Friday, April 11, 2008

ZANU PF Desperate and Very Dangerous

By Levi Mhaka

Phone text messages and emails being circulated among many Zimbabweans are describing the political situation as follows: The two major soccer teams, Dynamos and CAPS United, are playing a cup match at the National Sports Stadium. By the end of the match, the score board is reading 4-0 in favour of CAPS at the end of the match. The match officials, commissioners, special guests and fans are satisfied with the peaceful environment that has prevailed during the match.

Supporters of the winning team are then told not to celebrate until the match results are announced on Sports News on both radio and TV. Before they are announced, the nation realises that the losing team is meeting the national football association (ZIFA) by itself. Later the losing team issues public statements that the football association should simply announce a draw and therefore there a need for a rematch.

We are then told that it is only ZIFA that should announce results and soon after that Dynamos tells us that the captain for CAPS team wants to be the Vice Captain of Dynamos.

(Bhora rotambwa kuNational Sports Stadium pakati pe Dembare neMakepekepe. Makepekepe wins 4-0 kobva kwanzi imbomirai kufara kusvika mawona Sports news pa ZTV neparadio. Zvonzi vakuru veDynamos vamboita meeting nevakuru veZifa kumaoffice avo. Kwozobuda pa ZTV zvichinzi yaita zero zero and there is supposed to be a rematch. Mozonzwa kuti referee nema linesmen acho vasungwa. Kuita here ikoko?Pave paya, zvavekunzi Captain weCAPS United ari kuchemera kuita Vice Captain weDembare. Manje so!!)


In the State-owned Herald newspaper front page story on Wednesday, April 9, 2008, ZANU PF has claimed that MDC President Morgan Tsvangirai has “begged” to become the Vice President of Zimbabwe “in a government of national unity after being told by his advisors that a possible run-off with President Mugabe was not in his best interests”.

One wonders how MDC can approach ZANU PF for possible talks for a coalition government when results have not been released at the behest of ZANU PF and when all the indications are that ZANU PF will lose in a peaceful and fair electoral re-run or runoff.

In a marginally won election, the winner must approach the losing party to form a coalition government. ZANU PF is not the winner and currently there is no winner without results having been made public!

The Zimbabwe Electoral Commission’s (ZEC) lawyer, George Chikumbirike made a submission in the High Court on Wednesday, April 9, 2008, that releasing presidential results is "dangerous”. Why it is dangerous, he did not elaborate.

From the information slowly filtering into the public domain, the danger is that people will get to know the extent to which Robert Mugabe got far less than the combined votes of ZANU PF candidates for House of Assembly (HA) or Senate. A lot of people who voted for ZANU PF legislative (HA or Senate) and local authority candidates, did not necessarily vote for Robert Mugabe to become president. They voted for either Morgan Tsvangirai or Simba Makoni.

A constituency based results for the presidential election will clearly show this view. It is wrong to use the parliamentary results as a basis to make people expect a re-run or run-off.

This is the level of embarrassment that ZANU PF cannot stomach being made a public matter.

ZANU PF’s strategy is to render the release of results useless and meaningless by focusing on the very insignificant anomalies as a result of the arithmetic work of its thoroughly vetted ZEC election officials, most of whom are employees or informers of CIO. All these arrests are stage managed because if ZANU PF is the complainant, then it had access to the results on its own. Statements being made by ZANU PF prove beyond reasonable doubt that it had receipt of the actual results by itself by coercing ZEC.

If there were simple arithmetic errors, they would have been corrected by going back to the source document – the results form for each polling station. It becomes a logistical/administrative matter rather than to conclude that the behaviour by election officials was driven by a criminal intent.

The full accounting for ballot boxes and ballot papers was done at polling station level collectively by representatives of contesting parties, observers and election officials. Signatures were appended to the forms that clearly showed the serial numbers of the ballot papers used, spoiled and remained. Such polling station records were brought together to constitute the total for each ward; and likewise all the wards at one constituency centre.

All the current ZANU PF efforts are bereft of legal guidance because the pronouncements and actions forced on ZEC defy the procedural requirements in the constitution and electoral law.

As ZANU PF make wide claims about Tsvangirai, some people have been named as emissaries for Tsvangirai. Let us look at who the people are.

Elton Mangoma is the MDC's Deputy Treasurer General. He is said to have generally supported the party financially. A Chartered Accountant by profession, he is the owner of a beneficiary of cheap RBZ loan funds through his company, Mowpower, which is involved in manufacturing of lawn mowers.

Mangoma is the managing Director for Corporate Excellence and a former partner with Kudenga & Co, an accounting firm until end of 1999. he served in various capacities for Delta Corporation since 1987 until 1992. He rose from being a Financial Manager of Delta's subsidiary, Chibuku Breweries, to become Group Finance Director. Earlier, in the early 1980s, he worked with Ian Makone at Agricultural Finance Corporation - AFC (now Agribank) as a Financial Manager

Ian Makone is a member of the MDC's National Executive Committee. He is the National Director for Elections and Special Advisor to the MDC President. He is a former chairman of the Agricultural Finance Corporation (AFC) now Agribank, and thus his connection with Mangoma goes back in time.

Joe Mutizwa is the chief executive officer of Delta Corporation. He is a founding director of Zimbabwe Allied Banking Group (ZABG), a banking institution created by the RBZ out of remains of some indigenous banks Gono caused to close. He is also a trustee of the obscure Simon Vengai Muzenda Scholarship Foundation. In June 2007, Mutizwa was one of beneficiaries of the RBZ funded farm mechanisation programme.

As written by a correspondent of the Zimbabwe Times in January 2008, Gono forged close links with Delta Corporation's Joe Mutizwa, in a bid to wrest control of the industrial conglomerate from SABMiller. Mutizwa is alleged to have received funding from Gono to take up a horticultural project at Kintyre Estates, along Bulawayo road. The Ruwa-based Delta's subsidiary, Mega Pak Pvt Ltd, was one of the beneficiaries of the RBZ cheap funds named 'BACOSSI" by receiving US$1 million, which was the largest chunk of the foreign currency portion.

As it turns out, Gono had a meeting with Joe Mutizwa as a way of discussing the political dynamics as information filtered that ZANU PF was loosing the elections. Gono mooted an idea of sounding up to MDC for talks to protect their personal business interests and the political career of Gono as a ‘unifier” for the two political sides.

Mutizwa then contacted his former subordinate, Mangoma, for a social chat and made indications for a possible coalition talks between the two parties, without making explicit who was driving the initiative. Mangoma in turn contacted Makone, Tsvangirai's advisor. This personal contacts was then leaked to the foreign media on April 1, 2008 as if there are talks between ZANU PF and MDC. It is still not known if Makone played ball by talking to Tsvangirai but it is possible that Makone might have not known where it was coming from. He could have ben surprised when the foreign media went into frency about it.

What is background to all these manipulations and machinations?

The ZANU PF Electoral ‘A’ Team was created to become the ‘War Cabinet’ and deliver a win to the party. Reporting to only President Mugabe and unaccountable to the ZANU PF Politburo, the core group consisted of Elliot Manyika, the party's Secretary for Commissariat; Patrick Chinamasa, then Minister of Justice, Legal and Parliamentary Affairs; Gideon Gono, the RBZ Governor and the main electoral funder; George Charamba, the Presidential Spokesman and Permanent Secretary for Information and Publicity, and the 'Editor-in-Chief' of government owned mass media. The party's information and publicity department was made redundant by this ultra-nationalist cabal, whose personalised agenda is being driven dressed as anti-colonial/anti-imperialist.

To give semblance of the security establishment factor, the Zimbabwe Defence Forces (ZDF) Commander, Constantine Chiwenga was brought into the political game. Chiwenga wants to protect his own business interests and his wife, Jocelyn, who attacked Tsvangirai in August 2007, without having been unprovoked.

Chiwenga, like all the other senior military officials, have been some of the biggest beneficiaries of the RBZ funded farm mechanisation programme, while their spouses have received cheap funds for their small businesses. Chiwenga’s wife owns Zimsafe, a company in the business of manufacturing protective clothing and a recipient of lucrative ZDF contracts.

Anyone who would disagree with the approached and tactics of the 'A' Team was to be branded as against the electoral victory of President Robert Mugabe and actually was seen as a "Simba Makoni sympathiser". This is the same basis now being used to deal with Henry Muradzikwa, the ZBC Chief Executive Officer, who was implementing the electoral law requirements. A media survey released during the campaign period in actual fact exposed the extent to which ZBC was biased against the opposition. How Muradzikwa is now said to have been biased against ZANU PF is laughable.

The Electoral ‘A” Team created the campaign message and used RBZ staffers and funds to make the necessary payments for both ZEC and the ZANU PF costs.

This team manipulated and held Mugabe hostage and caused the release of concocted electoral survey by a CIO-aligned political scientist at the University of Zimbabwe, Dr. Joseph Kurebwa, who “predicted” that Mugabe was to win marginally.

From ignoring the economic realities on the ground, the ZANU PF electoral campaign team resoundingly delivered a loss to Mugabe because one cannot deliver an anti-colonial message to a population desperately seeking for a basic survival according to the Maslow hierarchy of needs. If there is a re-run or run-off, ZANU PF will still lose. Since it has recalled its violent machinery, the MDC should not participate.

The latest ZANU PF gimmick is to create a fake a document detailing alleged transitional arrangements from the office of the MDC Secretary General, Tendai Biti. The RBZ being taken over by Germans and the other lies being peddled by the Herald were produced by the CIO’s counter-intelligence department based in Harare suburb of Highlands and uploaded on the CIO online “research” organization called Global Analysis (http://www.glob.co.zw/) run from Mt. Pleasant in Harare. There is no meaningful research work on the site apart from articles uplifted from the Herald (especially the ones written by Caesar Zvayi and Mabasa Sasa), Sunday Mail and New African magazine and other foreign sites.

Desperately trying to survive from an electoral defeat, ZANU PF is getting dirtier and murkier. The Chinamasa-led self-created committee as become the de facto Cabinet and will continue to mislead Mugabe, the nation, region and the world. They will continue to be in denial and talk about everything JUST to illegally stay longer in power.

