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ZISCO: The cost of Zimbabwe's kleptocracy
December 14, 2006

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.

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