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ZISCO:
The cost of Zimbabwe's kleptocracy
Sokwanele
December 14, 2006
http://www.sokwanele.com/articles/sokwanele/zisco_thecostofzimbabweskleptocracy_14dec2006.html
Day by day,
we count the cost of this kleptocracy that rules our nation: we
count it in terms of the bodies of those who die silently week by
week of Aids, malnutrition and poverty; in terms of the disruption
of family life, and the misery of the millions of economic refugees;
in terms of the desecration of the environment; and, as here, in
terms of the cost to the economy brought about by the plunder of
national assets. What will be left once this evil is at an end,
and the culprits are finally brought to book?
With no real
democratic institutions in existence, and no law enforcement, there
is no culture of accountability, which leaves the ruling elite free
to loot and plunder as they please. When their heinous crimes do
come to light, instead of heads rolling, and the government falling
into disgrace - as would happen in a working democracy - the rulers
treat those over whom they rule with utter contempt, of which the
refusal to answer to parliament is a symptom. Without accountability,
those in power simply decide amongst themselves what path to take
in the latest and largest incidence of national fraud - some are
even using it to further their own political agendas!
Zimbabwean parastatals
are a by-word for mismanagement, incompetence, inefficiency and
corruption. Eyes roll and heads wag at the mention of Air Zimbabwe,
the Grain Marketing Board, Zesa, PTC, Zupco, and others. These are
state-owned companies, meaning that the government, which is elected
(we use this word loosely, given the theft of post-Independence
elections in Zimbabwe) by the people, is accountable to the people
of Zimbabwe for the management of these companies.
Zisco, the Zimbabwe
Iron and Steel Company, is one of the largest state-owned enterprises
in Zimbabwe. It also boasts the largest steel works in the region
outside South Africa. Its principal activities are the production
and marketing of iron and steel. At full capacity, the company produced
2 million tons of steel a year, but current production is less than
300 000 tons (or 15%). The drop in production stands in sharp contrast
to the firming of the world's steel price. In July, the Reserve
Bank saved Zisco from closure by providing an emergency Z$2 trillion
(old currency) lifeline, and the firm is saddled with significant
foreign debts.
Zisco is now
at the centre of a scandal that is rocking government circles, the
biggest case of high-level fraud and corruption to come to light
since Independence in 1980. As one Zisco official put it, the raiding
of the Midlands-based parastatal will make all previous government
graft cases "look like a Sunday afternoon picnic when it eventually
explodes".
If this is happening
at Zisco, what is happening in other parastatals? Are they any different?
Perhaps it is only the scale of the looting that is different. The
Zanu PF principle is always the same: take what you can while you
can, regardless of law and equity.
The
Zisco saga: the facts
Through the Reserve Bank of Zimbabwe (RBZ), Zisco had negotiated
a profitable USD 400 million management contract with an Indian
firm, Global Steel Holdings Limited (GSHL). GSHL was supposed to
have injected foreign currency for the rehabilitation of Zisco plant
components, particularly the blast furnaces, coke oven batteries,
furnace and rolling mills; after 20 years, management control would
have reverted to government.
This deal is
now off, following a report by NECI (the National Economic Conduct
Inspectorate), which implicates high-ranking government officials
in the systematic looting of Zisco - on a scale that is difficult
for most even to imagine.
A parliamentary
committee was set up to investigate the existence and findings of
the NECI report. In September, Industry and International Trade
Minister Obert Mpofu, told the committee of the existence of the
NECI report, saying that it implicated Members of Parliament and
members of Mugabe's Cabinet in the corruption at the parastatal.
A week later, he back-tracked on his words, apparently after uproar
from his Zanu PF colleagues and the government, who were afraid
of exposure. Mpofu then failed to appear before the parliamentary
committee, and government has refused to hand over the NECI report
to them. It seems that Mugabe told cabinet ministers that the report
should not be made public, and ordered Justice Minister Patrick
Chinamasa to advise the committee to halt further investigations
into Zisco operations.
