Monday, March 10, 2008

The Credentials, the Rise and the Personal Wealth of Gideon Gono

By Levi Mhaka

Published on January 26, 2007

A letter to the Editor of thezimbabwetimes.com online newspaper, by a Joseph Peter Chiguma, claimed that the RBZ Governor, Mr. Gideon Gono is "a hard worker with proven track record of business and he has worked hard for (his) earnings".

Relatedly, his statement published by newzimbabwe.com online newspaper (ironically this has not been uploaded on the RBZ website) on the Standard newspaper apology regarding the story of the Mercedes Benz Barabus, in his statement, Gono said (among other things):

"In the same vein, let me add that I have been working for the last 29 years and during that period, I have managed to acquire a number of personal assets in the farming, real estate, stock/financial and other sectors of the economy, all of which were declared to my Principals upon my assumption of Governorship of the Reserve Bank of Zimbabwe as required by the appropriate Statutes.

"Some stakeholders think that I only started working at RBZ in 2003 and not being privy to my asset and liabilities statement then, and now being driven by ulterior motives, have seen it fit to portray a false picture of misuse of public funds on what are purely legitimate private and personal acquisitions and investments, some of which are beginning to mature now after a long period of gestation."

This article seeks to probe into his professional credentials in relation to his position as a central bank governor, his rise to the current position and his personal wealth that he claims to have.

Mr. Gono has been a corporate executive all his professional life i.e. he has worked for others. Let us go through it together:

* January 1977 - December 1979: Teamaker/Office Orderly, National Breweries (Natbrew);
* January 1980 - September 1981: Accounts Clerk, Natbrew;
* October 1981 - April 1983: Senior Accounts Clerk, Natbrew;
* May 1983 - February 1984: Accounts Officer, Zimbabwe Fertiliser Company (ZFC);
* March 1984 - June 1985: Bookkeeper, Van Leer Zimbabwe;
* July 1985 - March 1987: Financial Accountant, Van Leer Zimbabwe (what a credible feat!)
* April 1988 - June 1988: Chief Accountant, Zimbabwe Development Bank (ZDB);
* July 1988 - June 1990: Finance Manager, ZDB;
* July 1990 - January 1995: General Manager, ZDB;
* February 1995 - November 2003: Managing Director/CEO, Commercial Bank of Zimbabwe (CBZ);
* December 2003 - to date: Governor and Executive Chairman of the Board, Reserve Bank of Zimbabwe (RBZ).

From this, he spent 10 years 10 months in the private sector. His professional formative (of or relating to formation, growth, or development) i.e. junior years in the private sector totalled 8 years 10 months. In the government-owned ZDB, he stayed for 8 years and 6 months while he ran CBZ for 8 years 7 months.

Psychologically, formative years of a person are so critical, be it biological as a child or as an employee. His corporate formative years are full of bitterness. You wonder why he is referred there is talk about him that 'once a tea-boy, always a tea boy' because of his public behaviour and posturing. Not that people do not credit him for working very hard for his social mobility with such a modest financial background. The formative career of the State President is teaching and he has lost nothing of that in his current political approach.

Mr. Gono has not created/acquired and run his own company like Strive Masiyiwa, Nigel Chanakira, Philip Chiyangwa, Bill Gates, Steve Jobs, Julius Makoni, Mutumwa Mawere, Saviour Kasukuwere, Patterson Timba, Nicky Vingirai, William Nyemba, etc. He has been a beneficiary of government or quasi-government appointments much of his professional life (except probably when he worked for Natbrew, ZFC and Van Leer Zimbabwe in very junior capacities).

He has not suffered the fate of many entreprenuers who lose sleep and sometimes live a miserable life over the gestation and 'product life cycle' of their corporate creations/acquisitions.

Therefore his earnings and wealth creation should be subject to scrunity because he has largely held and still holds positions in public bodies. A number of corporate owners have created/acquired their entities after working for others.

