Forex scam haunts Mugabe

President Robert Mugabe’s fight against corruption is closing in on his closest confidants. The 82-year-old leader is in a quandary and is unwilling to pass a routine political directive for the arrest and prosecution of Zanu-PF officials allegedly involved in illegal foreign currency dealings.

Police insiders have said that no arrest or prosecution of a Cabinet minister or member of Zanu-PF’s Politburo takes place without Mugabe’s sanction. It is a political formality that the police and Attorney General adhere to, but Mugabe’s selective approach has irked some of his colleagues in Cabinet.

The police’s criminal investigations department investigated Mugabe’s close ally, retired General Solomon Mujuru, husband of Vice-President Joice Mujuru,

for flouting exchange control regulations and running Mafia-type shelf companies.

These companies would buy and trade foreign currency on the black market with individuals and companies in which the government has an interest. Mujuru then made weekly transfers involving billions of Zim dollars (see “The docket”).

The official exchange rate is set at Z$250 to the US dollar, but the black market is thriving: the greenback fetches about Z$1 500.

Central bank Governor Gideon Gono has accused big business of sabotaging his economic reforms by trading on the black market and flouting the Exchange Control Act, an offence punishable with jail time or a fine.

Since 2003, when the exchange rate was fixed, several business people, hoteliers and bankers have been arrested for illegally dealing in foreign currency. However, it appears that no one has the guts to go after Mujuru — whom police insiders have dubbed the “Godfather” of murky foreign currency dealings in Harare.

Mujuru’s dealings have also implicated the Commercial Bank of Zimbabwe and the Zimbabwe Fertiliser Company, of which the government is the second major shareholder.

The Mail & Guardian can reveal that a docket was opened this year and handed to Mugabe by police Commissioner Augustine Chihuri. But no “political directive” was forthcoming, so police put an end to the investigation.

The M&G is reliably informed that a second probe was conducted by the national economic conduct inspectorate, a crime investigating unit of the finance and state intelligence ministry.

The docket was made available to the M&G by a high-ranking source in the government, who is concerned that Mugabe is “frying small fish” and leaving his confidants untouched.

This is despite Mugabe’s public assurances that he will prosecute anyone involved in corruption regardless of “status” or “political affiliation”. In the past two years his crackdown has netted just two ministers.

Front companies

The docket against Mujuru states that there are two front companies operating from Harare’s Five Avenue shopping centre: Cellular Unique (Star all) and Longfeld Investments. Cellular Unique is mysteriously registered as a cellphone business operating company.

Both companies use the same address — CY3095, Causeway, Harare, and have accounts at the National Merchant Bank’s Angwa City branch denominated in Zim dollars.

The police report indicates that Cellular Unique and Longfeld are front companies for a parent holding company, Parlovan Investments, owned by Mujuru. Parlovan is a registered money transfer business that made several big deposits into Longfeld and Cellular investments accounts.

Another company, identified as AIT, is also allegedly owned by Mujuru and, according to the docket, is used in illegal foreign currency dealings.

According to a senior government official, Gono is aware of the docket on Mujuru and has grown frustrated with Mugabe’s failure to take action against the general.

When Gono unveiled his monetary policy statement on August 31 he made a thinly disguised reference to companies in the Avenues area illegally transacting in foreign currency deals. “He [Gono] has knowledge of the police investigation into General Mujuru,” said the senior government official.

A week later, Gono said he would not be prevented from turning the economy around by people who were trying to intimidate him with their “liberation war credentials”.

This week, when contacted by the M&G to name these powerful people with liberation war credentials and those masterminding foreign currency dealings, Gono referred the newspaper to “his Excellency, the president” and “the police commissioner”.

In October Gono banned all money transfer agencies, accusing them of breaching foreign exchange regulations. Gono believes illegal foreign currency dealings are ruining the economy by encouraging speculative tendencies that fuel inflation which, at about 1 000%, is the highest in the world.

The docket
In the docket against Solomon Mujuru, the police reveal that “the money transfers and transactions involve large volumes of cash, such as $40-billion a day”.

The criminal investigations department’s (CID) probe reveals that “the two front companies are dealing in illegal forex business”. The dealings are done by Emmanuel Manyika, who heads both companies, with a buyer identified as Wadzanayi.

The currency is then sold to individuals and companies, including the Commercial Bank of Zimbabwe and the Zimbabwe Fertiliser Company, of which the government is a major shareholder.

Six pages of statements from Longfeld’s National Merchant Bank accounts made available to the CID show large deposits from Parlovan Investments during two months between December 2005 and February 2006.

Why Mugabe won’t act
Should Robert Mugabe act against Solomon Mujuru, there is likely to be an outcry from the powerful Zezuru ethnic group within his party and government. Mujuru is a Zezuru from Chikomba district, Mugabe’s first wife, Grace’s home area.

Mugabe is aware of more than 10 completed investigations into corrupt activities by senior government officials, but he has not acted on them. As a result there is a feeling that acting against Mujuru could open a can of worms, with disgruntled party members spilling the beans on their rivals. This could dent the image of his party and the government.

A ruling Zanu-PF party Politburo member told the Mail & Guardian that Mugabe’s loyalty to Mujuru dates back to 1976, during the liberation struggle. It was Mujuru, then known as Rex Nhongo, who formalised Mugabe’s leadership of Zanu’s military wing in the presence of the late Tanzanian leader Julius Nyerere.

Before joining the struggle Mujuru had worked as a tyre salesman at Dunlop in Bulawayo. In 1976 he worked with the late former Zanla commander, Josiah Tongogara, to have Mugabe accepted by the liberation fighters in the struggle.

Back then, there was deep-seated distrust between the liberation fighters and the political leadership. The leadership had been accused of selling out the struggle, but Tongogara and Mujuru forced the liberation fighters to accept Mugabe during a turbulent period that saw countless fighters killed and others detained for mutineering.

A senior official said that despite becoming “disdainful” and “very annoyed” by Mujuru’s business dealings and lack of party commitment in the past years, Mugabe is reluctant to send him to prison given his war credentials.

Although Mujuru is part of Mugabe’s supreme organ, the Politburo, over the past years he has not been active in party affairs. But last November he played a crucial role in elevating his wife to the vice-presidency, fighting off a challenge by presidential aspirant Rural Housing Minister Emmerson Mnangagwa.