasa during a heated parliamentary debate in May
this year.

      It has emerged that eight prospective ZANU PF candidates have lined up
to fight it out, hoping for a soft landing pad following Bennett's
imprisonment.

      Pro-government economic analyst Samuel Undenge and Wankie Colliery
Company board chairman Munacho Mutezo and a member of the central committee,
who lost the seat to Bennett in the 2000 parliamentary race, are the main
contenders in the looming battle.

      Other candidates jostling for the position are Misheck Beta, a twin
brother to Shadreck, a prominent business man in Manicaland, retired Major
Matsikinyere, Major Musabeya, Mutambara, Mugebe, a vice-chairman for the
Chimanimani council and a Mukono, a retired headmaster.

      Mutezo, one of the front-runners in the race for the constituency,
confirmed that he had been campaigning and working with the people of the
constituency "since 1998".

      He said an earlier parliamentary poll in the constituency had revealed
that he controlled 67 percent of the electorate while the other combined
seven would-be candidates shared 33 percent.

      Sources from Chimanimani said in the primary poll Undenge, a vocal
advocate of government policies but whose ZANU PF credentials are not known,
polled only one vote.

      "I have been campaigning vigorously and I am ready for whatever is
going to come, even for the MDC, assuming they want to field a candidate,"
Mutezo said.

      Undenge said he was anxiously waiting for the race for the seat to be
declared open but would not be drawn into divulging more of his intentions.

      He said: "I am waiting for that to happen but we will talk about it
when it happens. At the moment I am concentrating on the monetary policy."
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FinGaz

      MDC prepares for election but . . .

      Charles Rukuni
      11/4/2004 8:04:26 AM (GMT +2)

      BULAWAYO-The Movement for Democratic Change (MDC) is preparing for
next year's elections though it is still unclear whether it will participate
or not. But time is running out fast for both the ruling ZANU PF and the MDC
as each is refusing to budge from its present position.

