Although the central bank no longer has the means to disrupt the economy as it did during Zimbabwe’s hyperinflation, the very fact that Gono is still on the payroll frightens anyone who might consider a financial commitment that lasts more than a week.
This was said by United States ambassador to Zimbabwe Charles Ray after meeting businessman Kumbirai Katsande, according to a cable he dispatched on 16 February 2010.
Katsande had told the ambassador about the merry go round that Judge Ben Hlatshwayo had to go through before he finally landed on farm owned by Aritson, the company Katsande headed.
Hlatshwayo had taken over a farm from a white farmer in 2002 but was kicked out by First Lady Grace Mugabe in 2009. When he forced a white farmer off another farm he was told by Local Government Minister Ignatius Chombo not to take over that farm. He went on to another but was kicked out by Herbert Murerwa and finally he landed on an Ariston farm.
Katsande, who was also chairman of Nestle Zimbabwe, also described how he had been tossed around by several ministers when his company stopped buying milk from President Robert Mugabe’s farm.
Full cable:
Viewing cable 10HARARE105, Zimbabwe: Doing Business Zimbabwe-style
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|
Reference ID |
Created |
Released |
Classification |
Origin |
VZCZCXRO4495
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0105/01 0471355
ZNY CCCCC ZZH
R 161355Z FEB 10
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 0059
INFO SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMCSUU/EUCOM POLAD VAIHINGEN GE
RUEAIIA/CIA WASHINGTON DC
RUEHBY/AMEMBASSY CANBERRA 0027
RUEHDS/AMEMBASSY ADDIS ABABA 0027
RUEHOT/AMEMBASSY OTTAWA
RUEHRL/AMEMBASSY BERLIN 0027
C O N F I D E N T I A L SECTION 01 OF 02 HARARE 000105
SIPDIS
AF/S FOR BRIAN WALCH
NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN
ADDIS FOR USAU
E.O. 12958: DECL: 2020/02/16
SUBJECT: Zimbabwe: Doing Business Zimbabwe-style
REF: HARARE 116
CLASSIFIED BY: Charles A. Ray, Ambassador, STATE, EXEC; REASON:
1.4(B), (D)
¶1. (SBU) A recent conversation with businessman Kumbirai Katsande
illuminated the difficulties of doing business in Zimbabwe.
Katsande is the past president of the Zimbabwe Business Council and
the current head of the Confederation of Zimbabwean Industries. He
is the Managing Director of Ariston Holdings Ltd., which has major
horticultural and tea interests, and the Chairman of NestlC)
Zimbabwe Ltd.
¶2. (C) Katsande described how Ariston came to give up land to High
Court Judge Ben Hlatshwayo. In 2002, Hlatshwayo, in defiance of an
order from his own Court, seized a white commercial farm in the
agriculturally productive area of Banket, about 100 kilometers
northwest of Harare. The farm was near the Mugabe rural home. In
2009, the farm caught the eye of First Lady Grace Mugabe, who
apparently wanted it for her son from her first marriage. She
ordered Hlatshwayo off the land. He countered with a lawsuit but,
unsurprisingly, no judge was willing to hear the case. The powers
that be persuaded Hlatshwayo to leave his 600-hectare farm and
promised him another. He found another farm and demanded the white
owner leave. He then received a call from Minister of Local
Government, Urban and Rural Development Ignatius Chombo, a patron
of the owner, who told him to desist and look for another. He did.
This time he got a call from Minister of Lands and Rural
Resettlement Herbert Murerwa, who had a relationship with the
owner, Hlatshwayo moved on. He finally came to land owned by
Ariston Holdings which, under pressure, agreed to cede him land.
Katsande said Ariston was a bit miffed that Hlatshwayo’s original
farm was 600 hectares and he demanded 900 from Ariston. They
ultimately negotiated.
¶3. (C) Last year, in the wake of an international outcry, NestlC)
Zimbabwe, which had been buying milk from Grace Mugabe’s dairy
farm, decided to stop. After he and NestlC) workers were
threatened, Katsande contacted President Robert Mugabe’s office.
He was told Mugabe had asked Minister of Industry Welshman Ncube to
handle the matter, and that the government would not interfere with
NestlC). Katsande then learned that Reserve Bank of Zimbabwe
Governor Gideon Gono had frozen NestlC) accounts. He contacted
Gono, who said he was acting on Mugabe’s behalf. Katsande
convinced him to call Mugabe. He did and backed off. Katsande was
subsequently contacted separately by Minister of Youth and
Indigenization Saviour Kasukuwere and Minister of State in the
President’s Office Didymus Mutasa, both of whom threatened him if
he didn’t resume buying milk from the first lady. He told them to
contact Ncube. Ncube convinced them that Mugabe had left the
matter with him, and told them that he (Ncube) was not going to
force NestlC) to buy milk from Grace Mugabe. NestlC) has resumed
operations and is not buying milk from Grace Mugabe.
¶4. (SBU) We talked to Katsande just after Kasukuwere had issued
new indigenization regulations (Ref). He said despite
difficulties, NestlC) had a large investment in Zimbabwe and was
going to invest an additional US$10 to US$15 million. But it was
going to make other major investments in Botswana and Mozambique
which would have been made in Zimbabwe but for the unsettled
political situation.
¶5. (C) Finally, Katsande told us about a legal dispute of Ariston
involving tea estates in Chipinge. War veterans tried to take over
some of Ariston’s land and a legal case ensued. Ultimately, the
Supreme Court, in a decision signed by the Chief Justice, ruled in
Ariston’s favor. But squatting war veterans refused to leave the
estates. When Ariston contacted the police, it was told that farm
invasions were a political matter and the police would therefore
not act. Katsande paid a visit to the local police commissioner in
Chipinge and was told the same thing. Katsande pointed out to the
HARARE 00000105 002 OF 002
police commissioner that the Chief Justice belonged to ZANU-PF and
that the judgment in the legal case was therefore political. He
then threatened to bring an action for contempt against her
personally for defying an order of the Chief Justice if police did
not remove the war veterans within three days. They did.
————-
COMMENT
————-
¶6. (C) Katsande’s experiences demonstrate the difficulties of
doing business in Zimbabwe. ZANU-PF’s abuse of power echoes
throughout the economy and the party’s influence will certainly
inhibit economic recovery. Investors not yet active in Zimbabwe
generally understand this and accordingly choose to do business
elsewhere. Foreign companies already here – like NestlC), Chevron,
Implats, and others – will at most hedge their bets in existing
operations but not make major new commitments until Mugabe and the
likes of Kasukuwere have been forced from office. Consider, for
example, the continuing malevolent influence of Reserve Bank
Governor Gideon Gono. Even though the central bank no longer has
the means to disrupt the economy as it did during Zimbabwe’s
hyperinflation, the very fact that Gono is still on the payroll
frightens anyone who might consider a financial commitment that
lasts more than a week. On Zimbabwe’s current trajectory, Katsande
will have more amusing anecdotes for us next year. END COMMENT.
RAY
(15 VIEWS)
