Gono used $40 million of banks’ reserves without authorisation

Reserve Bank of Zimbabwe governor Gideon Gono used US$40 million of the banks’ reserves lodged with the central bank without authorisation and it is not clear what the money was used for, Minister of Economic Development at the time Elton Mangoma told United States diplomats.

Mangoma said this was a violation of the law which the Movement for Democratic Change could use to force Gono to resign.

The appointment of Gono as central bank governor for a second term was one of the outstanding issues in the Global Political Agreement with President Robert Mugabe who made the appointment arguing that he had a right to appoint him while the MDC argued that this was a violation of the GPA as he should have consulted Prime Minister Morgan Tsvangirai.

Mangoma said in the past Gono had received ministerial authorisation, mostly from the Finance Minister, for questionable activities but he had not received authorisation in this instance.

He did not know where the funds had gone but speculated that Gono had helped out ZANU-PF insiders or the military.

Gono claimed that the money was used to meet critical requirements such as the electronic payment system.

This information is contained in a diplomatic cable prepared by US embassy official Katherine Dhanani dispatched on 30 October 2009. This paragraph on the deal was, however, removed from the Wikileaks cable that was made public.

The cable confined itself to Mangoma’s request to the United States to contribute to a fund to provide a package for security chiefs to force them into retirement.

Full cable:

S E C R E T SECTION 01 OF 02 HARARE 000865 SIPDIS AF/S

FOR B.WALCH DRL

FOR N. WILETT ADDIS ABABA

FOR USAU ADDIS ABABA FOR ACSS STATE PASS TO USAID

FOR J. HARMON AND L. DOBBINS NSC

FOR SENIOR AFRICA DIRECTOR M. GAVIN E.O. 12958:

DECL: 10/30/2019 TAGS: PGOV [Internal Governmental Affairs], PREL [External Political Relations], PHUM [Human Rights], ASEC [Security], ZI [Zimbabwe] SUBJECT: MDC FOCUSES ON SECURITY SECTOR, GONO REF: A. HARARE 853 B. HARARE 863 C. PRETORIA 2136 Classified By: CDA Katherine Dhanani for reason 1.4 (b) and (d). ——-

SUMMARY ——-

¶1. (S) According to Elton Mangoma, MDC-T Minister of Economic Development and member of Prime Minister Morgan Tsvangirai’s inner circle, the MDC would like the U.S. to contribute to a “trust fund” to buy off securocrats and move them into retirement. The MDC will also try to pressure Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono to resign by negotiating immunity from prosecution for him for misappropriation of banks’ required reserves (Ref B). Finally, Mangoma believes an agreement will be reached ending the MDC’s disengagement from ZANU-PF, but if not, the MDC will continue pursuing its long-term strategy of preparing for elections. END SUMMARY.

¶2. (SBU) Pol/Econ chief met with Minister of Economic Development Elton Mangoma on October 29 at the Ministry. Mangoma is one of Tsvangirai’s closest advisors and was one of the MDC-T negotiators of the Global Political Agreement (GPA).

¶3. (S) Reiterating Tsvangirai’s views (Refs A and C), Mangoma said that a primary obstacle to political progress and reform was the service chiefs. Unlike many ZANU-PF insiders who had stolen and invested wisely, these individuals had not become wealthy. They feared economic pressures, as well as prosecution for their misdeeds, should political change result in their being forced from office. Therefore, they were resisting GPA progress that could ultimately result in fair elections. Mangoma asked for consideration of U.S. contribution to a “trust fund” that could be used to negotiate the service chiefs’ retirement. He said he planned to approach the UK and Germany with the same request.

¶4. (C) Mangoma told us the MDC was convinced Gono had violated the law in expending about US$ 40 million of banks’ required reserves lodged at the RBZ (Ref B). The MDC was formulating a strategy that would involve Gono’s resignation in exchange for immunity from prosecution. Mangoma noted that in the past Gono had received ministerial authorization, mostly from the finance minister, for questionable activities. He had not received authorization in this instance, and was vulnerable. Mangoma didn’t know where the funds had gone; he speculated Gono had helped out ZANU-PF insiders and/or the military. (COMMENT: Gono’s actions have become public and Gono has begun to spin the story. An article in today’s The Herald falsely claims that a visiting IMF mission observed that the “incomprehensible” non-funding of the RBZ by the Ministry of Finance had led to use of banks’ reserves by the RBZ to meet critical requirements such as the electronic payments system. It is doubtful this will become a pressure point to remove Gono. END COMMENT.)

¶5. (C) Although doubtful about the ability of SADC to bring about a rapprochement between ZANU-PF and the MDC, Mangoma Qabout a rapprochement between ZANU-PF and the MDC, Mangoma was hopeful that the parties themselves could ultimately reach an agreement. Most ZANU-PF officials realized that the entry of the MDC into government had brought about stability and did not want to see the MDC withdraw. If an agreement was not reached, the MDC would consider next steps with the goal of eventually having elections. HARARE 00000865 002 OF 002

¶6. (C) We posited there was a general perception among diplomats and in civil society that the MDC did not have a strategic vision and had disengaged without a Plan B in the event ZANU-PF did not compromise on outstanding issues. Mangoma disagreed; the West had continuously underestimated the MDC by focusing on specific events such as ZANU-PF’s repressive actions of the last week (Septel) rather than the long-term process by which the MDC had managed to enter government and begun to set itself up to win the next elections. With regard to the events of the last week, Mangoma said bumps in the road were to be expected. ——-

COMMENT ——- ¶7. (C) The relative power of Mugabe vis-a-vis the service chiefs is a matter of debate. While no doubt there are hardliners, including the service chiefs, close to Mugabe who are pressuring him not to further implement the GPA, we continue to believe he could make concessions should he choose to do so. The current visit of the SADC Troika may give an indication if there is any ZANU-PF flexibility. We’re skeptical and expect the current impasse — and ZANU-PF repression — will continue in the near term.

END COMMENT. DHANANI

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