      ZANU PF insists that the elections will not be rescheduled. They will
be held in March to enable the country to mark its silver jubilee after
having defeated "British Prime Minister Tony Blair".
      The MDC insists it will not participate in a sham. The government has
to level the playing field and abide by the principles and guidelines set by
the Southern African De-velopment Community (SADC) in August.
      Voters and political observers are in a quandary. If the MDC, the
strongest opposition party Zimbabwe has ever had, boycotts the elections it
will sink into political oblivion. If it participates, it will legitimise
the ZANU PF government which has already rigged its way into power because
of several advantages of incumbency that it has.
      MDC leader Morgan Tsvangirai, who was acquitted of treason charges
last month but still faces other treason charges, has been on a whirlwind
regional tour to persuade key leaders to put pressure on President Robert
Mugabe to abide by the SADC principles and guidelines which would usher free
and fair elections.
      He had talks with South African President Thabo Mbeki who was tasked
by the West to find a solution to Zimbabwe's crisis and Paul Berenger of
Mauritius, current chairman of the SADC.
      "The various meetings that took place provided an opportunity to
explain the situation in Zimbabwe," Tsvangirai said in a statement from
Johannesburg. "We explained how the dynamics that currently exist on the
ground, vis a vis the political environment, are woefully inconsistent with
the standards expected under the SADC protocol on principles and guidelines
governing democratic elections" Tsvangirai said.
      He said the prominent deficits were the absence of the rule of law,
political violence, repressive legislation that curtailed basic civil and
political liberties and an inaccurate voters' roll.
      These anomalies could not be tackled immediately prior to the
elections. They had to be addressed at least six months or more before an
election to restore public confidence and legitimacy in the electoral
process.
      He said though the MDC had resolved on August 25 to boycott all
elections until the government levelled the playing field, his party was
still hopeful that the government could be persuaded to implement political
and electoral reforms that would enable it to participate in next year's
elections.
      "That is why we are continuing to prepare for the elections. We look
forward to fighting in a free and fair election on issues of the day - food
and jobs," he said. "These are the issues that really matter to
 Zimbabweans."
      Though the decision to boycott elections was reached by the party's
national executive, the majority of the party's supporters are against it
because they feel the party is playing a crucial role in keeping ZANU PF on
its toes. They also argue that electoral reform is a process.
      "We support a total boycott because participating in any elections
when the playing field is not level is legitimising the ZANU PF government,"
Reggie Moyo, regional chairperson of the National Constitutional Assembly in
Matabeleland said.
      "You cannot have free and fair elections while AIPPA (Access to
Information and Protection of Privacy Act) and POSA (Public Order and
Security Act) are in place because the opposition cannot campaign
effectively," Moyo said.
      He said if there was a total boycott and ZANU PF won all parliament
seats, this would send a clear message that it was imposing itself on the
people, especially if the opposition parties campaigned and held rallies
that were attended by thousands of people prior to the polls because this
would show that they had support of the people.
      Asked what would happen if there was no total boycott as some of the
smaller opposition parties could take advantage of the absence of the MDC,
Moyo said, right now, the MDC was the only opposition party that counted.
      "In fact, it goes even beyond that. Our elections are between two
personalities. Mugabe and Tsvangirai. Period. You can put any other person
in their place but it will not be the same.
      "This is the problem in Zimbabwe. We probably inherited it from the
past, from the days of the liberation struggle. You could not talk about
ZAPU without Nkomo, the Rhodesian Front without Ian Smith. Even today you
cannot talk about ZANU PF without Mugabe or the MDC without Tsvangirai. It
is not about democracy per se but about personalities."
      Moyo said the major problem at the moment was that various actors
tended to divide their energies.
      "We should all be fighting AIPPA and POSA before we start fighting for
electoral reform. But of course, I understand why the MDC is concentrating
on electoral reforms.
      "The aim of any political party is to get into power, but how they
will rule after that is anybody's guess.
      Political parties should therefore not be at the forefront of
constitutional reform because they will always craft something that will be
in their favour," he said.
      Gorden Moyo, executive director of Bulawayo Agenda, said the MDC
should gear themselves to participate in the elections because without
participating they would sink into political oblivion.
      He said the acquittal of Tsvangirai on treason charges had been a
diplomatic goal for the government because the MDC "boycott gospel (was) no
longer sellable to the SADC region".
      "It is not so much an issue of neutrality or impartiality of our
judiciary system but rather a political goal by ZANU PF in the 2005
elections in the eyes of the SADC," Moyo said.
      "The best approach for the MDC is to declare in no uncertain terms
that whatever tricks may be employed by the ruling party, they are only
going to participate if AIPPA and POSA and other conditions have been
 eased," Moyo said.
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FinGaz

      Has Mugabe gone soft?

      Mavis Makuni
      11/4/2004 8:06:25 AM (GMT +2)

      President Robert Mugabe recently complained bitterly about the dismal
performance of some of his ministers which he said had resulted in the
collapse of a number of parastatals.

