RBZ summons suspected illicit forex dealers

THE Reserve Bank of Zimbabwe (RBZ) has summoned companies whose accounts were frozen last Friday on suspicion of illegal forex trading for questioning next week as the authorities try to manage irregular foreign exchange movements, Business Times has established.

Last week the Zim dollar lost 80% of its value in less than three months despite several measures — such as increasing interest rates and monitoring the activities of bureaux de change — which were introduced by the authorities to reduce rent-seeking behaviour and arbitrage opportunities.

The demand for foreign currency has increased following the end of the tobacco marketing season and low gold deliveries due to unfavouarable prices on the local market. This has left some companies and individuals relying on the parallel market for the US dollar which is being sold at a higher premium compared to the formal market.

The weakening of the Zim dollar has had inflationary pressures on the economy as restless workers struggle to make ends meet. As this trend persists, concerns are heightening that the economy could be forced to re-dollarise.

The RBZ’s Financial Intelligence Unit (FIU) last week ordered the freezing of accounts belonging to Sakunda Holdings, Access Finance, Spartan Security, and Croco Motors to pave way for investigations following the dramatic crash of the Zim dollar last week.

This week the central bank ordered the freezing of the accounts of five more companies as it intensifies its clampdown on financial indiscipline. Sources close to the developments told Business Times that the stance by the FIU would see more company accounts being frozen as the central bank moves to curb the illicit financial dealings.

“The investigations will be guided by the provisions of the Banking Act and the Bank Use Promotion and Suppression of Money Laundering Act. No stone will be left unturned,” a source familiar with the investigations told Business Times.

“The FIU has summoned the aforementioned companies to come for questioning early next week when the governor and other monetary authorities’ officials return from the 74th United Nations General Assembly (UNGA) for the concrete decisions.”

RBZ Governor John Mangudya, who is in New York with President Mnangagwa for the UNGA, said the FIU was an independent body which makes its own decisions. Thus, the RBZ would not interfere with the FIU’s investigations or decisions.

“We want to meet those companies whose accounts were frozen to discuss their [huge] transactions and map the way forward,” Mangudya said.

Speculation is rife that contractors under the Command Agriculture Scheme import substitution programme were on the market buying critical inputs and fuel imports for the exercise. Sakunda Holdings is the major contractor of the Command Agriculture programme.

The financing of Command Agriculture has in recent months come under the spotlight with Parliament and the Auditor General raising concerns over its funding model. Parliament’s Public Accounts Committee, led by Tendai Biti, has in the past taken the authorities to task over nearly US$4bn that was not properly accounted for under the project. – Source: Business Times (Z)