We are dealing with a very belligerant person of Robert Mugabe. The High Court judgement on April 14, 2008 will likely order the release of results. ZEC will likely claim that they were ready early in the week to release but were being held due to the court process instituted by MDC and will then release them. They are likely to be the doctored version because the arithmetic has been completed without the presence of contesting parties since the dismantling of the command centre mid-week.

As MDC contests the doctored results, ZANU PF will focus on the runoff which the MDC will ill advisely boycott.

Meanwhile the violent and rigging machinery has been sharpened and oiled....

Wednesday, April 9, 2008

The Herald Lying at the Behest of Gono

By Levi Mhaka

On Monday 7 April 2008, the State-owned Herald newspaper had a front page story entitled "Zimbabwe: Tsvangirai Plans to Give Control of RBZ to Germans". It made me laugh and felt pity for the editorial team at the newspaper.

In the story, the newspaper alleged that the MDC leader, Morgan Tsvangirai, "intends to give control of the Reserve Bank of Zimbabwe (RBZ) to German agents for up to one year in the event that he becomes State President."

The newspaper also claimed that Tsvangirai "also plans to change commanders of the Zimbabwe Defence Forces, Zimbabwe National Army, Air Force of Zimbabwe, Commissioner-General of Police, Director-General of the Central Intelligence Organisation, the Chief Justice and Permanent Secretary for Finance, among other high-ranking officials."

As a sign of desperation of the incumbent RBZ Governor, Gono, he has been funding the State-owned media using loan funds meant for the intervention on the supply side of basic commodities. He is literary running the public media together with George Charamba, the Presidential Spokesman and Permanent Secretary of the Ministry of Information and Publicity, as reckless propaganda outfits. The Herald has failed to subject many of its political stories using journalistic standards of truthfulness, accuracy, balance and fairness.

The newspaper went on to allege that the MDC's "transitional plan includes a restructuring of the RBZ that will see at least two agents from Germany's central bank playing key roles at the institution. The delivery of the central bank to the Germans will be among Tsvangirai's first directives in the event that he becomes President. Under the scheme, Tsvangirai will first relieve present Governor Dr Gideon Gono of his duties, appoint one of his deputies as acting boss and rope in the Germans to "advise" him."

As we wait for the High Court to make a ruling on the release of presidential and local authority election results, readers must be careful that we shall be seeing a lot more of these rabid levels of lying by people trying to protect themselves from the looming political changes.

One wonders why those who said they cannot salute Morgan Tsvangirai should not retire or resign on assumption of duty by a new government. What about one who had been running the only factory in Zimbabwe runnnning for 24 hours printing money to sponsor a partisan electoral venture? Core business of a central business has been abandoned. Why would a sane government allow such a person with distorted understanding of the central bank's role in an economy remain in office? This is the same person who has reduced the central bank into becoming a department in the President's office.

There is so much panic that we shall be seeing through pre-emptive lies in the State-owned media as the collective effort of Mugabe, Charamba, Gono, Elliot Manyika and the losing member of parliament, Patrick Chinamasa, further sink the economy by their shortsightedness, to protect their jobs.

The lying was in a higher gear on Tuesday 8 April 2008, when the same newspaper alleged that Tsvangirai has failed to secure the support of the Arthur Mutambara-led MDC for an opposition bloc that will have simple majority in the house of asembly.

This allegation defies reason. Let us look at it from another angle. Between the two parties (ZANU PF and MDC-Tsvangirai), who can receive votes from the voters who voted for Mutambara-led MDC? Alternatively, who would the person who voted for Mutambara-led MDC choose between the two choices - ZANU PF and MDC-Tsvangirai? Majority of the votes for the two MDCs and Simba Makoni have been derived from "as long its not ZANU PF" because of the economic conditions.

If Mutambara had wanted to work with ZANU PF from the onset, he should not have supported Makoni's candidature against ZANU PF. If he has a parliamentary pact with ZANU PF, it would mean ZANU PF controls simple majority in the House of Assembly together with the 10 parliamentarians from his faction. That is not being progressive!

From a gut feeling, one can easily tell that the 'natural' alliance for the Mutambara faction will be Simba Makoni as yet unlaunched political party.

Thursday, April 3, 2008

A Constitutional Crisis has been Created in Zimbabwe

By Levi Mhaka

April 3, 2008

THE tenure of office of the President of Zimbabwe is stipulated by Section 29 of the Constitution which states that “the President shall continue in office until the person elected as President at the next election of President enters office.”

President Robert Mugabe has ensured that the results of the presidential election are not announced, to give him and colleagues in Zanu-PF time to work behind the scenes preparing for a re-run after the release of the presidential election results.

Vice Presidents are a type of minister, albeit a senior one. Their tenure, arising out of general and presidential elections, together with that of ministers and deputy ministers, is provided for under section 31E (1) (c) of the Constitution.

Firstly, it was unconstitutional for President Robert Mugabe to have dissolved the Cabinet on March 27, 2008 two days before election day because according to section 31E (1) of the Constitution, the tenure of “the office of a Vice-President, Minister or Deputy Minister shall become vacant:
(a) if the President removes him from office; or
(b) if he resigns his office by notice in writing addressed and delivered to
the President; or
(c) upon the assumption of office of a new President
.”

None of these three instances above applied when Mugabe "fired" his vice presidents, ministers and deputy ministers by dissolving the Cabinet.

Secondly, in trying to fill in the ministerial vacuum, the public pronouncements by the former ministers and deputy ministers (like Bright Matonga) are illegal and mischievous. A former ambassador to China, Chris Mutsvangwa, who lost in the Norton constituency, has been pontificating as the government spokesman.

Thirdly, the country has had no Cabinet since March 27, 2008 until the presidential election results have been announced. If there is to be a re-run, there will not be a Cabinet for the next 21 days (at a minimum) during which the election will be held.

This means the president is currently running the country by himself and together with the Reserve Bank of Zimbabwe (RBZ) Governor, Gideon Gono, the Presidential spokesman, George Charamba (aka Nathaniel Manheru and "Editor-in-Chief" of Zimbabwe Newspapers Ltd and ZTV News), some excitable bureaucrats and senior securocrats, plus a few loud-mouthed Zanu-PF functionaries.

In the absence of a Parliament to hold him accountable, Mugabe is busy working on his political survival and protection of his legacy. The executive institutional functions of the State of Zimbabwe as provided for by section 31H (1) of the Constitution have irretrievably been broken down since “the executive authority of Zimbabwe shall vest in the President and, subject to the provisions of this Constitution, may be exercised by him directly or through the Cabinet, a Vice-President, a Minister or a Deputy Minister.”

Related to this section 31 H (5) stipulates that “in the exercise of his functions the President shall act on the advice of the Cabinet, except in cases where he is required by this Constitution or any other law to act on the advice of any other person or authority…”

Meanwhile, information now available is that it was allegedly the RBZ Governor Gideon Gono who created an impression to international media that there are talks currently going on between Zanu-PF and MDC because he wanted to test the Zanu-PF establishment.

He is actually now shuffling between the two sides to create a ground for an amicable handover of power to the MDC, while protecting Robert Mugabe and calming the security establishment.

Gono is not being sincere because he has more to protect about himself, personal gains and his tenure. The MDC and Simba Makoni aptly exposed his level of economic sabotage and abuse of public resources by fully bankrolling the Mugabe regime in the just ended election.

Meanwhile, the Zanu-PF propaganda machinery is now busy creating an impression that the previous white landowners are back in the country and are visiting “their farms". Britain and the USA are not making it any better by their official pronouncements on the elections. The government of Britain even went further by deciding for the new Zimbabwean government to rejoin the British Commonwealth, as if that alone will solve our many economic problems.

We must not harden Mugabe's position when he is already out. If it can, the MDC must tell Britian, the EU and the USA to keep quiet for their own good and that of the people of Zimbabwe.

This is the time to be very calm and cautious about Robert Mugabe because he is like a suicidal bomber in our midst. Engage him carefully! The Zanu-PF propaganda machinery wants to continue with its election campaign message in which they cast the MDC as Western stooges.

Today's Herald had a story “exposing" the British hand, not that of the people of Zimbabwe, in the winning of the elections by the MDC.

We must be calm as we wait for the results because Mugabe can create and sponsor chaos to find a reason and an excuse to hold on to power.

Update: Following the publication of this article on the Zimbabwe Times news website, Caretaker President Robert Mugabe renewed the tenure of the Cabinet until the Zimbabwe Election Commission (ZEC) has done the needful. The government press statement has not indicated whether this has been gazetted as required by law. Welcome to the a country of absolute illegality and illegitimacy! (10/04/2008)

Wednesday, March 12, 2008

Mugabe vs Makoni - The Guilty Accusing Others

By Levi Mhaka

Published on March 12, 2008

Zimbabwea's ambassador to South Africa, Simon Khaya Moyo, has issued a statement complaining that a "virulent and vicious" smear campaign is being waged against Zimbabwe over the list of observers invited to witness the country's elections on March 29.

Ambassador Moyo has been reported by South African media to have said the campaign is being driven by the West and certain sections of the South African media.He further claimed that the country's detractors are "trumpeting British falsehoods" about the election process.

"It is therefore disheartening, but not surprising, that certain sections of the media, unfortunately including the South African Broadcasting Corporation, have chosen to ignore the facts ... on the ground. We are now [aware] that whatever good and positive happens in Zimbabwe can never pass as newsworthy as long as such stories do not fit into the well-known and publicly acknowledged broad agenda of 'regime change'," Ambassador Moyo said.

What one finds ridiculous is that Ambassador Moyo is raising dust about a conduct which Robert Mugabe and ZANU PF is directed against Simba Makoni at every opportunity during the campaign.

One wonders if he has been reading the State-owned Herald newspaper.

ZANU PF and its presidential candidate, Robert Mugabe are engaged in a "virulent and vicious" smear campaign is being waged against Zimbabwe over Simba Makoni's candidature.