Mr. Gono has not been tested in the rough and tumble of the corporate world. In the quasi-government institutions that he has run, he has been shielded from the painstaking and treacherous business world.

The other not so important positions he has held are directorships in RTG (Rainbow Tourism Group), formerly ZBC (Zimbabwe Broadcasting Corporation) now ZBH, Parirenyatwa Group of Hospitals and the Mrs. Grace Mugabe-owned Zimbabwe Children's Rehabilitation Trust - ZCRT (which he was alleged as being the funder while at CBZ) and chairmanship of the UZ Council, which then scandalously awarded him a doctorate while he was at its helm.

The only known private sector directorship he holds and that conflicts with his current position of RBZ governor is that of the Financial Clearing Bureau (FCB), a trade name of Portcullis Pvt. Ltd. Even if he has resigned such a position, he could have only been appointed when he was either a ZDB General Manager or with CBZ.

One can not open a bank account nor appointed a director of any financial institution in Zimbabwe without having been cleared by the FCB. He is such a financial 'Big Brother' and a 'Corporate Overlord' indeed.

Therefore, is it not ironic or amazing that all the Zimbabwean bankers who lost their banks or who left Zimbabwe upon his appointment as the RBZ governor were both more educated that he is and were running commercial banks or financial institutions that were their own creations/acquisitions. Compare him with his predecessors, Kombo Moyana and Leonard Tsumba; Tito Mboweni of South Africa; Alan Greenspan's successor, Ben Bernanke of the USA. All of them earned their doctorates of economics!

Mboweni holds a BA degree in economics and political science and an MA degree in Developmental Economics. In 2001, the University of Natal awarded him the degree of Doctor of Economics. Today he does not refer to himself as ‘Dr.’ Mboweni. He was appointed the Governor Professor Extraordinary in Economics by the University of Stellenbosch for the period 1 April 2002 to 31 March 2005. Today he does not even refer to himself as ‘Professor’ Mboweni. Mr. Gono is driven by immodesty.

Lets us look at these facts and statistics regarding commercial banks:

i. Barclays Bank - international, not affected
ii. Standard Chartered Bank - international, not affected
iii. Stanbic - international, not affected
iv. Zimbank (subisidiary of Finhold) - local with a significant government shareholding, not affected
v. CBZ Bank - local with a significant government shareholding, not affected. (Gono's immediate past employer)
vi. Kingdom Bank - local with a significant international investor shareholding (Meikles), not affected
vii. Metropolitan Bank - local, not affected. Owner was forced to leave at the behest of the State President who is alleged to have pleaded with Mr. Gono to save the bank and Enoch Kamushinda from an arrest. He is believed to have gone into 'self-imposed exile' since 2004.
viii. Agribank - local and government-owned, not affected. ix. MBCA Bank - international, not affected
x. First Bank (now FBC Bank) - local, not affected. Ruling party and government have significant shareholding.
xi. Trust - local, affected. Owners lost it and forced to leave
xii. Barbican Bank - local, affected. Owners lost it and forced to leave the country
xiii. Royal Bank - local, affected. Owners lost it
xiv. Time Bank - local, affected. Owners lost it
xv. NMB Bank - local, affected. Owners forced to leave the country
xvi. Intermarket Financial Holdings - local, affected. Owners forced to leave, now taken over by ZB Bank (formerly Finhold)
xv. Century Bank - local, affected and was forced to merge with CFX, a white-owned institution.

When he became the central bank governor, he ruthlessly dealt with all those in the financial sector whom he considered to be a threat or 'pockets of resistance' to his newly found power and influence. One wonders why is it that for a government that claims to champion indigenisation, only indigenous banks were targeted by Gono's reforms.

During the 1990's into the new millenium most foreign owned banks were reluctant to fund government or quasi government agencies such as parastatals. Our fledgling black owned banks did. When the liquidity crisis emerged triggered by ENG in late 2003 and early 2004, many locally owned banks were affected by loans to parastatals etc which were never paid back.

