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Letter to President Mugabe: Governor Gideon Gono, ENG Capital and RBZ
Gilbert Muponda
May 31, 2009

Your Excellency President R. G Mugabe

RE: Governor Gideon Gono, ENG Capital and Reserve Bank of Zimbabwe reform

Firstly Your Excellency I would like to congratulate and thank you for agreeing to and implementing the Inclusive Government (I.G). You have shown encouraging leadership by demonstrating that you can indeed work with members of the opposition even though challenges remain. The I.G offers our nation hope for revival and future prosperity if it can be fully implemented.

The purpose of my letter is to clarify a few issues which you may not have been accurately briefed on.

My name is Gilbert Muponda. I hope you remember me, since in several public statements you were quoted to have mentioned both my Company ENG CAPITAL and my name. As you may recall during the financial crisis of 2003- 2004 I was made the poster boy for all things that had gone wrong with Zimbabwe-s economy. At one funeral you even mentioned me by name and you said, "hameno kuti vabereki vaMuponda vanoti kudii mwana wavo zva auraya nyika kudai". The then crusade was that once Zimbabwe closed firms and businesses such as ENG CAPITAL the economy would recover and people would have a better standard of living. The exchange rate between the Zimbabwe dollar and the US$ then was 1500 is to 1. The rate of inflation was 450%. But by early this year 5 years after the closure of ENG inflation had risen to around 500 million percent .One US$ was trading for several trillion Zimbabwe dollars. The situation worsened until the Zimbabwe dollar was suspended and replaced by foreign currency to a point that Zimbabwe has lost monetary policy sovereignty. Zimbabwe-s monetary Policy is now being determined from South Africa, Washington and other Western Capitals because Dr Gono was reckless in managing the country-s economy as he indulged himself in excessive money printing without devising other strategies such as those employed by Ian Smith-s regime which allowed the Rhodesia Front to carry on for 15 years despite sanctions .

Your Excellency when the Defense Forces Chiefs are forced to make various announcements and statements to insist that Governor Gono will remain it undermines Your Office, the Defense forces and the credibility of the Reserve Bank. The hiring and firing of the Reserve Bank Governor is not a matter for the Army to publicly stand behind a certain individual. This scares investors and other international partners.

Dr Gono has done his level best and as such he should now be allowed to rest and be gracefully retired to make way for another Governor to guide the Economy forward. An inaccurate impression is being created that there are malicious people who are trying to have Dr Gono dismissed for personal or vindictive reasons. The correct position is that Dr Gono is being asked to gracefully retire for several clear reasons related to how he has mismanaged the country-s monetary policy, its currency and the economy in general. The reasons are not personal but National in terms of importance, as his departure will unlock resources that remain elusive due to the way the Governor Has conducted himself over the last 5 years. This is not about MDC against ZANU-PF. I am sure MDC could agree with ZANU PF providing an acceptable replacement for Governor Gono. The problem is Governor Gono is seriously compromised and his stay at the Central Bank is endangering the chances of Economic recovery.

According to a report carried by the respectable AFP news agency of 25 May 2009 Cde President it appeared you were responding to my letter to the Prime Minister and were quoted as having said the following about Governor Gono ; "He is not a thief, he has done no wrong. Prove the wrong he has done, that's the crime he is alleged to have committed -- that he stood by this man Robert Mugabe, who must collapse so that there is regime change."

Governor Gono-s alleged crime is not that he supported or stood by you. His real crime is economic sabotage; this is why he has been referred to as an Economic terrorist. He is ruining the country-s economy through various ill-thought out policies and devising unjust self enrichment schemes which drained investor confidence whilst milking national coffers at the same time. The major problem with his unjust self-enrichment schemes is that he has been randomly mentioning that he does this with the approval of his 'Principal-. This Your Excellence is undesirable for a man of your stature and standing to let your name and reputation be tainted as the one who is facilitating and allowing such unjust self-enrichment and self-aggrandizement schemes.

I will briefly describe for you one specific example about what I mean by unjust self-enrichment schemes .I am sure you were told that ENG CAPITAL had many cars, and these cars were the only assets that ENG had. The correct and accurate facts are that ENG was a Group of Companies, which Companies had Directors, Managers and employees and the cars were for the use of these members of staff who ran the various companies which made up ENG CAPITAL.

