US embassy cable - 04HARARE460

UNCLAS HARARE 000460 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S AND AF/EX 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR AMANDA HILLIGAS 
TREASURY FOR OREN WYCHE-SHAW 
PASS USTR FLORIZELLE LISER 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ECON, EINV, ETRD, PGOV, ZI 
SUBJECT: The GOZ's Anti-Corruption Show 
 
 
1.(U) Summary: The Reserve Bank's (RBZ) much ballyhooed 
anti-corruption campaign has now shut down one large bank 
and a smattering of marginal institutions while pursuing 
several hundred individuals.  Although the RBZ has 
dredged up genuine instances of impropriety and 
embezzlement, it has mostly acted against holders and 
facilitators of undeclared foreign accounts and not yet 
against political leaders.  This is part of the RBZ's 
latest and misguided attempt to destroy the parallel 
currency market.  End summary. 
 
Uneasiness Over Vingirai and Ncube Charges 
------------------------------------------ 
2. (SBU) So far, RBZ investigators have raised charges 
against four significant players: businessmen Philip 
Chiyangwa and James Makamba as well as Intermarket's 
Nicolas Vingirai and Barbican Bank's Mtuli Ncube. 
Chiyangwa and Makamba were successor generation ZANU-PF 
upstarts aiming to leverage their political influence 
into commercial endeavors.  Many Zimbabweans - including 
older ZANU-PF politicos - seemed to rejoice at their 
imprisonment.  Reactions to charges against Vingirai and 
Ncube have been more conflicted.  (Intermarket is a large 
bank, while Barbican was only launched as a commercial 
bank last year.)  Both Vingirai and Ncube were founders 
and CEOs of their banks, prominent businessmen who served 
as role models and financiers for emerging black 
entrepreneurs.  Those who liked and respected the two 
have been pained to see them flee the country. 
 
3. (U) In addition, the RBZ has pursued a host of tiny 
financial institutions - such as Trust, NMB and ENG - as 
well as several hundred individuals.  In some cases, the 
RBZ seems to have unearthed evidence of malfeasance, 
perhaps best epitomized by Chiyangwa's large collection 
of fancy cars.  In most cases, however, the RBZ is 
charging individuals and financial bodies with 
externalization of assets.   Ultimately, this is 
selective and opportunistic enforcement, since almost 
every large business and businessman has dealt in the 
parallel market and maintained undeclared foreign 
accounts.  For example, RBZ Governor Gideon Gono's own 
bank, CBZ, had been a prominent parallel market trader. 
 
Comment 
------- 
4. (SBU) The net effect of the RBZ's energetic anti- 
corruption campaign has been negative on two accounts. 
First, this economy needs a parallel currency market, at 
least until there is sufficient export revenue to fuel 
the twice-weekly auctions.  By killing the parallel 
market while enforcing an overvalued zimdollar at 
gunpoint, the RBZ is further damaging the economy by 
limiting sharply access to essential foreign exchange. 
Second, the RBZ has been too selective in its targeting. 
Despite ample evidence of similar "offenses," authorities 
have yet to snare a truly "big fish" such as a cabinet 
official or Parliament speaker Emmerson Mnangwagwa. 
 
5. (SBU) It is ironic that Barbican's Ncube was a serious 
runner-up to Gono as the new RBZ chief.  In a parallel 
universe, we have no doubt that RBZ Governor Ncube is 
contemplating whether to take a call from fugitive Gono 
in London. 
 
Sullivan