At least eight business persons affiliated with mobile phone operators Econet and Telecel were arrested in one week in November allegedly for externalising foreign currency.
Observers said the move was aimed at frightening people and firms from dealing on the parallel market.
According to a cable released one senior banker commented that cracking down on businessmen and corruption was part of the government’s demagogic pandering to the masses to gain popularity in advance of the March 2005 elections.
“The consensus of Zimbabwean businessmen from various sectors is that this tactic is resonating with large numbers of Zimbabweans,” the cable said. “At the same time, the GOZ’s selective crackdown against ‘externalizers’, which includes almost all businessmen, keeps the moneyed elite off balance and beholden to Mugabe and his favoured inner circle.”
Full cable:
Viewing cable 04HARARE1862, GOZ Steps Up Arrests of Forex Externalizers
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This record is a partial extract of the original cable. The full text of the original cable is not available.
120835Z Nov 04
UNCLAS HARARE 001862
SIPDIS
STATE FOR AF/S
USDOC FOR ROBERT TELCHIN
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON
SENSITIVE
¶E. O. 12958: N/A
SUBJECT: GOZ Steps Up Arrests of Forex Externalizers
Sensitive but unclassified. Not for Internet posting.
¶1. (SBU) Summary: The GOZ has again been arresting
prominent Zimbabwean businesspersons for sending foreign
exchange offshore. The GOZ appears to believe that these
high profile arrests will deter others from exchanging
forex on the ever-resilient parallel market. End
summary.
¶2. (SBU) Over the past week, the GOZ has arrested at
least eight leading businesspersons affiliated with
mobile phone operators Econet and Telecel. Among those
detained:
– James Makamba, who has already spent most of the year
behind bars on similar charges. The opposition press has
asserted that Makamba’s alleged extramarital liaison with
First Lady Grace Mugabe is the underlying reason for his
arrest.
– Econet CEO Douglas Mboweni, an Embassy contact.
– PG Industries COO Nyasha Zhou, who serves on the Econet
Board of Director but does not oversee the firm’s day-to-
day operations. Zhou participated in a U.S. Embassy-
sponsored seminar about hyperinflationary coping tactics
for businesses last year, and serves as Chairman of the
Board of Zambuko Trust, a micro-finance institution and
longstanding USAID partner.
– Jane Mutasa, one of Zimbabwe’s top businesswomen and a
member of Telecel’s board of directors.
These new inmates join Finance Minister Chris Kuruneri in
detention. The GOZ has held Kuruneri since March and
alleges that he externalized funds to build a beachfront
Cape Town mansion. This week, a local judge denied
Kuruneri bail for the third time.
¶3. (SBU) Reserve Bank Deputy Governor Charity Dhliwayo,
who oversees exchange control, told us on Monday that the
GOZ still considers the parallel market trading a threat
to the economy and will pursue anyone who trades or sends
abroad forex through these informal channels. In his
October 28 policy statement, Reserve Bank Governor Gideon
Gono said he seeks to “ensure that regulatory provisions
around parallel market dealing are tightened further.”
Comment
——-
¶4. (SBU) The GOZ’s approach to monetary policy and
disinflation is largely limited to exchange rate
management. To frighten people and firms from dealing on
the parallel market, the Government has sporadically
arrested high-profile businesspersons. One senior banker
commented that cracking down on businessmen and
corruption is part of the GOZ’s demagogic pandering to
the masses to gain popularity in advance of the March
elections. The consensus of Zimbabwean businessmen from
various sectors is that this tactic is resonating with
large numbers of Zimbabweans. At the same time, the
GOZ’s selective crackdown against “externalizers,” which
includes almost all businessmen, keeps the moneyed elite
off balance and beholden to Mugabe and his favored inner
circle. In terms of economic impact, the GOZ’s zealous
enforcement has dampened but not eliminated parallel
trading. Local contacts tell us this week’s buy/sell
midpoint for U.S. dollars has been Z$8,700, a forty
percent premium to the official Z$6,200 exchange rate.
Weisenfeld
(586 VIEWS)