ENG Capital group had a market value of US$ 175 million, just before the RBZ descended on the Institution.

Below is a brief ENG Group Structure:

ENG HOLDINGS GROUP STRUCTURE

- SUBSIDIARIES
- ENG CAPITAL INVESTMENTS PVT LTD
- ENG ASSET MANAGEMENT PVT LTD
- ENG REAL ESTATE
- ENG NOMINEES PVT LTD
- ENG PRIVATE EQUITY (PVT) LTD
- ENG CAPITAL ADVISORY SERVICES
- ENG STRUCTURED FINANCE

ADDITIONAL MAJOR ASSETS OWNED:

- Century Bank Holdings (now CFX bank)
- Leasing Company of Zimbabwe, Century Asset Managers)
- Century Discount House
- Hybri Micro-Finance Institution
- Care Insurance PVT LTD
- RestCel Insurance PVT LTD
- Amalgamated Health Services ? (Harare West Hospital )
- 15% of OK Zimbabwe Limited
- 15% of Zimplow Holdings Limited
- 20% Medtech Holdings Limited
- Hornet Re-Insurance PVT LTD
- Pearl Pension Fund Management
- 25 % Clan Holdings Limited
- 25 % Zimbabwe News Papers Group - Zimpapers Limited
- Allied Conveyor Belts PVT LTD
- River Drilling PVT LTD
- Real Estate including (Anastasia Court, Belgravia House, Thaine Building)
- Various Listed ZSE Listed shares
- Treasury Bills
- GMB Bills
- Cargill Commercial Paper
- $ 4 billion - Alliance Capital Debenture (representing 123 million First Mutual Life shares)
- 23 Million First Mutual Life shares

ENG Group was liquidated and managed to repay its creditors.

Using the Anti-Graft mantra Governor Gono devised an unjust self enrichment scheme targeting business leaders arresting,harassing,intimidating,exiling and black mailing entrepreneurs .

ENG assets above included a parcel of more than 600 million Century Financial Holdings ( Now CFX BANK) of these 600 million we were able to track 309 Million Shares sold to Network Investments and Kwangwari Enterprises which are investment vehicles in which Gono reportedly has interests. The 309 Century Financial Holdings Limited Million shares in question were sold through Fidelity Stock brokers on or around May 13, 2004. Within the same week an announcement was then made that CFX Bank was taking over Century Holdings. The shares were sold to Gono-s reported consortium for Z$2,9 billion when ENG had spent $35 billion to accumulate the shares, thereby prejudicing ENG, Creditors, Investors and contributories of at least Z$32,1 billion.

As ENG contributory and shareholder, I wrote to the Zimbabwe Stock Exchange Chief Executive Mr Emmanuel Munyukwi asking for an investigation because we had agreed with the majority of creditors that the shares should not be sold but rather swapped with creditors and investors instead of selling them at an unreasonable price. But the 309 Century /CFX Financial Holdings million shares were somehow clandestinely sold and that transaction enabled CFX Bank to take over Century Holdings Limited.

This allowed the reverse listing of CFX Bank on to the Zimbabwe Stock Exchange. Without those 309 Century Holdings Limited million shares owned by ENG the CFX/Century merger would have never happened. Gono and his proxies became the new controlling shareholder of the new merged bank. Is this by design or accident, Gono then forced out the Mr Sean Maloney who had helped to put together the transaction. Mr Sean Maloney had to leave the country under unclear circumstances. Part of the same shares snatched From ENG were later transferred to Premier Bank Financial Holdings which is reportedly owned by Governor Gono.

ENG directors and contributories asked the high court to set aside the sale of the shares and the matter action is still before the courts in Harare. We asked Zimbabwe Stock Exchange Committee to investigate. They refused. We asked the brokers for the identity of the buyer of our shares. They refused. The brokers indicated they were under serious pressure from individuals they couldn-t identify to maintain total secrecy on the identity of the buyer. Within a few days of raising the challenge of the CFX/Century shares Justice Minister Patrick Chinamasa specified me without affording me a hearing or an enquiry as required by the Constitution of Zimbabwe. The was specification at the instigation of Governor Gono .The specification was meant to harass, cow, intimidate and silence me from raising further complaint and challenges regarding ENG assets specifically these 309 million shares in CFX Financial Holdings.