"It is therefore disheartening, but not surprising, that ZANU PF, unfortunately including President Mugabe, have chosen to ignore the facts ... on the ground."We are now [aware] that whatever good and positive has been done and is being said by Simba Makoni can never pass as newsworthy as long as such stories do not fit into the well-known and publicly acknowledged broad agenda of 'smear campaign," Ambassador Moyo should have said.

Makoni has constitutional right as a citizen of Zimbabwe under the electoral laws to contest. ZANU PF and its electoral candidates must respect that. The mandate to rule the country is derived from the people, let the people decide on March 29, 2008.

The ZANU PF conduct of criminalising and a State-inspired negative public media coverage Simba Makoni's candidature deserves condemnation of the worst kind by fair-minded observers.

Monday, March 10, 2008

Mugabe Electoral Campaign Desperate, Overstretched and Weakening

By Levi Mhaka

Published on March 8, 2008

Barack Hussein Obama on Wednesday said he was not ready to change his style of campaigning just yet. "Look, they (the Hillary Clinton Campaign Team) have run a pretty negative campaign over the last couple of weeks. I have said consistently that we do things differently. It's worked for us so far and you know I’m not gonna do things that I'm not comfortable doing and I want to make sure that we stay focused on the issues".

Simba Makoni has had a similar approach and so far he has not changed it despite the indecent use of words by President Robert Mugabe.

Three events have been used to drive President Robert Mugabe’s candidature - the dubious ‘Million Men’ March; the ZANU PF extraordinary congress that used a wrong clause of the constitution for endorsement; and launch of a bankrupt manifesto, whose copies cannot even be readily available, because of the different strategic approach between the ruling party’s information and publicity department and that of government.

With so much pressure arising out of Dr. Simba Makoni’s declaration as an independent candidate, Mugabe’s campaign has resorted to insults and uses the usual chief scapegoat, Britain, to protect his position.

One wonders how, to ordinary person, would Britain be responsible for the shortage of basic commodities; endless power and water cuts; escalating of prices; endless strikes by teachers; doctors and nurses; shortage of medical supplies in hospitals; cash shortages; a high level of people choosing to become economic refugees in the neighbouring countries especially South Africa and Britain, Australia and New Zealand, and the shrinking of the industrial and commercial capacity; and low productivity in the farms after what they consider as a successful land reform.

For lack of depth in dealing with all these challenges created by bad and unsound economic policies, Mugabe and ZANU PF candidates and officials have resorted to sloganeering – especially the oft repeated slogan "Zimbabwe will never be a colony again", which was coined by Prof. Jonathan Moyo, the former Minister of Information and Publicity.

The ruling party has no functioning website nor a formalised campaign team except for the use of Elliot Manyika, a politburo member responsible for the Commissariat (akin to the Organising Secretary) and George Charamba, the permanent secretary in the Ministry of Information and Publicity and the President’s press secretary. Manyika is also a candidate for Bindura North in Mashonaland Central Province and all he could do well is to sing during rallies, arrogantly neglecting the campaigning required for his constituency.

Charamba, a civil servant, is alleged to be working full time for ZANU PF loosely organised campaign team with Caesar Zvayi, the political editor of the Herald newspaper and his subordinate, Mabasa Sasa, while being funded allegedly by the Reserve Bank of Zimbabwe Governor, Gideon Gono. Zvayi and Sasa have been writing highly partisan articles attacking Simba Makoni or promoting the candidature of Robert Mugabe.

There have been secretive fundraising efforts by the ruling party’s department of finance and its Treasurer-General, David Karimanzira, was reported in the Herald newspaper that the party requires more than ZW$300 billion (US$8,571) for the elections. Given the shrinkage of the economy, local companies are hard pressed to donate anything, and thus one can only guess that its well wisher is the RBZ and China.

Just imagine during the electioneering there was no mentioning of Simba Makoni, Morgan Tsvangirai and the MDC opposition party. All hypothesise if the Western countries that have disagreed with Mugabe are not also mentioned. Would there be any need of an election? Would there be anything left for ZANU PF and its candidates to say?

Even if Mugabe was a sole candidate, he stlll needed a popular endorsement in the election. What would he say if he had no opposing candidate?

If there are no insults to make, no donations of computers and sewing machines and promises not backed by funding aspects, to make that come only during election time, Mugabe would be a better candidate to dialogue with on his record.

A local economist was quoted by a weekly newspaper that eight years in a row of negative growth, for the ruling party it will be ‘vote us into power and we will finish you off’. He said no government, having brought down such economic misery on the people, cannot with good conscience, stand in front of the people with a straight face and say: Vote for us. To do what? To inflict more damage on the economy, on the people?

"It’s the economy, stupid".

ZANU PF is a Political Party Full of Liars and Hypocrites

By Levi Mhaka

Published on March 6, 2008

On Friday, February 29, 2008, Joseph Msika, the ZANU PF Vice President had no decent words for presidential aspirant Simba Makoni, just like his boss Robert Mugabe, who cannot present himself in a campaign without insulting rivals. Msika attacked Simba Makoni for having been associated with him in the media. In his attacks, Msika should have simply directed his anger to the media. One wonders why he would insult Simba Makoni as if Makoni owns the media in Zimbabwe or as if Makoni had made a statement associating himself with Msika.

Msika even went ahead by claiming that he was making the insults in the name of the ZANU PF political leadership of Matebeleland, especailly the National Chairman, John Nkomo and politburo member, Dumiso Dabengwa.

Proving that Msika was lying, the following day on Saturday, Dumiso Dabengwa disassociated himself from Joseph Msika's statement by publicly endorsing Simba Makoni. In his public endorsement, he was joined by a highly respected lawyer and former Speaker of Parliament, Cyril Ndebele.

In his first public statement since Simba Makoni declared himself a presidential candidate, Dabengwa revealed that there has been a general desire in ZANU PF to have President Robert Mugabe take a rest by not having him re-run. This was after an exchange of views between Dabengwa and Patrick Chinamasa, the incumbent Minister of Justice and Parliamentary Affairs. Ironically, Chinamasa is part of the architects of Mugabe's ZANU PF candidature in the re-election.

On Sunday, the State-owned newspapers had no kind words for Dumiso Dabengwa through the statements of Zanu-PF secretary for education in the Poliburo and also Minister of Information and Publicity, Dr Sikhanyiso Ndlovu; a civil servant who is the permanent secretary in Ndlovu's ministry, George Charamba; Bulawayo Metropolitan provincial Governor, Cde Cain Mathema and Zanu-PF secretary for administration, Cde Dydmus Mutasa.

Dabengwa, said although he wanted a change of leadership he however, respected President Robert Mugabe for the role he played both during the liberation struggle and after independence.

These Zanu-PF luminaries not heavyweights as suggested by the State-owned newspapers, condemned Dabengwa for supporting Dr Simba Makoni's contest as a presidential candidate as if the position is a preserve of Robert Mugabe.Charamba said: "What is Dabengwa worth by way of supporters? He brought none to Zanu-PF, he takes none to the independent. The people of Nkulumane had long rejected him anyway."

This loudly applies to Cain Mathema and Ndlovu, who have been always mere Mugabe appointees who have no grassroots constituencies. Charamba must be reminded that ZANU PF lost majority of legislative (house of assembly and senate) and local authorities seats in the three provinces of Matebeleland - Bulawayo, Matebeleland South and Matebeleland North. Its fair game for Makoni!Mathema then attacked Dabengwa for being a tribalist. If he is a tribalist, why would he work with a Shona, Simba Makoni?

Mathema also made serious allegations insinuating that Dabengwa was sell-out and an agent of the Smith regime just because he has made a democratic choice to support another candidate other than Mugabe. Dabengwa can successfully sue for defamation.

Mathema, whose wife lost the Tsholostho parliamentary seat to an independent and former minister of information and publicity, Professor Jonathan Moyo, said: "They have been in the Politburo for a long time and why did they not raise those issues they say are dirty? They are irresponsible reactionaries. They have been ministers and what did they do for the people? Let them show us what they did. They are the people who have been telling the people that the Government has done nothing for the people of Matabeleland."

This allegation by Mathema must be directed to Matebeleland senior politicians other than Dabengwa only - the late Joshua Nkomo, Joseph Msika and John Nkomo. Apart from Kembo Mohadi, the minister of Home Affairs; Abednigo Ncube, the Deputy Minister of Minister of Public Service, Labour and Social Welfare; and and Andrew Langa, the Deputy Minister of Environment and Tourism, all the ministers, deputy ministers and senior ZANU PF officials from the three provinces of Matebeleland lost their parliamentary seats to MDC. They were only saved by the Mugabe's patronage of appointing non-constituency MPs. They were appointed to "preserve" the ZANU PF Unity Accord without electoral support in thir chosen constituencies.

Is it not intiguing that Joseph Msika, John Nkomo, Cain Mathema are arrogant to be embrassed to lose that they are not contesting the election? they are epecting Mugabe to protect their political careers under the remaining appointed positions of the Constitutional Amendment No. 18.

What did Ndlovu as minister and Mathema as a governor, achieve, respectively? Are they not beneficiaries of Mugabe's patronage? Mathema was appointed to frustrate, take any credit from and overshadow the Bulawayo mayor, Japhet Ndabeni-Ncube, because he won on an MDC ticket.

Didymus Mutasa said Dabengwa and Dr Makoni were not qualified to discredit the land reform programme and talk about multiple farm ownership."It's nonsense for them to talk about the multiple farm ownership. I am the Minister of Lands, (Land Reform and Resettlement) and what they are saying is rubbish. They should tell me the cases of multiple ownership and I will deal with them. They are just parroting what other people have been saying," he said.

There has been endless land audits Flora Buka, Charles Utete and many others numbering more than four under Mutasa. The issue of multiple farm ownership has been a thorny one. Mugabe has expressed anger about it. His public statements as reported by the State-owned newspapers can be extracted. Land audits have been carried and reports not published. They were meant to inform the nation about farm ownership patterns following the land redistribution exercise, the level of productivity, etc.