      The 80-year old leader said these goings-on at parastatals amounted to
"sabotaging the economy" and blasted the ministers concerned for
inefficiency and lack of commitment to their "sworn duty of serving the
nation"
      He said he was even more frustrated with the non-performing ministers
because they had never been denied funding by treasury but they had nothing
to show for all the resources that had been made available to them. Instead
of taking decisive action, the ministers were "just crying"
      "If I had my own way, people were going to be put in jail. I would
arrest the minister responsible for each parastatal, the chairman of the
board and the chief executive and lock them behind bars," the President
fumed.
      This is a curious remark, raising the question of why the President
does not have his "own way" as far as dealing with non-performers in his
Cabinet is concerned? Would it not be easier to simply fire non-performing
and corrupt ministers and replace them with more committed candidates?
      An examination of President Mugabe's track record as a disciplinarian
in the context of his cabinet ministers and other government officials shows
that he has tended to turn a blind eye on the faults of his lieutenants.
      Although he has dropped some ministers from time to time in cabinet
reshuffles, he has rarely outrightly sacked someone over a specific issue or
incident.
      When the President breathes fire over ministerial shortcomings, the
public therefore tends to be sceptical about his determination to deal with
the culprits. This scepticism does not seem unfounded.
      Apart from those dropped during cabinet reshuffles, most ministers who
have left government service in the last 15 years have done so after
resigning on their own accord.
      The largest number of resignations occurred after the implication of a
number of cabinet ministers in the Willowvale car scandal in 1989. Cabinet
ministers who tendered their resignations over the scam were Dzingai
Mutumbuka, Maurice Nyagumbo, Enos Nkala, Frederick Shava, and Callistus
Ndlovu. Jacob Mudenda, who was a provincial governor, and Charles Ndlovu
(Webster Shamu), who was a deputy minister, also resigned.
      A year earlier Shuvai Mahofa, who was deputy minister of political
affairs, was the first woman to resign from President Mugabe's government.
She quit after she became embroiled in a party row in Gutu South which
involved her love life.
      Other ministers who resigned of their own accord are Edmund Garwe, who
was minister of education, Nkosana Moyo, former minister of industry and
international trade, former finance minister Simba Makoni and Enos
Chikowore, who quit as transport and energy minister in 2000 over the fuel
crisis.
      Garwe resigned after his 14-year-old daughter had leaked a Zimbabwe
Junior Certificate Examination paper at the Dominican Convent High School in
Harare. Most of these resignations took place after President Mugabe had
assumed the Executive Presidency in 1988.
      The chronology of events seems to indicate that when he was Prime
Minister from 1980 to 1987, President Mugabe was bolder and more decisive in
dealing with errant members of his Cabinet. All those he fired outrightly
from government were shown the door during the eight years of his tenure as
premier.
      Ironically, one of the first ministers to be sacked was veteran
nationalist and late Vice-President Joshua Nkomo. He was sacked in 1982
following the discovery of arms caches on properties owned by PF-ZAPU,
during what now passes as Zimbabwe's darkest historical period.
      In 1984 President Mugabe dismissed two more ministers who were members
of PF-ZAPU. These were Cephas Msipa, who was a minister of state for water
resources and development, and John Nkomo who was also a minister of state
(deputy prime minister) in then Prime Minister Mugabe's office.
      The first ZANU PF minister to be fired by President Mugabe was the
late Herbert Ushewokunze. He was relieved of his post as minister of health
in 1981. The ever-witty Ushewokunze complained at the time that he was being
cast as the "whipping boy"
      Alexio Mudzingwa, who was deputy minister of labour, manpower planning
and social welfare, was next at the receiving end of President Mugabe's
wrath. He was fired in 1986 after being accused of drunkenness during the
Non-Aligned Movement Summit held in Zimbabwe that year.
      The pattern that emerges from this track record seems to indicate that
President Mugabe was bolder and more willing to discipline his lieutenants
during his eight-year tenure as Prime Minister.

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FinGaz

      Eyebrows raised as auditor borrows from client

      Nelson Banya
      11/4/2004 7:59:48 AM (GMT +2)

      A PERFORMANCE guarantee, estimated to be in excess of $900 million,
granted to an audit firm by a troubled bank has raised questions of possible
conflict of interest that could shift the spotlight on the role of
accountancy firms in the unfolding drama in the financial services sector.

      It emerged this week that the bank, which is one of the several
financial institutions to be placed under the management of a curator
following revelations of gross financial impropriety, had availed a
performance guarantee to the audit firm (name withheld), the banking firm's
external auditors.

      A performance guarantee, like a letter of credit, is an undertaking by
the issuing bank to guarantee a contractor's capacity to carry out a task
for which it is contracted and attaches a degree of liability on the part of
the issuer.

      The guarantee can be in the form of cash, certified cheque,
irrevocable bank letter of credit or any other acceptable instrument.

      The managing partner of the audit firm confirmed the existence of such
an arrangement with his firm's client, but hastened to say everything was
above board.

      "We applied and were provided, in September 2004, with a performance
guarantee for an assignment our firm was requested to undertake. As you are
well aware, huge contracts require a performance guarantee.

      "The guarantee was provided in the normal course of business and is in
line with our ethical rules as auditors and chartered accountants. There is
nothing scandalous about that, unless you mean all audit firms cannot enter
into transactions with banks," the partner said.

      It is believed the guarantee was made in favour of the Ministry of
Finance and Economic Development prior to the audit firm's appointment to
carry out investigations on behalf of the government.

      The Institute of Chartered Accountants of Zimbabwe's (ICAZ) rules of
professional conduct take a dim view of financial arrangements between
auditors and their clients.

      "Financial involvement with a client will affect independence and may
lead a reasonable observer to conclude that it has been impaired."