Since the ENG shares in Century /CFX Bank Financial Holdings were irregularly transferred the Bank ownership remains in dispute. The ENG shareholders and contributories filed and sought a high court order to stop the transfer of the shares until the dispute had been resolved. The shares were still clandestinely transferred despite the pending high court application to resolve the dispute. After filing for this order My Lawyer the late Oscar Ziweni was also specified by the Minister of Justice and threatened, harassed and intimidated until he went into hiding. However the point remains ENG shareholders and contributories still lay claim to these shares and stake in Century/ CFX BANK which were looted by Governor Gono.

A few individuals directly involved in the illegal sale of the ENG shares in Century later confessed that the beneficiary of the transaction was Governor Gono. Cde President the description of the actions above constitutes unacceptable behavior by the Governor of the Reserve Bank. The transactions clearly show corrupt behaviour which when repeated at a massive scale as done by Governor Gono can bring down a country-s Economy. This is a significant part of what killed Zimbabwe-s Economy. I am sure other business people will have their stories to tell and many will have common features with what I have described above. This will be difficult to prove without a forensic audit of Independent Commission of Enquiry. And this will only be possible if Governor Gono is gracefully asked to recuse himself or go on paid leave whilst this is done. As a scholar of modern corporate Governance practices I believe the Governor will find this acceptable.

As you may probably recall Barbican Bank, Trust Bank and Royal Bank experienced a liquidity crisis similar to what Century /CFX Bank experienced during the same period. Barbican Bank, Trust Bank and Royal bank were then taken over and amalgamated to form Zimbabwe Amalgamated Bank (ZABG). Even though Century /CFX Bank faced the same situation it was not merged into ZABG. The reason was that Governor Gono was now the new controlling Shareholder and he was protecting his self-interests. Century /CFX Bank was placed into temporary curatorship only to reopen a few months with RBZ pumping huge amounts of money to protect Governor Gono-s new investment?. Your Excellency this is corruption. This is how the country goes down the drain.

ENG case was not in isolation. Many people lost jobs, businesses and careers whilst Governor Gono was hiding behind anti-graft campaign just like today he is hiding behind the sanctions busting myth as if he is the one who invented sanction-busting techniques. Businesses destroyed or taken over Royal Bank, Intermarket, Barbican, Intermarket, Rapid, Sagit, Africa Resources, Century Bank, Trust Bank. And this all happened within a space of less than 6 months. Jobs were lost. Business people were intimidated, scandalized, arrested or haunted out of the country. This Your Excellency is what ruined the Economy. Even a strong Economy cannot with stand such massive brain drain where highly experienced and skilled business people and bankers are dismissed, exiled or jailed all at the same time. The Economy and investor confidence suffers. Capital Flight will result and factories and businesses will relocate into neighbouring countries whilst foreign investors avoid the country after witnessing how local investors and entrepreneurs have been treated. This is what ruins the country-s economy.

Your Excellency as you may be aware CUBA and North Korea have been under sanctions for longer periods than Zimbabwe. Cuba has been under a serious sanctions for more than 50 years, yet inflation in CUBA has never reached 1000% . The Cuban currency has never been to levels witnessed by Zimbabwe dollar. It is therefore clear that Zimbabwe-s Economic decline has more to do with ruinous policies as devised and implemented primarily by Governor Gono .