Didymus Mutasa delivered an undated 2007 speech (http://www.lands.gov.zw /speeches/speech%20by%20mutasa .html) in which he said "I am also presented with an opportunity to set the record straight on claims from some quarters that Government is engaged in endless land audits. Those who go to sea with such allegations should know that an audit in any organization is not a once off function but a continuous process to establish what is going on and what corrective measures need to be taken to ensure that implementation is on course. The land audits we are undertaking are no different from financial or organizational audits carried out in the private or public sector. Through the land audits Government will obtain vital data and information on a number of key issues such as plot take-up rates, land allocations to various categories, levels of land utilization and productivity, challenges facing the new farmers etc. It does not require a rocket scientist to grasp the importance of such data and information in land management. Let me advise the nation as I have done before through the press that land audits for both A1 and A2 resettlement programmes will be a continuous exercise to enable us to obtain up-to-date data to effectively manage the land reform programme."

On July 15, 15 2004, the Financial Gazette business newspaper reported: "According to the latest confidential report compiled by Special Affairs Minister John Nkomo's Land Reform Committee, business people connected to ZANU PF have also joined the land reform gravy train, amassing several farms, some measuring 2 000 hectares each. In total, the committee reports, 329 people had multiple farms measuring 55 513 688 hectares. These have continued to cling firmly to several lucrative properties in a clear rebuff to President Mugabe's official one-man-one-farm policy. Reads part of the report: "A total of 329 people have multiple farms measuring 55 513 668 hectares. In excess of 45 000 hectares of land were recovered during this exercise but there continues to be some resistance from high-ranking members of the ruling party and senior government officials to surrender the land. "This resistance and the clandestine manoeuvres have a combined effect of maintaining the status quo on the ground as regards the issue of multiple farm ownership."

"According to the latest audit, there are 249 473 landless people on the Model A1 scheme waiting list and 99 971 on the A2 list.

"The report says double allocations riddled both schemes as the Agriculture Ministry, headed by Joseph Made, then had no computerised data on land parcelled out to beneficiaries.

"President Mugabe has on several occasions pleaded with his Cabinet and other ZANU PF supporters with extra farms to surrender the properties for possible redistribution to deserving landless blacks. It is however important to note that just like two other government-sanctioned audits of the land reform exercise, the latest report is silent on the identities of the 329 people with multiple farms.

"Political commentators this week however expressed fears that the figure of 329 multiple farm owners being provided by the land audit report could be an understatement as a majority of party "chefs" used proxies in registering the properties. They said the government's inaction over the sensitive issue could suggest that there were powerful politicians caught up in the net whom President Mugabe was wary of upsetting by sanctioning their prosecution. "

ZANU PF is a political party full of liars and hypocrites that is desperate. Mugabe and those who have no source of income other than through his continued stay, cannot decently respond to Makoni vision of a sensible and economically-sound Pan-African and nationalist renewal without isolating ourselves from the world. All they do is deliver insults through the public media and use uncouth and negative militaristic language to describe a fellow Zimbabwean!

No day passes without Simba Makoni this, Simba Makoni that, yet we do not even know why ZANU PF candidates deserve anyone's attention under the current difficult economic circumstances

The Bankruptcy of Mugabe's Electoral Campaign

By Levi Mhaka

Published on March 5, 2008

A political campaign is an organized effort which to influence the decision making process within a specific group.

Any political campaign is made up of three elements i.e. the message, money, and machine. The message is a concise statement saying why voters should pick a candidate. Fundraising techniques include having the candidate call or meet with large donors, sending direct mail pleas to small donors, and courting interest groups who could end up spending millions on the race if it is significant to their interests. Finally, 'machine' represents human capital, the foot soldiers loyal to the cause, the true believers who will carry the run by volunteer activists. Successful campaigns usually require a campaign manager and some staff members who make strategic and tactical decisions while volunteers and interns canvass door-to-door and make phone calls. Large modern campaigns use all three of the above components to create a successful strategy for victory.

On February 21, 2008, President Robert Mugabe had a birthday interview on ZTV. Among the questions asked by the interviewer was "Why should I vote for you". The very long answer he gave was not good enough to convince his supporters. He then made tasteless, uncouth and vulgar remarks about Simba Makoni. Robert Mugabe is supposedly a family man and statesman for that matter.

Since then, he has been insulting other candidates. If he was a man competing for a woman or a marketer competing for customers he would have failed dismally. ZANU PF has been running full page colour adverts in the newspapers under the Zimpapers stable full of insults, personal attacks and negatives because the party knows that it has a dismal record. Everyday, the Herald and its sister newspapers publish stories quoting some ZANU PF luminaries to make personal attacks on Simba Makoni as if Simba is competing with Robert Mugabe for his wife's (Grace Mugabe) attention. Is Zimbabwe a personal possession?

After Robert Mugabe, the candidate, participated in the liberation struggle against colonialism, led Zimbabwe since independence in 1980, 'delivered' land to the people and is now aged 84, what more does he want to deliver? What more can he do when he is past the retirement age by 19 years and will be 89 at the end of his term?

You wonder why his message is not about renewal or fixing the economy. It lacks a proper understanding of the economic challenges faced by the country. Basic commodities shortages, escalating of prices on a weekly basis, unemployment due to the shrinking economy that has led companies to operate unprofitably, reduce productivity and are now shedding off labour or paying uneconomic salaries, and unbelievably a high number of economic refugees in South Africa, Britain, Australia and New Zealand. Ironically, as result the South African industry and commerce has benefited considerably from our man-made economic woes.

The questions is "Why should it be just him to lead this country?" ZANU PF's message is that of during the liberation struggle against colonialism. The presidential candidate of the ruling party has not trasformed itself to deal withe post-colonial challenges.

He lacks a culture of selling the message as a marketer. He does even think of himself as a person at the same level with fellow candidates. He is so arrogant!

Mutumwa Mawere wrote "Citizens are understandably angry at the state of the nation and instead of locating the blame at the leader; the tendency has been to blame the party. President Mugabe's world view of politics and the economy has not changed since the liberation struggle and it is evident that nothing will change his philosophy to suggest that Zimbabwe will be visited by a brighter day under his extended stewardship."

The language being used ZANU PF and its presidential candidate is a clear indication of dirty tactics being used against opposing candidates away from the glare of the media and public attention.

Zimbabwe and Zimbabweans deserves better than this dishonourable political behaviour and crassness i.e. so crude and unrefined as to be lacking in discrimination and sensibility.

Flatwatergate - Gono Still Not Off the Hook

By Levi Mhaka

Published on February 18, 2008

On February 15, 2008, the Reserve Bank of Zimbabwe (RBZ) had a 16-page tabloid sized pullout supplement in the Herald, Chronicle and the Zimbabwe Independent newspapers declaring victory. This was a follow up to the wide coverage (front page story and an interview with Gideon Gono) given by his newspaper, the Financial Gazette, a day earlier. On February 18, 2008, his online newspaper, newzimbabwe.com had a well strategically placed story entitled "Gono claims escaped arrest in December". The following day on the 19th, Gono continued with his victory celebration by causing a front-page article to appear in the Herald newspaper entitled "RBZ war against shady deals pays off".

The pullout supplement was claiming that the RBZ had been cleared of wrong doing in the Flatwater Investments case, in which the company and its directors were fined ZW$150 billion each, for illegally trading in foreign currency in the parallel market.

For those who did not see the wastage by Gideon Gono, the colourful supplement was entitled “When Facts Are Clear, Justice Will Always Prevail… RBZ Cleared of Wrong Doing In The Flatwater Case”. The pullout contained numerous cut and pasted of stories on the Flatwater case issues carried by the local print newspapers and selectively from online publications.

The preamble/introduction was entitled “Justice Well Served” and had points namely:

In a case where some people sought to divert attention from the main issue of illegal foreign currency dealings, it became clear that the Reserve Bank as the complainant was now being attacked and persecuted, by some highly placed people in positions of authority and influence, calling for the arrest of the Governor of the Reserve Bank and his officials.

"This, the RBZ saw as a grand cover-up operation to divert the public, and convert attention from the real facts, culprits and issues on the ground.

“Indeed, commentators and scribes of all manner and form joined in the attacks based on falsehoods while the Governor and his staff maintained silent confidence and faith in the due process of our courts, knowing fully well that RINAMANYANGA HARIPUTIRWE forever.

“The Governor and his team now feel vindicated as facts now speak for themselves and justice has been done
,” (EMPHASIS WAS AS PRINTED)

This was against a background of some of the Flatwater Investments 'runners' (Joseph Manjoro and Philemon Makuvise) having been fined ZW$100 billion for a similar offence. Former Member of Parliament, David Butau who is still on the run for a related offence, while Antony Hobwana and Royas Mazorodze are yet to be charged.

The finer details of what transpired will show that the RBZ must be held accountable through thorough investigation by a judicial commission of inquiry for fuelling the parallel forex market and trading in forex in the same market.

It is important to note that six Premier Banking Corporation/Premier Finance Group senior executives were unfairly, cruelly and vindictively relieved of their duties on the grounds of serious exchange control violations to do with the farm mechanisation programme when Premier was handling Flatwater funds from the RBZ.

The Harare Provincial Magistrate, Mishrod Guvamombe deliberately ignored a lot of glaring inconsistencies in the report presented by RBZ or he was ignorant of the procurement law and regulations of Zimbabwe for the State, local authorities and statutory bodies.

The provincial magistrate's conduct and statement of exonerating the RBZ that "the State erroneously applied for an order seeking (investigation and) arrest of RBZ officials in connection with the release of the money before it was proven in court that indeed there was a genuine contract" seem to confirm many people's fears that as a lowly paid civil servant, he was financially manipulated and blackmailed him by Gideon Gono. There was a talk during the trial period that the RBZ was prompted to undertake an audit of personal livelihood and assets of the magistrate and prosecutor after the prosecutor called for a full investigation of the RBZ. There is also a talk that the magistrate received a tractor and disc plough from the RBZ during the adjournment of the case before judgement was passed.