      However, the audit firm, which declined to divulge the value of the
guarantee, insisted there was nothing wrong with the arrangement entered
into with its client.

      "Our firm was assigned by the Reserve Bank of Zimbabwe to carry out
investigations into a number of banks, including the bank in question."

      ICAZ president Eric Bloch said there could be nothing unprocedural
about the arrangement between the audit firm and its client.

      "It would very much depend on the circumstances. If the transaction
was done within normal banking terms without any undue interference then
there is no problem, but our disciplinary committee would have to look at
the issue if normal banking terms were not followed.

      "There is no reason why an auditor cannot, for instance, purchase
items on account from Barbours simply because he does the Meikles audit,"
Bloch said.

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FinGaz

      Probe auditors


      11/4/2004 8:44:10 AM (GMT +2)

      ANXIOUS and expectant Zimbabweans who had kept their powder dry ahead
of the third quarter monetary policy review, hoping to hear that the worst
was over must have felt badly let down when, on the eve of the monetary
policy review, news filtered through that yet another bank had been placed
under curatorship.

      That another perennially struggling financial institution has slipped
on yet another banking banana skin at a time when all and sundry hoped for
calm after the violent storm in the scandal-plagued financial sector,
underlines the depth of the festering financial wound wrought by the mess in
the erstwhile seaworthy vessel in an otherwise sagging economy.

      If nothing else, it also underlines the extent of the malaise in the
sector where those running the affected banks have shown that they are
devoid of any notion of honour, integrity and honesty. These are words they
would not recognise except as clues in newspaper crossword puzzles. They
neither have sufficient conscience to bother them let alone keep them
straight. Put simply, the words honesty, integrity and honour, in the mouths
of some of these bankers are just like the word love in the mouth of a
whore!

      Little wonder therefore that a significant number of banking
institutions were teetering on the verge of collapse until they were thrown
an eleventh-hour life-line by the Reserve Bank of Zimbabwe. The central bank
ordered a merger of the troubled banks by January next year in an attempt to
stave off what appeared an imminent collapse and potentially Zimbabwe's
biggest corporate failure. While admittedly the temptation to become couples
is as prevalent in the corporate sector as the personal, this one is a
forced marriage. This option, other than an outright liquidation, was
probably meant to make the best out of a very bad situation as the central
bank tries to clean up potentially one of the world's messiest piles of
financial wreckage.

      All this because some of the despicable things the bankers did, if
they had not been done, could never be imagined. Indeed who could imagine
the stupefying complex pattern of deceit, fraud and criminality in the
financial sector? Hopefully however the move by the RBZ will provide an
opportunity for a quick route to cost-cutting, profit growth and the
long-awaited consolidation in the overcrowded banking segment.

      Added to this, the mess and rot in the sector has seen thousands of
hapless investors burning their fingers after they lost billions of their
hard-earned cash - thanks to the natural born cheats who masquerade as
bankers. It is exceedingly costly to the investment portfolios of people who
must be dismayed that the long arm of the law has not been long enough to
reach some fugitive bankers. Not to mention how distressing this is to the
investors' psyches and the crippled national confidence in banking.
Thousands of people have suffered as employees and millions still have
suffered as depositors simply because a handful of top banking officials
undertook a string of dangerously fraudulent practices. It has brought with
it anguish, nightmares and bitterness among a multitude of victims of the
financial scandal, some of whose very livelihood is in jeopardy.

      It is against this background that we here raise the issue of
professional ethics and the role played by external auditors in abetting and
masking corruption in the banking sector and indeed elsewhere in the
economy. We raise the issue because external auditors, who risk becoming
corrupt to the very dregs of infamy, could be guilty of complicity. It has
just been brought to our attention that a firm of external auditors, against
the ethics of the profession, borrowed close to a billion dollars from their
client - a bank that has since twisted in the air - leaving creditors in the
lurch to the tune of a whopping $400 billion. There is something untoward
over this financial arrangement because it clearly puts the auditors in a
position where their professional judgment conflicts with their personal
business interest.

      This is alarming coming as it does after a legal minefield that
erupted in the mid-1990s, when two international accounting firms were
issued with writs by Touche Ross, the liquidators of the disgraced Bank of
Credit and Commerce International (BCCI) for alleged negligence, breach of
duty and breach of trust. The former managing director of the bank's Harare
subsidiary, Bashir Shaik, was later jailed for three years in the United
States of America for assisting deposed Panamanian strongman Manuel Noriega
launder drug money.