The list of victimized businesspeople is rather long but it includes such luminaries as Dr Makoni, Mutumwa Mawere, James Mushore, Emmanuel Fundira, Otto Chekeche, Godfrey Jowa, Norman Sachikonye, Victor Chando, Durajadi Simba, Jeffrey Muzwimbi, William Nyemba, Nicholas Vingirai, Mthuli Ncube, Francis Zimuto , James Makamba, David Butau, Minister Chris Kuruneri, Nyevero Hlupo, Chris Goromonzi,John Moxon and many more. Mr President all these men above are true patriots who chose to set up businesses in their own country instead of neighbouring countries where they had similar opportunities and incentives. Is this normal to see a whole generation of entrepreneurs scandalized and lose all credibility and all at the same time all based on accusations raised and directed by one man? A lot of these individuals have been forced to settle in other countries where they are working, creating jobs and help build neighbouring economies whilst Zimbabwe is in desperate need for such skills and services.

This list includes some of the most gifted Bankers and Business people of our lifetime. It includes The Founders of the first Indigenous Merchant Bank, It Includes the founders of the first Discount House, It includes the first Black Entrepreneurs to form and list their own Financial Institution in Zimbabwe. All these men Your Excellency have been haunted out of the country, embarrassed and disgraced due to the vindictiveness of Governor Gono as he pursued long discredited economic policies. When such experienced and skilled business people are haunted out of their businesses and out of the country the impact is long term. Factories close, production is reduced, shortages become widespread and prices keep rising till hyper inflation becomes order of the day.

During the 1980s and 1990s the Government ran the much-vaunted Education for All campaign. That campaign produced millions of graduates. Including me. It is sad today that a majority of those products are today working and serving other nations whilst Zimbabwe is in desperate need of their skills and services. More than 80% of my former classmates at National University of Science and Technology are now based outside Zimbabwe.

Cde President other countries protect and support their business people and entrepreneurs. They give them incentives to remain, stay and be based in their country of birth. In the USA there are individuals like Warren Buffet, Steve Jobs, Bill Gates and many others. They live in America and if they were to re-locate else where I am certain the American Government will do everything it can to re-attract them. They do this because they know Entrepreneurs create jobs, provide services and make the economy prosper. In 2006 The richest Chinese man was the then 37 year old Wong Kwong Yu of Gome Appliances. Wong Kwong Yu has an estimated $2.3 billion US dollars in assets according to the Forbes business magazine. China has 108 other billionaires. And they all live in and operate from China. These are some of the people who have helped China become such an Economic powerhouse. The world over its rare for any country to be developed by foreigners in the absence of a vibrant local entrepreneurial community. Whilst Zimbabwe may look east its also important that it looks inside for its own business people and entrepreneurs. Under the direction of Governor Gono Zimbabwe lost too many talented individuals who are needed to revive the economy. It is therefore imperative that the RBZ be reformed and Governor Gono be re-deployed away from the Central Bank which must play.

The Media and those close to you tried to create impressions that ENG was brief case company premised on Financial Engineering and Financial gymnastics and creating money from thin air without real economic activity. This is false. I will clarify this by bringing to your attention 2 companies, which were part of the ENG Capital Group. ENG included River Drilling PVT LTD specialized in locating under ground rivers and water bodies. Its main activity was to locate such water bodies and bore hole drilling through out the country. This included drilling boreholes for schools and rural district councils. Allied Conveyor Belts was involved in manufacturing, servicing and installation of conveyor belts and elevators. At the time of ENG-s closure the Company was in the process of negotiating the refurbishment of all the Conveyor belts and systems at Hwange Colliery Company Limited. In addition it was finalizing an conveyor belt system export order worth US $ 2.8 million from an Angolan firm. It is clear a misleading impression was created that ENG specialized in cars or non-economic activities and these businesses I am highlighting were ignored and downplayed to try and create justification for the closure of ENG CAPITAL whilst ENG assets were stripped and looted as earlier described above.

I hope the above will give an indication of why the RBZ must be reformed and during that reform individuals like Governor Gono must gracefully be retired or redeployed. The above case about the ENG shares in Century / CFX Financial Holdings show how corrupt the Governor is. Your Excellency your reputation and legacy is on the line. Cde President you cannot be seen to be defending and protecting a corrupt man like Governor Gono. I am sure other cases of his corrupt behaviour will be brought to your attention since you have asked people to show you the Governor-s criminal and corrupt deeds .

* Gilbert Muponda is an Entrepreneur based in Canada. He is Founder of GMRI Capital He can be reached at gilbert@gilbertmuponda.com

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