The RBZ prepared a report passionately defending Flatwater Investments. In the report, there is an attachment marked “Intelligence Report” and it contains paragraph of RBZ anger against the senior prosecutor when it said “The conduct of Mr. Tawanda Zvekare was beyond his role of a State prosecutor. He acted like an ambitious politician opposed to the Government mechanisation programme. He was actually assisting the defence to mitigate on behalf of the accused persons. His interest and overzealousness is beyond the means of having justice done, it could be that he is being used by some mercenaries to fight the Governor of the Reserve Bank or to protect the accused persons."

From the attachment cited above, it can noted that the RBZ now has its own ‘CIO’ or it recruited CIO officers to work for the central bank!

A copy of the report whose contents was part of the court submission by Mirirai Chiremba, RBZ's Divisional Head - Financial Intelligence Inspectorate and Evaluation (FIIE), in the criminal case against directors of Flatwater Investments, has been made available to this correspondent through the court.

The RBZ report claimed that Flatwater Investments specializes in imports and whose major activities have been the importation of grain and heavy equipment for private and public companies. Major contracts that were claimed to have been handled by Flatwater Investments since 2004 were from the following customers:


  • National Foods and Victoria Foods – importation and supply of wheat for their milling operations;
  • GMB – importation and supply of tarpaulins for covering grain;
  • Delta Corporation – importation and supply of coke concentrate for beverage production;
  • Zimbabwe Fertilizer Company – importation and supply of front-end loaders;
  • Nestle Zimbabwe - importation and supply of coffee.

In a letter of introduction, Flatwater Investment claims to have got previous contracts with various institutions and corporate organisations. There is no sufficient evidence of business done attached to the letter of introduction, except such claims which the provincial magistrate described as coming from a well established company.

Besides these claims as presented in Flatwater letter of introduction, the claims were considered as facts by RBZ in the report. There are no attachments of purchase orders from the named Flatwater customers to provide proof about these so called major contracts.

Provisions of the Procurement Act

Section 31 provides the tendering requirements under the Procurement Act (Chapter 22:14) for the State Procurement Board; a ministry, department or other division of the government; local authority; and a statutory body. Some of them are:
an open invitation to suppliers to tender to be published in a newspaper; and
the invitation must contain – a comprehensive description of the goods/services to be supplied; the time within which the goods/services are to be supplied; the criteria by which the suppliers will be evaluated; the manner in which solicitation documents may be obtained and their price; and the deadline for the submission of tenders and the place where they are to be submitted.

Provisions of Section 34 of the Procurement Act provide that the procuring entity be satisfied with the supplier’s:
possession of the necessary professional and technical qualifications and competence, financial resources, equipment, facilities, personnel and experience to perform the contract; and
tax status, obligations and contributions/payments to NSSA are up-to-date.

Section 35 of the same principal act requires the procuring entity to keep a record of procurement proceedings and Section 36 provides for the public access to any document regulating the procedure in the procurement proceedings or the qualifications of suppliers. The record of the procurement proceedings must contain the names and addresses of the suppliers that participated in the pre-qualification proceedings; the suppliers that submitted tenders, bids or proposals; the price or the basis for determining the price and other related principal terms and conditions of the tender; the supplier who won the tender and the contract price; and a summary of the procuring entity’s evaluation and comparison of the tenders that were submitted.

The RBZ-Flatwater Relationship

How did the RBZ came to know Flatwater Investments and/or how Flatwater Investments came to know about the tender since it was not publicized? There was an attempt to answer this question in the RBZ report by the claim that “Following the call, under the Monetary Policy Statement, for capable suppliers of farming equipment to manufacture and sell their products to the RBZ, Flatwater Investments approached RBZ with its business profile, in late 2006, outlining the nature of their operations.”

Flatwater Investment's unsolicited letter of introduction is dated December 28, 2007 instead of December 28, 2006. Since this letter was made in December 2007, the error on the date escaped their attention, thus exposing the cover-up.

There was no due diligence conducted by the RBZ to establish where Flatwater Investments was to get its forex to pay for the products being ordered for. It is unprocedural not to have attached the terms and conditions of the offshore facilities to the procuring entity, unless it was a fishing expedition.

An unsolicited letter of introduction by Flatwater Investments was purportedly made on December 28, 2006, the first contract was signed 4 days later on a public holiday on January 1, 2007, the 1st delivery was made within 6 days of the signing of the contract on January 7, 2007. What a swift scandal!

A purported confirmation of the access to free funds was only made to the RBZ on January 31, 2007 through a one paragraph letter, a month after the contract had been signed.

The January 31 letter was addressed to Elias Musakwa and copied to a ‘Dr. O. Moyo’, who is believed to have been the link person between Gideon Gono and Flatwater. The letter was written by Flatwater’s CEO, T.J. Chivaviro, and it read "This letter serves to inform you that our company is in a position to support the importation of tractors through Farmer (Pvt) Ltd. We have an offshore facility at our disposal to the value of US$9 million. The terms and conditions of the facilities are available for your perusal…”

Even if the tender was informally awarded, the Report contains no tender details and specifications. There is no indication in the report of an attempt to invite more than one company to bid to supply the tractors and other agricultural mechanisation requirements. Procurement by government and quasi-government bodies are governed by the Procurement Act (Chapter 22:14) and the related procurement regulations.

An RBZ letter dated February 6, 2007 written by Elias Musakwa (Divisional Chief - Procurement, Logistics and Technical Services, a gospel musician and owner of Ngaavongwe Records, a Board member of the State-controlled Broadcasting Authority of Zimbabwe and ZANU PF candidate for the 2008 parliamentary elections) was addressed to Flatwater Investments confirming the purchase order of 60 tractors. The RBZ report claimed that the first delivery was made on January 7, 2007. Such a confirmation, ordinarily, must have been made before January 7, 2007. If a supplier has a copy of the written contract, why would a letter confirming that same contract be written?

The total payments made to Flatwater Investments Pvt Ltd under the farm mechanisation between the period February 7 – October 25, 2007 amounted to ZW$8,905,618,786,780. These was for the so called ‘Contracts No. 9, 10 and 11’ of 2007 valued at ZW$7,008,881,070,200 for 357 tractors; ZW$273,066,600,000 for 18 combine harvesters and ZW$2,067,767,478,826 for 250 planters, respectively.

Through a total of 15 payments, two banks were used – Premier Banking Corporation (ZW$5,789,789,000,000 – into account numbers ‘FLATW-01SET-ZWD0272, ‘FLATW-01SET-ZWD0156’ and ‘FLATW-01PCA-ZWD0156’) and Stanbic Bank (ZW$3,115,829,786,780 – into account number 014-006-895-5001).

On September 18, 2007, an unsolicited letter was written by a Ambarin Hassim-Tayob, the Business Development Executive of a South African company, VFS Wealth Managers (Pty) Ltd, to Flatwater Investments. It was entitled “Proposal to participate in the national mechanization program” and it read: “We would like to apply to the Reserve Bank of Zimbabwe for inclusion in the above exercise. We are proposing to commit free funds of up to US$10 million to the program on a revolving basis. We are a South African based wealth and portfolio management company and manage substantial funds on behalf of our clients. All the funds we manage are what are termed ‘free funds’ and have been sourced from various foreign non-Zimbabwean investors.

“We would like to use the Zimbabwean dollar proceeds generated from our participation in the program to invest in various companies listed on the Zimbabwe Stock Exchange, specifically Old Mutual. We intend to liquidate such investments by purchasing Old Mutual shares, which we will then seek to be transferred from the ZSE share register to share registers in South Africa and London for trading
”.

The founding CEO of VFS Wealth Managers (Pty) Ltd is Victor Chando who is a former deputy general manager for international finance of Zimbank. VFS Wealth Managers was registered on January 8, 2007 and its incorporation number is 2007/000172/07. Victor was a 25% founding shareholder and director of Royal Bank Zimbabwe Ltd through his company Victory Financial Services (VFS). He also owned a company called Global Capital Holdings (GCH). He fled from Zimbabwe in 2004 during investigations into allegations of illegal forex dealings. He also used to run Travellers Money Transfer Agency (MTA) located in Edgars Stores.

VFS Wealth Managers made an unsolicited proposal that was NOT responded to by Flatwater and no subsequent correspondence and substantive agreement made between the two parties. One wonders how the letter from VFS Wealth Managers came to be in the hands of RBZ to be an attachment of its report when the RBZ is the complainant against Flatwater.

On the same day of receiving the unsolicited letter from VFS Wealth Managers, Flatwater Investments wrote to Premier Banking Corporation DUBIOUSLY seeking exchange control approval on transactions related to the farm mechanisation programme. The following day on September 19, 2007, Flatwater Investments wrote another letter to the RBZ Exchange Control Divisional Chief applying for exchange control approval on the farm mechanisation funds.

The substantive contents of the letters were the same as those in the VFS Wealth Managers proposal letter. Flatwater was now claiming that it had secured “free funds” from VFS Wealth Managers, which was not true. It is important to note that these letters were written and the exchange control approval was being sought at a time that Premier Banking Corporation was under investigation by RBZ for exchange control violations.

One can see that there was an attempt to control or manage the damage that had been caused from January until October 2007. There is no attached record of the exchange control approval having been granted.

Both VFS Wealth Managers and Flatwater were seeking to ‘externalize’ foreign currency. The letters written were simply a cover-up of what already been going on. The letters to both Premier Banking Corporation and RBZ seeking exchange control approval were based on a non-existent agreement with VFS Wealth Managers. At the time these letters were written, RBZ had made 13 payments to Flatwater through Premier Banking Corporation and the remainder through Stanbic Bank.

The Negligence of the Provincial Magistrate

After all the suspected secret meetings between the magistrate and RBZ with Flatwater directors, separately, during the period of the case’s adjournment, the magistrate has shown the whole world how compromised he was. The magistrate has absolute disregard of the provisions of the Procurement Act (Chapter 22:14) and the complicity of the RBZ for having simply threw public funds to the wind for possible personal enrichment by engaging a company without the capacity to raise the so called “free funds”.