      What is disturbing is the flagrant disregard for the profession's
ethics. The rules of professional conduct of the Institute of Chartered
Accountants of Zimbabwe (ICAZ) categorically state that: Financial
involvement with a client will affect independence and may lead a reasonable
observer to conclude that it has been impaired. According to the institute,
such an involvement can arise in a number of ways, among others, by loans to
or from the client or any officer, director or principal shareholder of a
client company.

      So, doesn't the auditors' actions give rise to conflict of interest?
Wasn't this inducement to paint a rosier-than-real picture of the financial
status of the bank which they knew had a full-blown liquidity crisis,
falling revenues insufficient to provide for adequate capital, support for
present and future operations and a run on the bank signifying a deep
depositor alienation? Moreso given that auditors must be independent in fact
and appearance. Doesn't it impair integrity, objectivity, independence and
indeed the reputation of the profession? A case of not wanting to risk the
ire of the hand that feeds them!

      To what extent do these accountants help their clients cook the books
and shade the truth? Is it within their professonal ethics to cover up for
the misdeeds of influential and powerful people? In the case pointed to
above, should they have turned a blind eye and let bank executives rob and
deceive depositors by stashing away huge sums of depositors' money? Or
should they have blown the whistle to enable the government to punish the
criminals and not hurt legitimate depositors as former New York District
Attorney Robert Morgenthau once said as the BCCI scandal unfolded. Lastly
but not least, how widespread is this problem?

      We ask these pertinent questions because we believe that it is the
duty of outside accountants to, among other things, detect and identify
simmering problems and questionable financial dealings before it is too late
to correct them. This is more so in Zimbabwe where banks, for whom
transparency has been an alien concept, had erected "Chinese walls" that
kept the authorities from getting critical information about their
operations. This is why we feel that this is a ripe area for investigation.
The ICAZ and the powers-that-be need therefore to get to the bottom of this
issue, because we need a fresh start to restore credibility to local
business.

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FinGaz

      ...and now to the NOTEBOOK


      11/4/2004 8:40:32 AM (GMT +2)

      Historic?
      In our African culture, it is agreed that it is not the done thing to
recite a person's misdeeds after their death. It is wrong. It is immoral.
Uncouth.

      Fine and dandy. But there are some situations when we are forced to
disregard this age-old tradition. Moreso when some people try to
deliberately distort a straight forward history - the way ZANU PF seems to
be adept at doing.
      Last week former Harare executive mayor Cde Solomon Tawengwa passed
on. Every patriotic Zimbo felt as bereaved as the Tawengwa family . . .
until ZANU PF started distorting history.
      We started hearing that Cde Big Solo had been Harare's first executive
mayor until he resigned in 1999 . . . blah, blah! Jesu Kristo! Why do people
just want to distort facts at each and every twist and turn?
      It is a fact that the late ZANU PF mayor was dismissed by Ignatius
Chombo after Harare had gone dry.
      And even this year, sclerotic apologists at the state media argued
that there was nothing eventful about the dismissal of Elias Mudzuri because
even before a ZANU PF mayor in Harare had been dismissed for
non-performance. So where does the resignation story come from?
      A lot was said, but nothing was said about people who pegged their
service stations at sports stadia . . . and such other unbecoming acts!
      Cosmetic
      It is good to notice that ZESA - which last year posted a loss of $163
billion - finally has a new board. Remember the Great Uncle firing the
previous board in a graveside speech at the National Heroes Acre last year?
Back to ZESA board appointments. Nothing has, in actual fact, changed at all
since the man at the centre of the mess, our national brother-in-law, Cde
Sydney Gata, is still in his self-created position as executive chairman -
and he still answers to no one.
      It is said everyone is nepotic at some point in life - and for
altruistic purposes, it is sometimes important that we become nepotic - but
there are cases where some people tend to take this game too far. And it is
only within the realms of nepotism that one can explain the perennial
survival of Cde Gata at ZESA.
      Last year, we were told that the entire ZESA board was being sacked
because it had failed to deliver, but what is surprising is that the same
man who headed the board that failed to deliver is again heading the
cosmetic new-look board.
      Our sages always advise us that a fish rots from the head downwards .
. . so what sort of fish is this ZESA one that not only rots from the tail
but whose head, in fact, never rots?
      It is because of decisions like this nepotic one that we are ever in
trouble!
      Gig of the year?For months, we were told to gird our loins for a
"Kongonya Dance Party of the Year", courtesy of no one else but PaxAfro,
that ambitious musical outfit owned by the only Professor in this country.
And guess what it turned out to be? The mother of all flops! Yes, a flop of
all flops! For it turned out to be a real sorry apology for a "party of the
year."
      Ever since when has the market been flooded with free admission
tickets on the last minute? We mean ever since when have serious and
well-organised groups invited others to join them on the eleventh hour?
      Yes, this only happened when it dawned on the organisers that the
thing was going to be a flop, dead cert!
      So that explains the many comps that were curiously given to whoever
cared to receive them . . . and the invitation of Tongai Moyo and other
musical groups to join in at the very last minute. It had been realised that
PaxAfro alone had no capacity, whatsoever, to lure even half-a-dozen
demented merry-makers.
      Zimbabweans were just not interested in attending the show. Whether it
was because of who is behind the musical group, or just the craven dislike
for gatherings over-attended by some security operatives, Zimboz just did
not get excited about this so-called party of the year.
      And we are also told that even the double CD is not selling. Whether
the music is good or not, once they have made up their mind on something,
nothing changes their hearts.
      So this explains the flop.
      Sorry
      Our commiserations to gospel diva Fungisai Mashavave (nee Zvakavapano)
for being the latest victim of the (smart) travel sanctions slapped on
Zimbabwe. The songbird is the latest addition to the long list of those
characters banned from setting foot in the United Kingdom. Sorry Sister
Fungisai.

