The Parliamentary Select Committee appointed to carry out a more comprehensive investigation into irregularities of the Zimbabwe Banking Corporation and the Merchant Bank of Central Africa in their relationship with the M and C Group of Companies -Lorac (Private) Limited- has been given the unenviable task of naming top government officials and politicians, most of whom are their bosses or colleagues, who so far four investigations have been too scared to name.
If they carry out a proper investigation they could end up toppling the government they are part of as reports say the Lorac case could turn out to be worse than the Willowgate scandal which resulted in five government ministers losing their jobs.
Former Lorac boss, Michael Fewster, did not only deal with former head of State Canaan Banana, the only political leader named in the Kudenga Report, but could also have had some dealings with the country’s late first lady.
The Sunday Times has reported already that it believes nine ministers and six Members of Parliament had their houses renovated by Lorac.
A London based confidential also reported that it understands that the late first lady had some links with Fewster before he left for South Africa. It says, however, the investigators in the Ngoni Kudenga Commission whose report was heavily criticised in Parliament saw it fit not to mention this in writing and instead told the President in person.
If this is true this could be disastrous for President Robert Mugabe’s political career as it would be almost impossible to convince the nation that he did not know about such dealings.
So far four investigations have produced inconclusive reports, although it is widely accepted that Fewster had successfully cultivated influence in the Ministry of Commerce and Industry, whose investigations were a flop, the Department of Customs and Excise, the police force, which failed to come up with any charges against him, and cabinet ministers, who witnesses are said to be too scared to name, or who the commission itself was scared to name.
Although the Kudenga Commission underplayed Fewster’s influence when in its concluding remarks it said Fewster “even went so far as to befriend the former head of State which goes to stress that he was building around himself an aura of influence which made him almost untouchable,” Fewster appears to have been in fact, untouchable.
While the commission said all key witnesses were scared to come up with names of cabinet ministers who had dealings with Fewster despite the committee’s persuasion and assurance that the witnesses should feel free to tell the truth, it does not explain why these witnesses were so scared since most of their evidence was not going to be attributed to them by name as the final report seems to indicate.
It is also surprising that the commission failed to persuade witnesses to disclose the names when all in all they interviewed almost 70 people which would have been very difficult for anyone to trace who had said what unless members of the commission itself leaked this information.
One witness, Trevor Andrews, has already complained that he was detained five times for exposing the shady deals Fewster was involved in. He also said he was surprised names of the ministers involved had been left out in the Kudenga report since they had been supplied.
The Kudenga commission interviewed three members of Parliament including Alois Mangwende who brought up the matter in Parliament. In the end it appeared the commission came up with less information than Mangwende probably had. This is also reported to have been the case in the Sandura Commission where most people believed the commission in the end came up with fewer names of people involved in the car racket than the Chronicle which broke the story.
It also interviewed 13 ex-employees of Lorac some of whom claimed they were very cooperative because they were disturbed at the way emergent business people were being ripped off by Fewster. The commission also interviewed 11 emergent businessmen who had dealings with Fewster, eight other persons from various fields including former Head of State Canaan Banana and his former private secretary, 15 officials and board members of Zimbank, four officials from Zimbank subsidiaries, three officials from the Merchant Bank of Central Africa, five police officers, two members of the National Economic Conduct Inspectorate (NECI) and an official from the Attorney-General’s office.
Fewster started Lorac with his wife Carol in November 1980 as a company involved in confirming activities, importation and clearance of goods. He immediately took advantage of the government’s policy to favour emergent businessmen who were issued with import licences so that they could break the white monopoly.
Since most of the emergent businessmen lacked basic education, training and experience required in foreign trade, and the collateral normally required to secure loans, Fewster, through Lorac, turned into their saviour. He told the businessmen he was prepared to offer them 30 to 60 days credit facilities.
Some bank officials even referred some of these emergent businessmen to Lorac. Another confirming house, Gerber Goldschmidt, also referred emergent businessmen to Lorac allegedly after they had failed to meet its (Goldschmidt’s) requirements.