A diligent magistrate should have said:

"The court finds the accused Flatwater Investments Pvt Ltd and its executive directors Tazviwana James Chivaviro and Nigel Marozhe guilty of illegally trading in forex after having used local currency valued at ZW$8,905,618,786,780 (i.e. more than ZW$8,9 trillion) after purporting to have access to or able to source free funds during the period January – October 2007.

The accused are guilty under the Exchange Control Act (Chapter 22:05) and Section 4 subsections (1) and (2) of the Exchange Control Regulations, 1996 S.I. I09 of 1996. The accused persons received local currency from the RBZ to import farm mechanization equipment and did NOT do so with the use of “free funds” as was required and expected.

In this case, the accused recruited people, who have since been convicted by a court of law for exchange control violations, to buy forex in the parallel market causing well documented damage to the economic activity in Zimbabwe , to pay the South African dealers in the required farm mechanisation equipment.

According to Section 2 of the Exchange Control Regulations, 1996 S.I. I09 of 1996, “free funds” are money which is lawfully held outside Zimbabwe by a Zimbabwean resident and which was acquired by him as the proceeds of any trade, business or other gainful occupation or activity carried on by him outside Zimbabwe.

Section 4 Subsection (3) of the same Regulations exempts, as an offence under Section 4 subsections (1) and (2), the acquisitions of foreign currency outside Zimbabwe by an individual who is a Zimbabwean resident, where the foreign currency is acquired with "free funds" which were available to him at the time of the acquisition.

The court also has found out hat there is prima facie evidence of serious violations of the Procurement Act (Chapter 22:14) and under the Prevention of Corruption Act against the RBZ. State funds were recklessly and negligently paid to Flatwater Investments without due diligence.

Since it is not the RBZ that is the accused, the court calls upon the State Procurement Board (SPB) to invoke Sections 46 and 48 of the Procurement Act (Chapter 22:14) for the purpose of preventing, investigating or detecting contraventions of the Procurement Act and other laws by the RBZ, which is a statutory board and the procuring entity under section 2 of the Procurement Act (Chapter 22:14).

It is morally repugnant that the RBZ is an authorised forex dealer under exchange control laws and regulations but aided and promoted the violations of exchange control regulations by a private company. The acquisition of the farm equipment is a noble programme to bolster the economy of the country but must have been done as provided for by the Exchange Control Act and Procurement Act.

The court also expresses its utter disappointment with the January 16, 2008 statement by the RBZ Governor Gideon Gono, which amounted to contempt of court, intimidation of court officials in their personal capacities and sub-judice when he said “On a separate but related note which touches on the credibility or otherwise of the Bank, the last two weeks have witnessed sustained negative comments on the Central Bank’s internal systems and corporate governance procedures. A grossly serious misrepresentation of facts and reality on the ground; infact, the opposite of the truth has been made against the Reserve Bank by those who are infact supposed to represent it and project facts as they stand and nothing else. The result of such shocking utterances and misrepresentations has been to shake the confidence of the banking public, the industry and some of our key stakeholders who know us better.”

Since the magistrate did not exercise his mind to ensure justice is done, there is now a call for an immediate review of the case by the High Court of Zimbabwe under the Criminal Procedure Act, which provides for the review of magistrates court cases by a higher court. the behaviour of the magistrate is highly discreditable!



Beware! A Devastating Banking Crisis Looms

By Levi Mhaka

Published January 29, 2008

Since the Reserve Bank of Zimbabwe (RBZ) Governor, Gideon Gono scuttled the opportunity to name and shame before a parliamentary committee, he then diverted attention from his culpability in the cash crisis by presenting banks as being responsible. He has knack of blaming everybody else except himself.

On January 16, 2008, he introduced a new high value set of bearer cheques, although one was expecting them to include Z$50 million and $100 million and the removal of the $250,000 and $750,000 bearer cheques. This saves money of printing and is convenient for high value transactions.

The new notes were to be circulating with effect from January 18, 2008.
Banks did not get enough notes for their clients during the period January 16-18, 2008. On January 19, 2008, the Herald reported that “at least $13 trillion was yesterday released into the market as the Reserve Bank of Zimbabwe stepped up efforts to ease cash shortages. Commercial banks and building societies each received $1 trillion of the new higher denominated notes from the central bank… This increased the cash in circulation by between 10 and 15 percent… There were some long queues but not as bad as they were in a few weeks ago, particularly during the festive period. Although the cash situation had vastly improved, it was still not enough to satisfy demand. While some people appeared satisfied, others appeared to have lost faith in the banking system.”

And then on January 21, 2008, boom, the governor claimed that the “RBZ was stuck with trillions of dollars” of new bearer cheque notes in its vaults. Discerning observers could see that this governor was misleading us or was simply lying. The Herald got the details about the cash released obviously from the RBZ and there were no trillions on Friday and Saturday ready for releasing to banks.

Suddenly, the villains and easy prey for the blame game were to become banks because the blame on cash barons no longer made sense. The RBZ’s subsidiary company, Fidelity Printers, got so busy printing money during the period January 16-20, 2008 before banks were expected to collect cash on the 21st.

The RBZ could have been hoarding the trillions for release on the 21st and then use it as a publicity stunt on the day he was supposed to have appeared before the parliamentary committee.

Unprecedented Newspaper Expose

The January 25, 2007 edition of the Zimbabwe Independent newspaper had an unprecedented expose of a devastating crisis in the banking sector. This followed another crisis following a cash crisis which earlier had been blamed on so called cash barons and currency speculators.

The Zimbabwe Independent had a lead story entitled “Banks face collapse” by the news editor, Dumisani Muleya and an editorial commentary entitled “Banking crisis deep-rooted”. There were 3 more stories entitled “Banks sail in choppy waters”; “Banks trapped in liquidity crunch”, “RBZ has duty to protect banks – Chikura” by the business editor, Shakeman Mugari; political reporter, Constantine Chimakure and business reporter, Augustine Mukaro, respectively.

The stories were covered by a record 5 writers and this cannot be arising from the resourcefulness of the newspaper in covering the goings in the banking sector. One of the stories even contained excepts of a confidential letter from the ZABG chief, Stephen Gwasira to the central bank.

Almost all banks were covered in the stories. What was missing was just a graphical design of ‘Exclusive’ written in bold red on the newspaper.

Details cannot have leaked from all of them at the same time to the newspaper. Given that it is only the governor’s office handling communication with the banks and is the only person with the passionate contact with the media in the RBZ, it can therefore be deduced that he released the documents about the state of banks to the newspaper in the middle of the night.

On January 25, 2008, the Herald quoted his circular to banks that he was making it difficult for banks not to get financial assistance from the central bank by increasing the overnight loans interest rate to 1,500%. He also ensured that when the desperate measure has to happen, it will not be the institutional set-up of the central bank that deals with the matter but him ONLY with the bank’s chief executive officer. Armed with such details, he will be able to dish detailed documents and recorded audios to the media to destroy the career of the banking CEO because he is in a fighting mode.

Who is also going to be the biggest beneficiary of the banking crisis because as the banks wish to be financed of their positions, they will be forced to sell properties, liquidate forex and sell shares. For this to happen, the bank transfer system must be operating efficiently and there must be reasonable value when offloading shares or liquidating forex. The forex would only have to be offloaded to the RBZ at lowly ridiculous rates. Any person or institution would be buying it at parallel rate. Who would want to be called to account by the RBZ in such a situation?

The stock exchange has remained stuck in red and those who are selling have not received value for the shares because of the transfer system that is down.

Therefore, the banks will remain stuck with the forex, shares and properties, while the liquidity situation remains worse.

The governor requested the services of the Minister of Finance, Samuel Mumbengegwi (a brother to Clever Mumbengegwi, one of the RBZ board members and the Minister of Foreign Affairs, Simbarashe Mumbengegwi) to ruthlessly deal with bankers as was reported by the Herald newspaper on January 23, 2008.

Coincidentally, the person we have as a Minister of Finance knows no other language except threatening and abrasive talk. Gono found a political partner as a Storm trooper. We now know that:


  • It was not the so called cash barons, forex dealers and the unbanking businesses after all who caused the cash shortage crisis but banks;
  • He had a desire to close banks in involved in “errant ways”;
  • He gave the Minister of Finance $400 million for his son’s requirements after a bank turned down the request for an overdraft or the maximum withdrawal was then $50 million per day/account, or both;
  • We have a Minister of Finance who is an educationalist by profession but who shows the whole world that he is does read newspapers on his own, does not get press briefings for hard copy and online newspapers, is so ill-informed of what is happening in the country and that he deliberately ignored the unfolding Flatwatergate where Z$21 trillion was used to prop up the parallel forex market. Gono had the time to sanitize the scandal with some manipulated internal inquiry report to pre-empt a judicial commission of inquiry;
  • Zimbabwe is “over” banked is a remark that is a forerunner to the closure of more banks as what he did happened in 2004 with no benefit to the economy. We are yet to see banking services confidence index survey done independently of the RBZ to show the current and expected changes in banks' income, expenses, profitability, competitive position, credit standards and investment. An over-banked economy has too many banks to enable them individually to generate good returns. One wonders if our banks are struggling to make good returns. In South Africa, the Banking Services Confidence Index, which is part of the Financial Services Confidence Index, is a barometer of satisfaction within the banking sector on the prevailing business conditions, and is conducted by Ernest & Young;
  • He would want to victimise and fix some banking executives before he is asked to leave the office of governor. He said “I can assure you that if I am to be fired, I would have fired many of you”. Thus, he has assumed the absolute role of a shareholder and Board of Directors of all banks in Zimbabwe;
  • He thinks he has lost control of the banking sector as the supervisory authority and he will soon reclaim it by engaging in a serious fight with bankers whose voices have never been reported in so called meetings with banking executives with him. When we see the departure of a banking CEO, he has already told us that he will be engaging in very dirty and vindictive attacks against banking executives;
  • He accused bankers of undermining his authority yet we have the most passive banking grouping in the world in the face of an emotionally unstable and reckless central bank governor;
  • He told the whole world that he has lost confidence with his four of his deputy governors have become cosy with the banking sector;
  • He will re-organize financial institutions as if he is the board of directors;

Banker-Client Relationship

A central bank is a nation's principal financial institution or monetary authority, which regulates the money supply and credit, issues currency and manages the rate of exchange. It functions as the government's banker and the bankers' bank ("Lender of Last Resort"). As the bankers’ bank, it holds deposits representing reserves of commercial and merchant banks. It is also the lender of last resort to the banking sector during times of financial need or crisis.