      cznotebook@yahoo.co.uk

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FinGaz

      Land reform cuts down timber output

      Zhean Gwaze
      11/4/2004 8:09:58 AM (GMT +2)

      ZIMBABWE'S commercial timber production has shrunk by 50 percent,
largely because of uncertainties caused by changes in land tenure
legislation, uncontrolled veld fires and increases in production costs,
players in the sector say.

      Uncertainty brought about by the government's chaotic land
redistribution exercise has resulted in non-expansion of plantations over
the past four years.
      The industry has also been hit hard by declining consumer demand for
timber and timber-related products on the local market, while the lull in
the property sector has added to the industry's misery.
      The construction industry, the major consumer of timber products, has
been operating below capacity because of high costs of building materials,
mainly imports.
      Bill Johnston, chief executive of the Timber Producers Association,
said output in the industry had been on the decline since 2001, with no
major expansion programmes taking place.
      Johnston told The Financial Gazette: "(The) local market has shrunk by
between 30 and 50 percent. The industry was on the brink of collapsing in
2003 when changes in the banking sector occurred, which saw the mainstay of
the industry (Zimbabweans in the diaspora) shun the local property market.
There is not much we can do until the land resettlement programme is
concluded."
      The Reserve Bank of Zimbabwe earlier this year introduced managed
foreign currency auctions to curb a thriving parallel market that was
central to a booming property market.
      National annual timber statistics indicate that 119 000 cubic metres
of timber were produced in 2001and the figure dropped by 10 percent in 2002
to 108 000 cubic metres. Figures for last year are yet to be released.
      The timber industry has a long production cycle. Pine trees, the major
and common raw material in the sector, mature after a period of up to 25
years and continuous replanting is required.
      The government's land redistribution exercise displaced a number of
white farmers who were involved in timber production. Invasions of the
properties are still reportedly occurring throughout the country and
existing timber plantation owners are still uncertain whether to go ahead
with expansion programmes.
      The government's agrarian reform has led to the expropriation of over
90 percent of the country's 4 500 white-owned commercial farms for the
resettlement of the landless blacks, many of whom lack resources to farm on
a large scale.
      Major timber-producing areas were acquired for resettlement and most
of the settlers reportedly started depleting the forests for firewood and
construction material. They also allegedly overgrazed the land. Uncontrolled
veld fires had also contributed to the decline, Johnston said.
      The timber industry contributes about four percent of Zimbabwe's gross
domestic product and earns the country much-needed foreign currency through
exports to regional and international markets.
      Johnston said players in the industry were increasing export volumes
as a survival tactic. But he said this was not viable because there had been
no major changes upward on the auction rate offered to exporters by the
central bank since the beginning of the year.
      Reserve Bank governor Gideon Gono last week announced that the foreign
currency exchange rate had been upped from $5 600 to $6 200 against the
greenback, a move likely to change the fortunes of the timber industry
players.
      There have also been calls to give concessions to communities in
timber-growing to motivate them to look after trees.
      own timber output
      Zhean Gwaze
      Staff Reporter

