Biti lashes out at RBZ over ZAMCO secrecy




Former Finance Minister Tendai Biti

MDC Alliance vice president and chairperson of the Public Accounts Committee (PAC) Tendai Biti says the parliamentary committee will not let up in its pursuit to make the Reserve Bank of Zimbabwe (RBZ) account for loans acquired by the Zimbabwe Asset Management Corporation (Private) Limited (ZAMCO).

The committee has been at logger hands with the central bank since the bank declined to provide full details of all its activities and transactions relating to ZAMCO.

This included full details and disaggregation of each loan portfolio taken over by ZAMCO, the names of the individual defaulters, the amounts thereof, and the security provided

The committee noted that Treasury Bills (TBs) were issued to purchase Non Performing Loans from banks in the total sum of US$ 1.2 billion.

In an exclusive interview with Zim Morning Post, Biti said PAC’s efforts to get necessary information from the RBZ governor John Mangudya, with regards to ZAMCO loans have yielded nought.

ZAMCO was established by the RBZ in July 2014 as part of holistic measures to deal with the problem of rising non-performing loans (NPLs) in the banking sector.

This was in recognition of the fact that high NPLs invariably constrain banking institutions’ credit intermediation capacity thus, acting as a drag on economic growth.

However, the majority of loans acquired by ZAMCO are from politically exposed persons who would have failed to pay their debts to various banks.

According to a parliamentary report seen by Zim Morning Post, PAC requested information from Mangudya but nothing came through.

“The Bank through its Counsel undertook to provide a legal opinion on quasi-fiscal activities as well as the legality of the Bank’s export requirements and the legality of the Bank’s use of the country’s minerals as securities for loans obtained by it (securitization). This opinion was never supplied to the Committee,” the report states.

“The Bank also undertook to provide full details of all its activities and transactions relating to ZAMCO. This included full details and disaggregation by Bank, of each loan portfolio taken over by ZAMCO, the names of the individual defaulters, the amounts thereof, and the security provided,” the report adds.

“The Committee was shocked when it received a letter dated 18 March 2019, in which the Bank claimed that it could not disclose the disaggregated information pertaining to the RBZ, the portfolio taken over, the amount lent and the security on the basis that: Protected by banker-client privilege existing between ZAMCO and the individual defaulter whose debt was being taken over and that the RBZ was covered and protected by section 60 of the RBZ Act as well as section 12 (2) of the Privileges, Immunities, Powers of Parliament Act,” report further reads.

In an interview on Thursday, Biti said the RBZ’s refusal to provide the information shows how the central bank has been captured.

“RBZ is a clear example of state capture, in fact it is the grandmother of state capture,” Biti said.

Biti said PAC will continue to play its oversight role and will continue to probe for information with regards to the loans.

“We strongly disagreed with the Bank’s position. We maintained in our response dated 12th April 2019, that we had the right to scrutinize any public institution before us as results of sections 117 and 119 of the Constitution of Zimbabwe. We also reinstated our right of scrutiny of all revenues in terms of section 299 of the Constitution. We are pleased that Counsel to Parliament agreed with our position,” he said.

“We insisted and communicated this to the Bank through our letter dated 21st May 2019.We therefore want to restate as the Public Accounts Committee and as Parliament, that Parliament has unlimited oversight powers and the RBZ and any other body that receives public funds cannot refuse scrutiny on the basis of some technical legal arguments,” he said.

PAC also argues that “part of the challenges with ZAMCO is that there is no legal instrument or Act governing the RBZ’s Non-Performing Loans as like with other countries like Nigeria. The absence of a legal instrument makes the process opaque and subjective leaving too much discretion in the hands of RBZ officials.”

According to the PAC report “the TBs are a levy on the Consolidated Revenue Fund and will have to be paid and honoured by the taxpayers of Zimbabwe. There was therefore a need to provide for these borrowings in an appropriation account to be approved by Parliament in terms of section 305 of the Constitution.”