From the above, it can be seen that the government and banks are the clients of the central bank.

The concept of “banker-client” relationship is built on the foundations of "doctor-patient”, “lawyer-client”, “auditor-client” and “journalist-source” confidentiality. The concept is derived from Common Law. It is based on ethics, not law, and goes at least as far back as the Roman Hippocratic Oath taken by physicians.

Bankers, lawyers, auditors and physicians are fiduciary agents. A fiduciary agent is a person required to act for the benefit of another (the principal) with the duties of good faith, trust, confidence, reasonable care and diligence, loyalty, reasonable disclosure, accounting and candour. This duty obligates the fiduciary agent to act in the best interest of the principal. The central bank must act in the best interest of the government and banks, which in turn will act in the best interests of the citizens and depositors/investors, respectively.

The Oath of Hippocrates, traditionally sworn to by newly licensed physicians, includes the promise that "Whatever, in connection with my professional service, or not in connection with it, I see or hear, in the life of men, which ought not to be spoken of abroad, I will not divulge, as reckoning that all such should be kept secret." The laws of Hippocrates further provide, "Those things which are sacred, are to be imparted only to sacred persons; and it is not lawful to impart them to the profane until they have been initiated into the mysteries of the science."

Banker-client confidentiality stems from the special relationship created when a banking client seeks the services and advice of a banker. It is based upon the general principle that individuals seeking banking services should not be hindered or inhibited by fear that their concerns or conditions will be disclosed to others.

Banking services clients entrust personal and institutional state to their bankers, which creates an uneven relationship in that the vulnerability is one-sided. There is generally an expectation that bankers will hold that special knowledge in confidence and use it exclusively for the benefit of the banking services client.

Waiver of Confidentiality

A privilege belongs to the banking client, not the banker. Generally, only a banking services client may waive the privilege. A banking client's written consent is needed before a banker can release any information about the client. But there are other ways in which a client may "waive" the privilege of confidentiality.

The professional duty of confidentiality covers not only what banking clients may reveal to their bankers, but also what bankers may independently conclude or form an opinion about, based on their examination or assessment of clients. Confidentiality covers all account details as well as communications between the banker and client. It also includes communications between the banking service and other professional staff working with the banker.

The duty of confidentiality continues even after clients using the bank.

Generally speaking, individuals voluntarily seeking banking services have an expectation that the communication is held in confidence. This expectation of confidentiality does not need to be expressed. It is implied from the circumstances.

All the explicit and implicit pronouncements about the assistance given to various government ministries and departments; corporate and banking institutions; and the state of the banking sector by the RBZ governor break the banker-client relationship and banking ethical practice expected in the ordinary sense.

Gono will ever stand out to be the worst example of a banker and a central banker because he is so reckless with the information that he handles. Which sane bank will approach the central bank for financial assistance, if such communication will find itself splashed in the newspapers? Had it not been out of desperation to be assisted, all the banks should have taken a class action against the central bank for unethical practice as defined by banker-client confidentiality.

A Likelihood Bank Run

According to Barron’s, an online accounting and banking dictionary, a bank run (also known as a ‘run on the bank’) is a type of financial crisis. It is a panic which occurs when a large number of customers of a bank fear it is insolvent and withdraw their deposits. It begins when the public begins to suspect that a bank may become insolvent. As a result, depositors begin to withdraw their savings. This action can destabilize the bank to the point where it may in fact become insolvent.

A bank run is caused by loss of depositor confidence. Media glare on banks as instigated by the regulator cannot allow them to deal with their problems quietly.

The governor we have in Zimbabwe gets so overwhelmed and restless with information. With the recently introduced electronic tracking system, he will always find victims with it vindictively.

There is nothing that can make an ordinary or a discerning depositor/investor to leave funds in the custody of our banks when they have been battered like this. Depositor confidence denotes a feeling of emotional security about a bank’s abilities or capacities. Confidence, as a fact or condition of being without doubt, has been severely been damaged by the central bank governor.

The Law on Secrecy of Bank Deposits or Republic Act (R.A.) No. 1405 of the Philippines declares that all types of deposits in banking institutions including investments in bonds issued by the Philippine government and its political subdivisions and instrumentalities are considered of absolutely confidential nature. As provided, deposits may not be examined, inquired or looked into by any person, government official, bureau or office. It is also unlawful for any official or employee of a bank to disclose to any person any information concerning deposits. Violation against this law subjects the offender to certain penalties.

Deposit records may be disclosed only (a) upon written permission of the depositor, (b) in cases of impeachment, and (c) upon order of a competent court in the case of bribery or dereliction of duty of public officials or when the money deposited or invested is the subject matter of the litigation.

“The initial indications of trouble come from a regulatory evaluation of bank capital. A judgment that one or more large banks are insolvent can reflect a reassessment of the viability of their borrowing clients (the reassessment triggered, perhaps, by such extraneous factors as a political event that removes protection from hitherto favoured borrowers), or because of the revelation of bank fraud or mismanagement on a large scale.

Depositors may not at first react to the regulator’s emerging awareness of solvency problems, whether because of lack of information, or because they are confident that the authorities will protect them; instead, it is the potential for looting of the insolvent bank by insiders that generates the urgency for containment action." – ‘Systemic Financial Crises - Containment and Resolution’ (Cambridge University Press), edited by Patrick Honohan and Luc Laeven.

Gono is armed with so much nationally sensitive information amassed during the course of his work. He will either destroy himself or destroy the nation with it. Do we care if he destroys himself?

We should be worried that a central bank governor addresses and talks to the nation more than 6 times in four months and issues endless press statements and leakages, when the President of the country has spoken to his supporters at the airport upon a return from an international trip.

Whom do we turn to for survival? The Minister of Finance, who is a brother to an RBZ board member, (Clever Mumbengegwi) was broke and recently he got assistance from Gono for his son of Z$400 million. The Parliament of Zimbabwe faces dissolution pending the elections on March 29, 2008. The Anti-corruption Commission has been heavily compromised by his personal involvement in resourcing it and in any case, other than jingles reminiscent of Jonathan Moyo, there is nothing else the Commission is capable of doing.

All the hope and expectations are focused on the State President!

Banks face closure by and as caused by this reckless clown of a Central Bank Governor whose mouth knows no caution and restraint. We have a ‘benzi rakapfeka suit’ as the governor. Akabhabhauka! He has no sense of discretion with the information he handles.

In settling unending scores, this is the man who went on a rampage in 2004 destroying people’s livelihoods, savings, investments and caused anguish in households by closing banks few weeks upon assumption of the office of governor on December 1, 2003. Few months before the expiry of the 5-year term in December 2008, he has been possessed by the same demon of economic and social destruction.

Whenever he talks, we are counting very high costs, especially in the delicate financial services sector and banking sub-sector.

Further Evidence that the RBZ is Destroying the Economy

By Levi Mhaka

Published on December 31, 2007

Its slowly coming out as to who is the Grand Master of forex dealers in Zimbabwe i.e. Gideon Gono.

The Sunday Mail of December 30, 2007 reports that David Butau has escaped to Britain following attempts to arrest him over alleged exchange control violations.

The truth of the matter could be that Butau MERELY owes the RBZ money in local currency because he did not pay forex to Michigan Tractors after he was paid by Acondex Investments Pvt Ltd, a company owned by Munyaradzi Manjoro.

Cynthetic Cotton, a subsidiary of Dande Capital Holdings Pvt Ltd was named by Manjoro (who has since been arrested over the missing funds as reported below, but has surprisingly not appeared in court yet) has been one of the receivers of the money as directed by Raymond Chigogwana, of Premier Banking Corporation.

Michigan Tractors has been a beneficiary of payments made by companies who would have been paid by either the RBZ or the numerous middlemen of the companies who would have received money from the RBZ.

Butau could not have paid Michigan Tractors the mentioned 573,000 pounds unless doing so for the RBZ or RBZ'a direct agent known by Munyaradzi Manjoro. Let us wait to see what paperwork Butau has to exonerate himself at the same time exposing Gono of what he is - a Grand Master of forex dealers and a Forex Baron.

Gono has been buying the agricultural mechanisation equipment, fertiliser, seed maize, motor vehicles, etc through the forex black market. Butau's crime is that he did not pay the forex to Michigan Tractors in respect of the local currency received through Manjoro.

Manjoro had received the local currency at 'black' market rate from a company who had got the money from the RBZ. The RBZ had paid for the money purportedly that it was doing so to a company with access to "free funds". Gono would obviously not know all forex dealers but if each of high value local curency for forex supply is traced backwards, it will lead to the RBZ agent showing all the corruption being driven by the central bank.

The Economic Road Zimbabwe is Travelling

The Worst Episode of Hyperinflation in History: Yugoslavia 1993-94

By Thayer Watkins

Under Tito Yugoslavia ran a budget deficit that was financed by printing money. This led to rates of inflation of 15 to 25 percent per year. After Tito the Communist Party pursued progressively more irrational economic policies. These irrational policies and the breakup of Yugoslavia (Yugoslavia now consists of only Serbia and Montenegro) led to heavier reliance upon printing or otherwise creating money to finance the operation of the government and the socialist economy.

This created the worst hyperinflation in history up to this time.

By the early 1990s the government used up all of its own hard currency reserves and proceded to loot the hard currency savings of private citizens. It did this by imposing more and more difficult restrictions on private citizens access to their hard currency savings in government banks.

The government operated a network of stores at which goods were supposed to be available at artificially low prices. In practice these store seldom had anything to sell and goods were only available at free markets where the prices were far above the official prices that goods were supposed to sell at in government stores. In particular, all of the government gasoline stations eventually were closed and gasoline was available only from roadside dealers whose operation consisted of a parked car with a plastic can of gasoline sitting on the hood. The market price was the equivalent of $8 per gallon.