      ZIMBABWE'S commercial timber production has shrunk by 50 percent,
largely because of uncertainties caused by changes in land tenure
legislation, uncontrolled veld fires and increases in production costs,
players in the sector say.
      Uncertainty brought about by the government's chaotic land
redistribution exercise has resulted in non-expansion of plantations over
the past four years.
      The industry has also been hit hard by declining consumer demand for
timber and timber-related products on the local market, while the lull in
the property sector has added to the industry's misery.
      The construction industry, the major consumer of timber products, has
been operating below capacity because of high costs of building materials,
mainly imports.
      Bill Johnston, chief executive of the Timber Producers Association,
said output in the industry had been on the decline since 2001, with no
major expansion programmes taking place.
      Johnston told The Financial Gazette: "(The) local market has shrunk by
between 30 and 50 percent. The industry was on the brink of collapsing in
2003 when changes in the banking sector occurred, which saw the mainstay of
the industry (Zimbabweans in the diaspora) shun the local property market.
There is not much we can do until the land resettlement programme is
concluded."
      The Reserve Bank of Zimbabwe earlier this year introduced managed
foreign currency auctions to curb a thriving parallel market that was
central to a booming property market.
      National annual timber statistics indicate that 119 000 cubic metres
of timber were produced in 2001and the figure dropped by 10 percent in 2002
to 108 000 cubic metres. Figures for last year are yet to be released.
      The timber industry has a long production cycle. Pine trees, the major
and common raw material in the sector, mature after a period of up to 25
years and continuous replanting is required.
      The government's land redistribution exercise displaced a number of
white farmers who were involved in timber production. Invasions of the
properties are still reportedly occurring throughout the country and
existing timber plantation owners are still uncertain whether to go ahead
with expansion programmes.
      The government's agrarian reform has led to the expropriation of over
90 percent of the country's 4 500 white-owned commercial farms for the
resettlement of the landless blacks, many of whom lack resources to farm on
a large scale.
      Major timber-producing areas were acquired for resettlement and most
of the settlers reportedly started depleting the forests for firewood and
construction material. They also allegedly overgrazed the land. Uncontrolled
veld fires had also contributed to the decline, Johnston said.
      The timber industry contributes about four percent of Zimbabwe's gross
domestic product and earns the country much-needed foreign currency through
exports to regional and international markets.
      Johnston said players in the industry were increasing export volumes
as a survival tactic. But he said this was not viable because there had been
no major changes upward on the auction rate offered to exporters by the
central bank since the beginning of the year.
      Reserve Bank governor Gideon Gono last week announced that the foreign
currency exchange rate had been upped from $5 600 to $6 200 against the
greenback, a move likely to change the fortunes of the timber industry
players.
      There have also been calls to give concessions to communities in
timber-growing to motivate them to look after trees.

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FinGaz

      Chombo, Ndabeni-Ncube tiff miffs residents body

      Munyaradzi Mugowo
      11/4/2004 8:26:54 AM (GMT +2)

      THE Zimbabwe United Residents Association (ZURA) is consideringways to
intervene in the tug-of-war between the local government ministry and the
Bulawayo City Council, which is threatening service delivery.

