New United States ambassador to Zimbabwe Christopher Dell described central bank governor Gideon Gono as a wolf in sheep’s clothing who had hounded out his enemies while building his own empire.
In a cable released by Wikileaks, Dell said at first blush, Gono was like an anomaly among President Robert Mugabe’s officials.
He courted Western embassies and the International Monetary Fund, had accommodated people like Eric Bloch and Tony Hawkins once regarded by the government as enemies and was even seen in the company of Commercial Farmers Union president Douglas Taylor-Freeme but he had imprisoned, marginalised or exiled nearly everyone of his rivals.
He had forced into exile “the country’s most revered indigenous banker” Mthuli Ncube who was the main contender for the central bank post and chief executive of Barbican Bank. He had driven out Intermarket boss Nicolas Vingirai.
The government had neutralised the Ministry of Finance’s two most powerful policymakers, jailing Minister Chris Kuruneri and offering permanent secretary Nicholas Ncube a largely ceremonial appointment as one of three Reserve Bank of Zimbabwe deputy governors.
“We cannot state for certain what Gono’s role has been in the demise of each rival, but find it telling that so many rivals have fallen from power since Gono’s rise, that he has taken no action to halt this process and that he has benefitted personally and professionally from their demise,” Dell said.
“With a rotation of cabinet officials overseeing the Finance Ministry (while Kuruneri awaits trial from behind bars) and powerless David Chapfika serving as the new deputy Minister, Gono now controls nearly every economic policy function.”
Full cable:
Viewing cable 04HARARE1495, CENTRAL BANK GOVERNOR GONO: WOLF IN SHEEP,S
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 HARARE 001495
SIPDIS
AF/S FOR BNEULING
NSC FOR SENIOR AFRICA DIRECTOR C. COURVELLE, D. TEITELBAUM
USDOC FOR AMANDA HILLIGAS, TREASURY FOR OREN WYCHE-SHAW,
PASS USTR FOR FLORIZELLE LISER, STATE PASS USAID FOR
MARJORIE COPSON
E.O. 12958: DECL: 12/31/2009
SUBJECT: CENTRAL BANK GOVERNOR GONO: WOLF IN SHEEP,S
CLOTHING?
Classified By: Ambassador Christopher Dell.
Reason: 1.5 d
——-
Summary
——-
¶1. (C) We are disturbed that Reserve Bank (RBZ) Governor
Gideon Gono’s expanding hegemony spells more trouble for
Zimbabwe’s flagging economy. Although he is an ideological
moderate by GOZ and Zanu-PF standards, preaching an
uncharacteristic fervor for Western and International
Monetary Fund (IMF) reengagement, recent RBZ policies reach
far beyond conventional central bank parameters. Most
worrisome, it is becoming increasingly difficult for firms to
survive without lobbying for and obtaining personal
concessions from Gono. His personal corruption is a source
of concern for the country,s economic future.
—————————————
Moderate in Tone, Machiavellian in Deed
—————————————
¶2. (C) At first blush, Gono seems like an anomaly among
Robert Mugabe’s officials. Unlike many, Gono has never
misrepresented Western sanctions as the cause of the
country’s economic decline. He courts Western embassies and
the IMF. He has personally rehabilitated many out-of-favor
white Zimbabweans. (Note: Before Gono took over at the RBZ
in December, for example, outspoken Bulawayo accountant Erich
Bloch was subject to recurring arbitrary detention; now he
heads the RBZ’s most important advisory committee. Gono is
similarly happy to be seen in the company of Commercial
Farmers Union President Douglas Taylor-Freeme and University
of Zimbabwe MBA department chair Tony Hawkins ) whom the
GOZ’s Herald often portrayed as enemies of the State.) Gono
has called for transferable 99-year leases for land
redistribution beneficiaries, the most market-friendly
position on land reform of any prominent Zanu-PF spokesman.
In private talks, he derides the GOZ’s estimate of a 2.4
million ton maize harvest and land-grabs by prominent
ministers.