Gono ironically then praised the foreign owned banks for 'good risk management' while our own banks which had heeded the call to fund national projects and had done their patriotoc duty were now accused of being badly managed.

One of the locally owned banks, Trust initially had a liquidity mismatch of ZW$44 BILLION at the onset of the crisis of which ZW$24 billion was owed by GMB. This amount was covered by a government guarantee. When Trust tried to call in the loan in late 2003 they were told by Gono that they had made a commercial decision in lending to GMB and so should bear the consequences, irrespective of the fact that govt had guaranteed the loan. This precipitated the collapse of Trust.

Ironically, once Trust had collapsed and Trusts assets had been taken over and incorporated into ZABG which as we know is Gono's pet project, the Central Bank suddenly had a change of heart and decided to repay GMB's obligations not to Trust which by now had gone under but to ZABG!! Trust was also owed US$20 million by RBZ. This was part of a revolving 12 month offshore facility from Affreximbank which Trust had onlent to the RBZ.

The loan had not been paid for at least 3 years. Each time arepayment date came due, Trust had to find bridging finance from the market so as not to spoil the country's credit rating. This was obtained from one Jayesh Shah (the owner of Gift Investments Pvt Ltd, a supplier of buses) with the full knowledge of the Central Bank but at parallel market rates. Trust had to bear the bridging cost between the time the borrowing was done from Shah to the time that Affreximbank allowed a fresh draw down some of which would then be used to settle obligations to Shah, usually a period of about 3 months.

This mitigating factor which clearly contributed to Trusts problems was ignored by Gono when he took over.

There is banking market talk that on taking office Gono gave liquidity support on a no questions asked basis to the following banks, CBZ Bank, First Bank and Zimbank. This was shortly before his first monetary policy announcement which heralded the rise of interest rates to as high as 800% and which caused the colapse of those banks in short positions.

One wonders whether CBZ Bank was favoured because its collapse would not have reflected well on Gono who a few weeks ago had been its CEO?

Financial sector insiders will tell you that for the duration of Gono's tenure as CEO of CBZ, the bank was infamous for the poor quality of its loan book (due to loans to politicians and poor performing quasi govt entities). It frequently had to be bailed out by the Reserve Bank. Is it not ironic that having built his reputation indirectly as a result of government liquidity support, Gono once governor put in place stringent conditions on those banks which needed it for reasons less to do with mismanagement but more to do with Governments failure to meet its obligations to these banks as well as a generally hostile economic climate! (Remember there was a company called CBZ Nominees for the terrible loan book)

In January 2005, the Troubled Financial Institutions (Resolution) Act came into being. As a result a Troubled Bank Fund (TBF) was set up ostensibly to rescue 'troubled banks' and then charge interest rates of 300 percent on the fund at a time when "healthy" banks could access overnight liquidity support at around 80 percent. Was the intention to make it seem to the public that the Reserve Bank was genuinely trying to save these banks when in effect it could not wait for their demise?

Whatever irregular conduct caused Zimbabwean bank owners to loose their banks, it was also happening in the international and government owned banks. Ask anyone in the financial sector, this will and can be verified.

According to 'Gospel of Gideon Gono', only local-owned banks are corrupt until he has certified not to be. In the exercise of his POWER, according to him, Zimbabwean owned banks vanofanirwa kungwarirwa (always take note of them, they up to no good at all), they can wreck the economy. Fate shall inform us otherwise, that at the centre of all this was his technical/intellectual inferiority complex and vindictiveness against his former peers as a CEO in the financial sector who had achieved more than him for having created banking institutions under the spirit of indigenisation!

Mr. Gono has personally amassed wealth and assets NOT from his condition of service as an 'employee' - a corporate 'civil servant'. When it is not seemingly legitimate or clear, observers are forced to think that it has been money made out of conduct that includes abuse of office, unsecured loans, advances and 'commissions' from deals made through a senior position from those seeking to curry favour from him.