      ZURA secretary-general Masimba Ruzvidzo said ratepayers viewed Local
Government Minister Ignatius Chombo's interference in the administration of
Bulawayo as persecution targeted at councillors from the main opposition
party.
      "The fighting between the mayor and the minister is affecting
ratepayers in terms of service delivery. The outcome of the political feud
will have implications on us (ratepayers), hence we have developed an
interest in what is taking place.
      "We are trying to make consultations and mediate in the issue with a
view to bridging the rift," Ruzvidzo said.
      Ndabeni-Ncube faces dismissal for issuing reports that there were
growing incidences of deaths caused by hunger in the country's second
largest city, statements the government says were unfounded.
      The government insists the deaths were caused by malnutrition, not
hunger. Ndabeni-Ncube, however, says he does not see the difference between
the two.
      ZURA blamed the wrangling on the Urban Councils Act, which gives
Chombo leeway to interfere in the running of municipalities.
      According to the provisions of the Act, said ZURA, the minister can
suspend councillors and appoint a commission, which would not be answerable
to ratepayers but to him.
      This lopsided balance of power enshrined in the Act, said ZURA,
compromised transparency and accountability.

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FinGaz

      This time it may finally be the red card


      11/4/2004 8:39:58 AM (GMT +2)

      The hullabaloo that the visit of the Congress of South African Trade
Unions (COSATU) delegation to Zimbabwe has sparked reminds me of a statement
attributed to Winston Churchill.

      To underscore his abomination for one of the most evil tyrants of the
20th century, Britain's great wartime leader is reputed to have said that if
Adolf Hitler invaded hell, he (Churchill) would say a favourable word for
the devil in the House of Commons.
      What Churchill meant, in essence, was that he detested the Nazi leader
so much that he would support anything Hitler was against or vice-versa.
      Hitler established Nazism, launched the Second World War and presided
over the Holocaust, during which six million Jews were killed.
      Through Joseph Goebbels, he mounted the most ferocious and hate-filled
propaganda campaign under which freedom of speech and assembly came under
relentless attack.
      Churchill's disgust with this ruthless oppressor and his "if you are
against it, I am for it" stance was hardly surprising.
      However, the "if you are a friend of my enemy, you are my enemy"
philosophy that seems to be at play in the controversy involving the COSATU
delegation is hard to understand and is indeed uncalled-for in a supposedly
democratic country.
      The official reason given for the deportation of the South African
trade unionists was that their mission was "political" and this was anathema
to the government.
      The heavy-handed action against the visitors unfortunately betrays an
increasing sense of government paranoia characterised by a jumble of vague
and contradictory suspicious and imagined conspiracies.
      In a bid to justify the government's defiance of a court order
nullifying the delegation's deportation on the grounds that it was illegal,
officials fell back on a now familiar cop-out - claims that relevant
documents were not received in time to act.
      Far from giving the impression of a country safeguarding its
sovereignty, these vindictive actions portray a nervous government that
knows its clampdown on the rights and freedoms of Zimbabweans cannot bear up
to scrutiny and investigation.
      One minister even fumed that COSATU, like the main opposition
political party in Zimbabwe, the Movement for Democratic Change (MDC), was
an agent of the government's favourite scapegoat - Tony Blair.
      According to the twisted logic of some government ministers, anyone
who wants to have anything to do with organisations such as the MDC, the
Zimbabwe Congress of Trade Unions and the National Constitutional Assembly,
which are accused of being sponsored by the British, is, in turn, a puppet
of Blair.
      There can hardly be many organisations with better African or
revolutionary credentials than COSATU, which is a powerful ally of South
Africa's ruling African National Congress. To accuse such an organisation of
being under the control and influence of Blair is to take the "macho" and
combative propaganda that has become the order of the day in this country to
new levels.
      The counterproductivity of this reality-defying propaganda, in which
things are said to demonstrate false bravado rather than persuade, was shown
during the invasion of Iraq last year.
      Saddam Hussein's energetic information minister provided an
entertaining sideshow when he persistently denied that Baghdad had fallen,
despite overwhelming evidence to the contrary. He often made these denials
when viewers could see for themselves on their television screens what the
reality was.
      The fact of the matter as far as the crude treatment of visiting
delegations is concerned is that it serves to confirm the charges of human
rights abuses and repressive governance levelled against Zimbabwe by the
international community.
      It is difficult to think of any other democratic country that would be
prepared to decree without any sense of irony that the discussion of the
political situation prevailing within its borders is taboo and therefore a
legitimate reason for the kind of clampdown characterised by the kicking out
of the COSATU delegation.
      The government seems to have fallen into the trap of believing its own
relentless and virulent propaganda. But in this case, it has not only scored
an own goal. It may finally have issued the red card against itself.

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