Back to Index

This article participates on the following special index pages:

Prisons full of company directors as price war continues
Tererai Karimakwenda, SW Radio Africa
July 10, 2007

http://www.swradioafrica.com/news100707/prisons100707.htm

The lawyer representing the majority of big companies facing charges for failing to comply with government's price controls has said more owners and directors were being arrested Tuesday and his telephone was ringing every half hour. Lawyer Jonathan Samkange is representing Colcom and many other large companies. He confirmed that the price monitoring exercise has continued with vigor and the government is serious.

Last week all companies were ordered to reduce prices by 50% or risk a takeover. Then a new law was gazetted legalising the price freezes. At least 133 directors and owners have been arrested since. According to the state media companies being charged include TM Supermarkets, City Welcome Supermarket, Italian Bakery, Spar Supermarket, Motorview Car Sales and City Motor Lane.

Samkange described the prison cells as being full of arrested owners and directors, and said the government will now be charging all of those that were arrested after Friday, in their personal capacities. The State controlled Herald newspaper confirmed that nearly 10 directors and company representatives will face charges in their personal capacities. Asked why the authorities are making such a move Samkange explained that the statutory instrument being used to prosecute them requires imprisonment for those found guilty, and you cannot imprison a company. A financial expert described the situation as madness, saying: "It's like the inmates are now in control of the asylum."

Samkange said there are many arguments against this campaign but they will only be heard once they get a hearing in court. He also said many of those facing charges were arrested before the new law was passed. The new regulation covers all goods and services produced and distributed in Zimbabwe, and fixes the base date at 28th June. All manufacturers need written approval before effecting any price changes. Wholesalers and retailers are allowed to mark up their products by a flat 20%, and there is a 20% mark up for transport if the destination is more than 40 kilometres from the point of collection.

But with hyperinflation now believed to be close to 10,000%, experts say these regulations are insane and the time required to process price change applications will be enormous. Samkange said government is asking companies to do the impossible. He said: "Anyone with even an elementary understanding of business knows this is not workable."

The lawyer gave the example of The Italian Bakery, which was accused of charging more than the stipulated Z$150,000 for a rump steak. The company director produced invoices showing that they paid Z$950,000 for 4 steaks, meaning each would have to be sold for at least Z$250,000 without considering rent, salaries and other expenses. The police response was: "Then don't buy it." Meanwhile The Zimbabwean Times news site this week reported that The Reserve Bank of Zimbabwe is allegedly spending "a staggering Z$6 billion" daily in subsistence allowances for members of the unit enforcing price controls. The operation has been dubbed "Operation Dzikisai Mitengo" (reduce the prices). The site quotes sources from within the police who said more than 2000 operatives were recruited from the police, army and Central Intelligence Organization. Each is believed to be making about Z$2 million per day. If this goes on for a month, the RBZ will require more than Z$200 billion. This latest government operation caused a mad rush to the shops by consumers desperate for cheaper products. Police and youth militia hired to monitor prices have been accused of looting and enforcing the price freezes, according to their own rules. The government has said the crackdown will continue.

Please credit www.kubatana.net if you make use of material from this website. This work is licensed under a Creative Commons License unless stated otherwise.

TOP