The combination of the shortage of gasoline and the government confiscation of German Deutsche mark deposits created a bizaar episode. A man after repeated attempts to get the government to let him withdraw his Deutsche mark deposits as Deutsche marks announced the was going to commit suicide in front of a government building by dousing himself with gasoline and igniting it. On the appointed day he showed up with a canister of gasoline. The media was there to film his protest. The police were also there and arrested the man. Afterwards the television station got numerous phone calls asking what had happened to the canister of gasoline.
Most car owners gave up driving and tried to rely upon public transportation. But the Belgrade transit authority (GSP) did not have the funds necessary for keeping its fleet of 1200 buses operating. Instead it ran fewer than 500 buses. These buses were overcrowded and the ticket collectors could not get aboard to collect fares. Thus GSP could not collect fares even though it was desperately short of funds.

Delivery trucks, ambulances, fire trucks and garbage trucks were also short of fuel. The government announced that gasoline would not be sold to farmers for fall harvests and planting.

Despite the government desperate printing of money it still did not have the funds to keep the infrastructure in operation. Pot holes developed in the streets, elevators stopped functioning, and construction projects were closed down. The unemployment rate exceeded 30 percent.

The government tried to counter the inflation by imposing price controls. But when inflation continued the government price controls made the price producers were getting ridiculous low they stopped producing. In October of 1993 the bakers stopped making bread and Belgrade was without bread for a week. The slaughter houses refused to sell meat to the state stores and this meant meat became unvailable for many sectors of the population.

Other stores closed down for inventory rather than sell their goods at the government mandated prices. When farmers refused to sell to the government at the artificially low prices the government dictated, government irrationally used hard currency to buy food from foreign sources rather than remove the price controls. The Ministry of Agriculture also risked creating a famine by selling farmers only 30 percent of the fuel they needed for planting and harvesting.

Later the government tried to curb inflation by requiring stores to file paper work every time they raised a price. This meant that many of the stores employees had to devote their time to filling out these government forms. Instead of curbing inflation this policy actually increased inflation because the stores tended increase prices by a bigger jump so that they would not have file forms for another price increase so soon.

In October of 1993 the created a new currency unit. One new dinar was worth one million of the old dinars. In effect, the government simply removed six zeroes from the paper money. This of course did not stop the inflation and between October 1, 1993 and January 24, 1995 prices increased by 5 quadrillion percent. This number is a 5 with 15 zeroes after it.

In November of 1993 the government postponed turning on the heat in the state apartment buildings in which most of the population lived. The residents reacted to this withholding of heat by using electrical space heaters which were inefficient and overloaded the electrical system. The government power company then had to order blackouts to conserve electricity.

The social structure began to collapse. Thieves robbed hospitals and clinics of scarce pharmaceuticals and then sold them in front of the same places they robbed. The railway workers went on strike and closed down Yugoslavia's rail system.

In a large psychiatric hospital 87 patients died in November of 1994. The hospital had no heat, there was no food or medicine and the patients were wandering around naked.

The government set the level of pensions. The pensions were to be paid at the post office but the government did not give the post offices enough funds to pay these pensions. The pensioners lined up in long lines outside the post office. When the post office ran out of state funds to pay the pensions the employees would pay the next pensioner in line whatever money they received when someone came in to mail a letter or package.

With inflation being what it was the value of the pension would decrease drastically if the pensioners went home and came back the next day. So they waited in line knowing that the value of their pension payment was decreasing with each minute they had to wait in line.

Many Yugoslavian businesses refused to take the Yugoslavian currency at all and the German Deutsche Mark effectively became the currency of Yugoslavia. But government organizations, government employees and pensioners still got paid in Yugoslavian dinars so there was still an active exchange in dinars.

On November 12, 1993 the exchange rate was 1 DM = 1 million new dinars. By November 23 the exchange rate was 1 DM = 6.5 million new dinars and at the end of November it was 1 DM = 37 million new dinars. At the beginning of December the bus workers went on strike because their pay for two weeks was equivalent to only 4 DM when it cost a family of four 230 DM per month to live. By December 11th the exchange rate was 1 DM = 800 million and on December 15th it was 1 DM = 3.7 billion new dinars. The average daily rate of inflation was nearly 100 percent. When farmers selling in the free markets refused to sell food for Yugoslavian dinars the government closed down the free markets. On December 29 the exchange rate was 1 DM = 950 billion new dinars.

About this time there occurred a tragic incident. As usual pensioners were waiting in line. Someone passed by their line carrying bags of groceries from the free market. Two pensioners got so upset at their situation and the sight of someone else with groceries that they had heart attacks and died right there.

At the end of December the exchange rate was 1 DM = 3 trillion dinars and on January 4, 1994 it was 1 DM = 6 trillion dinars. On January 6th the government declared that the German Deutsche was an official currency of Yugoslavia. About this time the government announced a new new dinar which was equal to 1 billion of the old new dinars. This meant that the exchange rate was 1 DM = 6,000 new new dinars. By January 11 the exchange rate had reached a level of 1 DM = 80,000 new new dinars. On January 13th the rate was 1 DM = 700,000 new new dinars and six days later it was 1 DM = 10 million new new dinars.

The telephone bills for the government operated phone system were collected by the postmen. People postponed paying these bills as much as possible and inflation reduced there real value to next to nothing. One postman found that after trying to collect on 780 phone bills he got nothing so the next day he stayed home and paid all of the phone bills himself for the equivalent of a few American pennies.

Here is another illustration of the irrationality of the government's policies. James Lyon, a journalist, made twenty hours of international telephone calls from Belgrade in December of 1993. The bill for these calls was 1000 new new dinars and it arrived on January 11th. At the exchange rate for January 11th of 1 DM = 150,000 dinars it would have cost less than one German pfennig to pay the bill. But the bill was not due until January 17th and by that time the exchange rate reached 1 DM = 30 million dinars. Yet the free market value of those twenty hours of international telephone calls was about $5,000. So the government despite being strapped for hard currency gave James Lyon $5,000 worth of phone calls essentially for nothing.
It was against the law to refuse to accept personal checks. Some people wrote personal checks knowing that in the few days it took for the checks to clear inflation would wipe out as much as 90 percent of the cost of covering those checks.

On January 24, 1994 the government introduced the super dinar equal to 10 million of the new new dinars. The Yugoslav government's official position was that the hyperinflation occurred "because of the unjustly implemented sanctions against the Serbian people and state."

Source: James Lyon, "Yugoslavia's Hyperinflation, 1993-1994: A Social History," East European Politics and Societies vol. 10, no. 2 (Spring 1996), pp. 293-327.

www.sjsu.edu/faculty/watkins/hyper.htm#YUGO

How history is being replayed in Zimbabwe ….Shortage Economy

From Wikipedia (http://en.wikipedia.org/wiki/Shortage_economy)


Shortage economy is a term coined by the Hungarian economist, János Kornai, which he used to criticize the old centrally-planned economies of the communist states of Eastern Europe .

In his article Economics of Shortage (1980), which is generally viewed as his most influential and best-known work, János Kornai argued that the chronic shortages seen throughout Eastern Europe in the late 1970s (and which continued during the 1980s) were not the consequences of planners’ errors or the wrong prices, but rather systemic flaws.

It is important to note that a shortage of a certain item does not necessarily mean that the item is not being produced; rather, it means that the amount of the good demanded exceeds the amount supplied at a given price. This may be caused by a government enforced low price which encourages consumers to demand a higher amount than is supplied. Kornai, however, concentrates on the role of reduced supply, and argues that this was the underlying cause of Eastern European shortages during the 1980s.

Definition and Characteristics

According to János Kornai, a shortage economy has the following characteristics:
Shortages that are:
general, that is, in all spheres of the economy (consumer goods and services, means of production and producer goods)
frequent
intensive
chronic
horizontal and vertical
replaced by occasional slacks (surpluses)
buyers’ and sellers’ market change
forced substitutions
forced savings
soft budget constraint
paternalistic behaviour (characterizes attitudes or political systems that are thought to deprive individuals of freedom and responsibility, only nominally serving their interests, while in fact pursuing another agenda)
repressed inflation

Buyers' Actions

Again according to János Kornai, the possibilities facing buyers in a shortage economy are the following:

Event 0: buyer goes to a shop, the item sought is there, and the purchase is made immediately. This is the normal situation if there is no shortage. In Kornai's view, a shortage economy is by definition an economy in which this event happens rarely.

Event 1: the item is there but the buyer has to queue for it, as there are fewer items than buyers. Sometimes queues also formed only on the possibility (or gossip) of an item's availability. Consumers spend considerable time queueing, often many hours a day for basic products like food. For certain other goods there is a waiting list, which in some cases can be very long. For example, the wait for an apartment in the Soviet Union during the 1980s was typically 10 to 15 years - so families had to plan and buy in advance the housing for their children to live in.

Event 2: the item is not available, so the buyer accepts a forced substitution, i.e. he is buying something else that is more or less a close substitute. This substitution is compulsory, because the original item has sold out.

Event 3: the item is not available so the buyer searches for it elsewhere, or the item is not available now but it is known that it will be in the future, so the buyer decides to postpone the purchase. This is a form of forced saving, as the consumer is unwillingly saving his money.

Event 4: the item is not available so the buyer abandons purchase completely.

Event 5: another unrelated item is available, so the buyer purchases it (even if he does not need or want it) on the hope that he will be able to profit from trading it with someone else who has the item he needs. This event increases demand for unneeded items, simply because they are available.

References

Kornai, János, Socialist economy, Princeton University Press, 1992,
Kornai, János, Economics of Shortage, Amsterdam : North Holland Press, Volume A, p.27; Volume B, p.196.
Gomulka, Stanislaw: Kornai’s Soft Budget Constraint and the Shortage Phenomenon: A Criticism and Restatement, in: Economics of Planning, Vol. 19. 1985. No. 1.
Planning Shortage and Transformation. Essays in Honor of Janos Kornai, Cambridge , Mass. : MIT Press, 2000