If he was so incorruptible, he would have been pushing for legislation like that of South Africa, where a public official declares his financial interests, assets and wealth, given that he has a knack to be involved in everything fiscal.

He owes his closeness to the State President, Mr. Robert Mugabe, not because he is now the central bank governor. He cultivated his closeness to Mr. Mugabe through the Minister of Local Government and Public Works, Mr. Ignatious Chombo, one person he is busy rubbishing through his own Financial Gazette newspaper on ZUPCO transanctions Mr. Gono was heavily involved in the procurement deals as the allocator of forex to public entities.

His origin from virtually the same village in the Chikomba District as the First Lady, Mrs Grace Mugabe, was a contributing factor, while he used the proximity of Chikomba and Buhera, where the President Mugabe's Press Secretary, also comes from.

Following the efforts of Mr. Chombo to bring him closer to Mr. Mugabe, that he became the President's personal banker and most other ministers, and personally handled the accounts. Very few ministers, if there is any, did not have account with CBZ during his time there. He has endlessly poured money that is not his (from CBZ Bank and RBZ) into projects run by KOBA (Kutama Boys Association), in which the President is a patron. He has provided funded the so called school computerization programme by the President.

His generosity with public money and penchant for extravagance started when he was the Finance Manager at ZDB where loans were awarded without due diligence.

With a probing media, the truth will come one out one day. For being so power hungry, you wonder why he has been busy investing in it (Financial Gazette, Mirror newspapers, Mighty Movies, ZPH, etc) and privately allegedly paying reporters and their spouses for their upkeep.

He is alleged to be so obssessed with his public image and the suppression of damning details about to the extent that some in the media fraternity talk in undertones about his allegedly conduct of frequently phoning and sending of 'SMS' to those reporters. Just because he has been politically shielded by the State President whose children now spends time with his including going on holiday, its just a matter of a day.

It is shear madness to credit Mr. Gono for doing nothing as a central banker but behaving like a colossal Minister of Finance, Industry and Commerce, and a Prime Minister in one. It is simply a serious indictment of the State President, who allows his Minister of Finance to be made redundant by the central bank governor.

The greatest achievement in his working life has been to improve his financial position from a humble peasant background from somewhere in Buhera, which most of us share! He has said well about the country (insincerely, though) and done very well for himself.

Business, the middle class and ordinary people, alike, should and MUST be very angry with him for having failed to focus on his core duty - protecting the value of our currency and reduce inflation at least to a single digit level. The first role provides for the central bank to create a stable and stabilize the currency system by acting as the sole issuer and controller of the currency, and through this, to lay the foundation for sustainable economic development. This enables people to use money confidently.

To achieve a stable currency system, two requirements must be satisfied:
(a), the value of the currency must be stabilized, i.e., price stability must be maintained; and
(b), circulation of money and the functioning of the mechanisms through which monetary transactions are processed, i.e. the settlement and financial systems, must be stable and efficient. The central bank's two major objectives are that of maintaining price stability and ensuring financial system stability.

The mission of the central bank, therefore, is to fulfill these two requirements in order to preserve the soundness of the currency, and to thereby provide a solid foundation for sustainable economic growth and for an improved standard of living.

To achieve price stability, it manages the monetary aggregates in the economy and interest rates. This is the essence of monetary policy. Is the Zimbabwe currency system stable and are people using the currency confidently? The answer is NO to both questions. There is so much flip flop in the monetary system. Inflation is galloping! Our currency has become very useless (mamvemve) since Mr. Gono took over the Governor in December 2003.

Therefore, can our media probe the so called "legitimate private and personal acquisitions and investments, some of which are beginning to mature now after a long period of gestation". He has not created nor acquired known business(es) of his own, then how did he amass such assets in "farming, real estate, stock/financial and other sectors of the economy" other than through contacts and influence from his working time as a corporate 'civil servant'?

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