Fewster also recruited other persons to get emergent businessmen to him and paid them 10 percent commission of the face value of their import licences. One of his employees, Clive Lukan, was offered $500 for each import licence he brought in, while another businessman, Ruwisi of Ruwisi Stationery, was given a monthly allowance of $1000 to recruit. There were even allegations that officials of the Ministry of Trade and Commerce referred some businessmen to Lorac.
Once he had obtained the import licences Fewster would claim to have ordered the goods and sold them at a loss and would therefore demand the balance. He at times claimed the goods had been lost at sea and would pay the licence owner the face value of the import licence. In most cases those who dealt with Fewster ended up being indebted to him.
After getting off the ground, Fewster began to build an empire around him. He formed a construction company which built houses for government ministers and officials who in turn were expected to give him some favours. The original Kudenga report only named former President Banana among the politicians who received favours from Fewster. The name of former permanent secretary, Langford Chitsike, was only mentioned in an addendum.
Fewster also built houses or factories for emergent businessmen so as to utilise their import licences. Some of those named in the Kudenga report are Chidziva of Chakabachi (Private) Limited who had a factory and a shop constructed for him at Mubaira Growth Point, Muchechesi of Muchechesi Import/Export who had a house built for him, Chitanda who had a house and a supermarket built for him in Marondera. Musa and Phiri had houses renovated. The projects for Chitanda had not been completed when Lorac went into liquidation, the report says.
Fewster also went into horse breeding and racing and set up a company called Camiad for this purpose. Fewster, the report said, wanted to become the most accomplished horse breeder in Zimbabwe within two or three years. When his company went into liquidation, he had 59 horses in his stables. Fewster’s business empire expanded from just one company in 1980 to 14 in 1989. Some of the companies, which were now under M and C Group were: K and F Enterprises, Brians Motors, Bokoto Enterprises, Billboard Systems, The People’s Trading Company, Paper Products, Royale Enterprises, Spare Parts, and Watch Industries.
Fewster also owned Rockridge Properties which had several properties in Bulawayo including a house that he used when there were horse races at Ascot. He was a 50 percent shareholder in Merick, which owned immovable property in Mutare.
Fewster’s main financial backers were the Zimbabwe Banking Corporation where he seemed to have support from not only the bank officials but could have used the influence of politicians he had befriended.
The Kudenga report notes that a member of the executive committee of the Zimbank board said there could have been pressure on the bank’s chief executive, Leonard Tsumba, “from politicians to extend funds for particular purposes without due regard to viability since Zimbank is regarded as the people’s bank.”
Even when he sought additional finance from the Merchant Bank of Central Africa, Fewster seems to have made a good impression on the management as indicated in a memo by one of the officials.
“Basically, his operation is one of acting a banker for emergent businessmen. They approach him with an import licence which he holds on their behalf, and he then takes on the whole exercise of importing, from placing the order to opening the L/C (letter of Credit), and to selling the goods locally and collecting the proceeds. In the meantime, he advances the emergent businessmen various sums of money during that period and has complete control of licences and goods.
“All his transactions are done on an L/C basis and he only deals with reputable local companies as far as the end buyer is concerned, eg. Meikles, Haddon Motors, Clover Leaf Motors, Art Printers, O.K. Bazaars etc. Through his subsidiary, Bill Board Systems, he has the local agency for Staedtler, Pelican and Rapide, and is the sole supplier to government of printing and stationery material from overseas.
“Once the L/C is drawn against, the local end buyer pays after the usual recognised credit terms have been followed (the payments made obviously are inclusive of Fewster’s profit which is normally in excess of 50 percent) and Fewster then pays the emergent businessmen. In some cases these may be many, even though there is only one end buyer.
“It would appear he is well connected with people in government circles,” the memo concludes.
This extract was followed by a note by the Bank’s general manager at the time which read: “Concerning this approach, I am happy to make the facility available having received confirmation that the modus operandi is known to and accepted by Government.”