The parliamentary
committee has now compiled its report, and has given government
an ultimatum to put the NECI report on the record and publish it,
or they will leak to the press the version they have obtained. Parliament
has now started impeachment proceedings against Obert Mpofu on charges
that, lying under oath, he gave false evidence to the committee.
This will be the first time that a government minister has been
impeached by Parliament in post-Independence Zimbabwe. He faces
a fine, or up to 2 years in jail, or both.
The committee
also investigated the contract with GSHL, finding that "the
implementation of the contract was unplanned, improper, and highly
questionable". It found that the contract was awarded to GSHL
out of 9 competing companies, without due diligence, and that the
Zisco board was unaware of the deal. It seems that the board's authority
was usurped by Mpofu's ministry - the Ministry for Industry and
International Trade - which signed the GSHL contract. The committee
also found that GSHL has a history of being on the receiving end
of multi-billion US dollar lawsuits concerning agreements in Nigeria
and the USA, where the company had entered into contracts which
it had failed to honour.
Gross abuse
of public assets at Zisco has been revealed, being perpetrated in
the following ways:
- Claiming
large allowances from the company after travelling on business
that had nothing to do with Zisco
- Dubious
contracts, where the bids were rigged
- Over-pricing
purchases, where the excess money would be split between the arranging
parties (at the Botswana subsidiaries, only one person handles
purchases - contrary to the fundamental principle of segregation
of duties)
- Claiming
money for management fees and directors' meetings without justification
or following procedure
- Taking cash
for private use
- Abuse of
credit cards
- Hotel bookings
and entertainment allowances (thousands of US dollars were spent
entertaining government officials and their cronies at the Grand
Palm Hotel Casino & Convention Resort - a five star hotel
in Gaborone - where they squandered public funds on expensive
drinks and food during weekends)
The employees
of Zisco and its two Botswana subsidiaries, Ramotswa and Tswana
Steel, have said they are ready to reveal the names of those implicated
in the looting. The Zimbabwe Independent has performed extensive
investigation into the matter, and revealed the names of the following
individuals who seem to have benefited in some way from dubious
dealings:
- Gabriel Masanga,
the former Zisco group MD, had private expenditure paid through
the company, plus questionable vehicle expenses incurred in Botswana
- David Murangari
received forex to pay for personal expenses
- Samuel Mumbengegwi
(Indigenisation and Empowerment minister & formerly Industry
and International Trade minister in charge of Zisco) - paid an
allowance of USD 3000 while attending a SADC meeting in Gaborone
for himself and two others; also paid accommodation for unexplained
visits to Botswana
- Joice Mujuru,
who in 2003 was paid USD11 000 as allowances by the Botswanan
subsidiaries, and received 30 000 litres of fuel (liquid gold!)
from Zisco on her election as vice-president in 2004
- Olivia Muchena
(Science and Technology minister) - air tickets and allowances
for missions unconnected with Zisco
- Sithembiso
Nyoni (Small-to-Medium Enterprises Development minister) - air
tickets and allowances for missions unconnected with Zisco
- Stan Mudenge
(Higher Education minister), hosted by Zisco subsidiaries in Botswana
under unclear circumstances
- Late Gibson
Munyoro (Zanu PF MP) - same as Mudenge
- George Mlilo
(Transport permanent secretary), incurred dubious expenses for
the company
- George Chikumbirike,
received dubious forex payments
- Tirivanhu
Mudariki (businessman and former Zanu MP) - air tickets, allowances
and accommodation for missions unconnected with Zisco
Numerous other
individuals who were also on the receiving end of dubious payments,
or transactions; George
Chikumbirike, listed above, was the lawyer representing the Zimbabwe
Electoral Commission in Tsvangirai's legal challenge of the results
of the stolen 2002 Presidential Election. Zisco's Botswana subsidiaries
paid him USD1 225 in July 2003 as an allowance through a telegraphic
transfer into his ABC Botswana Bank Account (we trust that the Exchange
Control authorities are investigating this); he also received USD1
000 for school fees in January 2004 from the Zisco Managing Director
Masanga's company facility.