¶3. (C) However, since Gono took office, the GOZ has
imprisoned, marginalized, or exiled nearly every one of his
rivals, often through allegations of investment abroad
(“externalization of foreign exchange”), a serious crime in
Zimbabwe. Authorities have chased into London exile Gono’s
main contender for the RBZ post – Barbican CEO Mtuli Ncube –
as well as the country’s most revered indigenous banker )
Intermarket CEO Nicolas Vingirai. The GOZ has neutralized
the Ministry of Finance’s two most powerful policymakers,
jailing Minister Chris Kuruneri and offering Permanent
Secretary Nick Ncube a largely ceremonial appointment as one
SIPDIS
of three RBZ deputy governors. (Ncube now complains to us
about his shrunken workload.) We cannot state for certain
what Gono’s role has been in the demise of each rival, but
find it telling that so many rivals have fallen from power
since Gono’s rise, that he has taken no action to halt this
process and that he has benefited personally and
professionally from their demise. With a rotation of cabinet
officials overseeing the Finance Ministry (while Kuruneri
awaits trial from behind bars) and powerless David Chapfika
serving as the new deputy Minister, Gono now controls nearly
every economic policy function.
—————————–
Central Bank Gains New Powers
—————————–
¶4. (U) Gono has shifted many responsibilities from the
Finance Ministry to the RBZ, such as the registration of
investment firms and screening of bank executives. The
central bank also now not only reviews/approves
qualifications of CEO/CFOs, as the Finance Ministry used to,
it requires banks to forward the curriculum vitae of
applicants for every managerial position down to department
head, a source of resentment in the banking sector. Gono has
also dictated to private banks that they may no longer close
for Wednesday afternoons (a Zimbabwean tradition).
¶5. (U) By establishing the GOZ’s forex auctions in January,
Gono also established a mechanism for the RBZ to set the
country’s official exchange rate. Previously, this required
a cabinet decision, as when the rate moved from Z$55 to
824:US$ in late 2002. However, Gono’s commitment to an
overvalued rate has dashed initial hopes he would use his new
authority to keep the rate at realistic levels. He may be
the undisputed master of Zimbabwe,s economic policies, but
he has been unable or unwilling to change those policies for
the better.
————————————-
Gono Determines Who Gets Loans, Forex
————————————-
¶6. (C) Gono’s greatest power lies in determining which firms
succeed and which fail. He has final say over who can tap
attractive low-interest productive sector loans (presently
carrying a 50 percent rate, versus approximately 200 percent
on the open market ) a rent-seekers haven). The RBZ
Governor also decides how to allocate the auctions’ meager
forex. Favored importers buy it at a 28 percent discount to
the parallel market, widening their profit margin over
competing importers. The key to auction success is often an
audience with Gono, something many importers never obtain.
¶7. (C) Finally, Gono maintains his own business empire,
including Jewel Bank and growing media interests. He is
publisher of the Financial Gazette, Zimbabwe’s main business
weekly, which toes the RBZ policy line. He is taking over
the daily and Sunday Mirror, a potential rival to the
Ministry of Information’s daily Herald.
———–
Bottom Line
———–
¶8. (C) Since he says so many things that contradict customary
GOZ rhetoric, Gono makes for a refreshing interlocutor. In
fact, he seems to have spellbound many visitors. The local
IMF office put out a 2005 forecast of 5 percent growth
(published on the IMF website, but since withdrawn) after
meeting with Gono earlier this year. However, we do not
believe Gono is either taking or advocating the decisions
that will lead to an economic turnaround. He continues to
expand money supply at an alarming clip (year-to-year M3 is
up roughly 400 percent through April, the latest available
statistic), while reining in inflation through an enforced
official (auction) exchange rate. As a result, exports )
the engine of the economy – appear to be dropping (there are
no useful official statistics). Foreign direct investment is
negligible.
¶9. (C) Gono has also failed to use his three policy
statements to make the case for devaluation (as Finance
Minister Simba Makoni did in 2001-02). Nor has he advocated
an end to the GOZ’s selective “witch-hunts” for investments
abroad. This is a crime every Zimbabwean of the middle-class
and above has committed, often ) as in the case of Finance
Minister Kuruneri ) facilitated by Gono’s Jewel Bank. In
the final analysis, Gono appears to see no conflict of
interest in the RBZ Governor owning one of the most prominent
indigenous commercial banks and much of the financial press.
Gono may be a moderate, but presently only by GOZ standards,
and his personal corruption poses its own threat to
Zimbabwe,s economic future.
Dell
(214 VIEWS)