The general manager, however, told the Commission that he could not remember who in the government was approached for this confirmation but he believed it was verbal.
Although the report notes that “it is most likely that this confirmation came from the then minister of Trade and Commerce” it does not indicate whether he was approached for comment on this or not.
Like in other investigations carried before, Fewster seems to be getting away with it all the time. This probably indicates how influential he had become.
The Criminal Investigations Department (CID) carried an investigation from 1986 to 1988 after it had been approached by the Department of Customs and Excise to carry out investigations on four import licences that had been altered. These investigations centred on an import licence belonging to Zimbabwe Car Breakers owned by Shaft Mashavira.
This licence was originally meant for ball-joints but was altered to include shock absorbers which were selling well at the time. Section Officer, Munanzvi, who was tasked with the investigation, collected a few typewriters which could not be linked with the print on the import licence. He then closed the investigation without the knowledge or approval of his seniors, and then telephoned Mafungautsi from the Attorney general’s office to decline to prosecute the matter. Munanzvi later left the police force to join Zimbank.
Another investigation started in 1989, this time under Assistant Commissioner Manjeya. This was aimed at establishing whether emergent businessmen were selling import licences to Fewster. Fifty emergent businessmen were interviewed and all denied selling their import licences despite offers of indemnity from prosecution. Senior police officers were not satisfied with the progress and transferred the investigations to another department. The matter is still pending.
NECI also carried out investigations into Lorac in 1986 centred on allegations that import licences were sold to Lorac and that Lorac was engaged in transfer pricing in its import activities. It interviewed 28 businessmen who had dealt with Lorac but their investigations were inconclusive although a report was forwarded to the CID.
The Ministry of Trade and commerce also carried out its own investigations but the Kudenga commission said although it was given some of the documents the ministry had, some had disappeared.
Those that had disappeared included copies of reports on the investigations that had been conducted by the ministry and forwarded to the police for actioning and files pertaining to emergent businessmen who had dealt with Lorac and were subject to investigation.
The Kudenga Commission was supposed to provide a comprehensive report on all that had transpired but it too appears to have failed to come up with conclusive evidence which some people believe is available but people may be scared to divulge.
This has therefore put the recently appointed Parliamentary select committee in a tight spot as names are now being floated around. Everyone is now expecting names rather than reports.
When the lawmakers or members of the public call for a commission of inquiry, they expect the commission to dig deeper and unravel more than they already know through the grapevine.
They suspect that there is scandal. They expect all the sordid details to come out. And they also expect heads to roll.
A number of commissions of inquiry have been set up in Zimbabwe and they have presented their findings but it appears none has fully satisfied the taxpayer. Perhaps the taxpayer expects too much. Rightly, he should because in most cases it is a disgruntled taxpayer- out of concern – who will have leaked the initial information.
By calling for a commission of inquiry, rather than leaving the investigation to law enforcement agencies the taxpayer will be expecting a balanced finding which does not cover up for anyone, especially those in power who might use their office to thwart full investigations.
What has been very disturbing about the Kudenga Commission report is that it named only one key person, former President Canaan Banana. Banana even complains that some of the evidence he gave was left out. The tone of his complaint is that had this evidence been included things would not have looked as bad on him as they now look.
The naming of Banana itself without naming government ministers involved seems to imply that there was a cover- up, deliberate or otherwise. The argument offered by the commission that those who gave evidence were too scared to name the ministers is very shallow and hollow. How can an ordinary thinking person be scared to name a mere government official? Was it merely because Banana was no longer in power while the ministers still were, and could still be, in power, or were there other ulterior motives?
It would appear, like in the Sandura case where Nyagumbo could have been sacrificed after his death, Banana was probably being sacrificed because he is no longer in power and has been made so comfortable that he is expected to be eternally grateful for this that he will shut up rather than squeal. Or could the others involved have a hold on Banana since, unfortunately, his family seems to be in shambles?
These are some of the questions the new committee will have to answer. People are definitely expecting names to be mentioned this time.
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