Further shenanigans
are apparent in the fact that the Ramotswa/Tswana Steel MD and business
manager, James Chininga and Shelton Chivhere, respectively, are
also trying to acquire those two companies themselves - both companies
are owed money by Zisco and have made a lot of payments on behalf
of their parent company. They claim that this is their own initiative
but speculation is rife that senior politicians are working behind
the scenes.
For further
proof of mismanagement, Zisco has also just had to surrender its
mining concessions to KFW, a German company, after failing to repay
a USD 17.6 million loan advanced for the construction of its steel
plant. This debt was in addition to numerous others, including those
due to the Chinese, the NRZ, Zesa, and other local companies. And
the latest news to hit the press is that a Chinese company has made
a USD 3 billion takeover bid for Zisco, although that fact is being
vociferously denied in some quarters.
The
consequences
The questions of the release of the NECI report, and of the impeachment
of Obert Mpofu, have given rise to further rifts within Zanu PF
(and here we refer you to our earlier article "Is Zanu PF splitting
up?"). The thieves are falling out among themselves over the
share of the booty each is to receive, and those who are not actually
complicit this time are making the most of their good fortune, and
advancing their own agendas in the succession struggle by exposing
guilty colleagues who are their rivals. And there are the others
who see Zanu PF tearing itself apart, and are desperately trying
to put a lid on the whole scandal.
Speaker John
Nkomo is believed to be aligned to Vice President Joice Mujuru (she
with presidential aspirations) - they want the committee scuttled,
and the report swept under the carpet, Nkomo managing to hold in
abeyance the motion to impeach Obert Mpofu for as long as he could.
But the other
side is striking back! Justice Minister Chinamasa is on the side
of rival presidential aspirant, Emmerson Mnangagwa. They are now
retaliating against Joice Mujuru, who is suspected of involvement
in the attempted prosecutions of Mutasa and Chinamasa. Chinamasa
managed to adjourn parliament for some weeks, aiming to buy time
to restore discipline within the ruling party. Mnangagwa and Chinamasa
both want the report to be published and the wrong-doers to be exposed,
and need time to swing things to their advantage.
On the subject
of the impeachment, Obert Mpofu is to be taken to the Parliamentary
Privileges Committee. The last person to appear before that committee
was Roy Bennett - will Mpofu get the same treatment as he did, and
will we see him clothed in Zimbabwe Prison uniform for 8 months,
we wonder? One would expect parliamentarians to regard the deliberate
misleading of the House as about the most serious offence imaginable.
Sadly, past
experience has led us to believe that the regime's commitment to
fighting corruption will falter before the drastic step of a truthful
public exposé of the facts, and the prosecution of offenders.
If the result of any investigation is any less than this, it will
be an irrefutable declaration by Mugabe and his regime that they
are not committed to transparency, to justice, or to the fight against
corruption.
Zanu PF has
been involved in the rape, pillage and plunder of the assets of
this country for 26 years; as we see from the list above, high level
people have been involved in the plunder. They think they can get
away with it because they've managed to do so for so long. We need
to let them know that they can't - and we praise those journalists
who have been, and continue to be involved in this exposé.
But there will come a day of reckoning; there will come a day when
what is done in the darkness will be brought to light!
It is time for
all Zimbabweans who care, to say "SOKWANELE!" "ZVAKWANA!"
- demanding full accountability, and insisting that the perpetrators
of this massive fraud be brought to justice. It is the patriotic
duty of any who can assist this process to make their contribution
now, failing which, we are on the way to joining such totally failed
states as the DRC, Darfur, Somalia, Sierra Leone et al.
Visit the Sokwanele
fact
sheet
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