RECENT pronouncements by Chris Mutsvangwa, the Zanu PF spokesman falsely alleging that the Reserve Bank of Zimbabwe ( RBZ) lost an unspecified quantity of gold to an unnamed Arab country during the tenure of an “unnamed governor” who served under the late former President Robert Mugabe (MHDSRIEP) put the nation in a state of unnecessary frenzy.
If such lies are left unchecked with authentic facts, they could become that “little spark” that sets alight a whole forest at a time when the Reserve Bank of Zimbabwe and the country at large have more important issues to deal with than waste time attending to veld-fires whose uncontrolled consequences could end up melting whatever confidence the bank is trying to build around itself, the country and this great nation at large. And how dare we dampen people’s spirits at this “ celebratory hour” with blatant lies?
Ordinarily, past governors are not supposed to comment publicly on matters “current” which a sitting governor is capable of dealing with regardless of which period those matters occurred. However in this case, I feel the need for leadership in dealing with this matter, so that we do not burden our new governor John Mushayavanhu or immediate past governor John Mangudya with an historical matter that I can easily deal with myself without ambiguities or the need to look for Sekuru Ndunge, the late doyen of traditional healing and forecasting to return from the other world so he can provide spiritual proclamations to something that is so straightforward, simple (if we respect TRUTH) and explainable in plain, non-technical English.
If this explanation still proves difficult to understand, I would advocate that we ask President Emmerson Mnangagwa to set up a Commission of Inquiry in terms of the Commission of Inquiry Act (Chapter 10:07) incorporating all interested parties to look into this serious allegation of perfidious proportions and report to the nation its findings in simpler language than I would have done here.
Ordinarily too, no governor would want to comment publicly on any matters he/she dealt with while in office because the Official Secrets Act which binds and prohibits us from commenting on specific documentation received or matters of the state dealt with during our periods in office. Section 4 is particularly telling – level 14 fine or 20 years in jail or both if violated. But I am risking that by putting the record straight in a manner that cleans the image of the nation’s central bank.
The third reason I have decided to take the bull by the horns is the ambiguous nature of the allegations, casting aspersions on many distinguished personalities who served as governors under former President Robert Mugabe and still carry “scars and pride” of national service equal only to a few living souls around during one of the most difficult economic episodes of our country.
The ex-governors’ integrities ought to be respected and protected in retirement, as well as those ministers of finance under whom they served and reported to. It is my duty to set the record straight for their sake as well as mine, so that our new governor does not take his eyes off the “ZiG ball” to go into the archives of 18 years ago, searching for files and records for a response to this little fire that has deliberately or inadvertently been started with checking facts with all concerned.
For the record, former governors for the period concerned which excludes our inaugural independence governor the late Dr K. Moyana (1983-93) are: Leonard Tsumba (1993-2003); acting governor Charles Chikaura (May 2003-November 2003); acting governor Charity Dhliwayo (December 2013-April 2014); John Mangudya (May,2014-November 2017). These periods were under the late former president Robert Mugabe. I am sure all of them have suffered some distress because the statement from the Ambassador Spokesperson was ambiguous as to who among us could have been that dumb or daft! Now they can all sit back and tell their families and friends “no it was not me who was being referred to!”
I proudly served the longest of that sanctions period, 10 years in all, giving my country the best I could, from December 1, 2003, to November 30, 2013, and it is natural to guess then who did what and when.
UPFRONT
Upfront, in summary, let it be known by all that we are talking here of what could, if it had succeeded, have been a “structured gold-backed transaction” which required mining the gold from underground in the first place, then export it in exchange for funds that would have been delivered and repackaged “fourfold in the first place” involving international banks and all above board, but after the first transaction amounting to a US$5 million deposit was executed by RBZ, the transaction failed on the other side and all parties to the envisaged transaction reimbursed each other, with no prejudice incurred or suffered by any of the parties to the transaction and ultimately, no gold was mined from underground for further export in terms of the initial agreement which is now causing a hullabaloo due people who were not part of the RBZ team trying to confuse the nation instead of letting us happily celebrate our 44th Independence
One frowns at the timing of the release of such “ news” even if, by any stretch of imagination, it was true! We need a little bit of finesse and circumspection in the discharge of our duties when it comes to the dissemination of information that has potential to harm the reputations of others in our positions as leaders.
That’s the summary but here are the details.
BACKGROUND
Managing this economy during the period 2000 to 2017 was not a walk in the park for any governor. The full story is yet to be written about the trials and tribulations of the times but that is for another day.
Some of us got onto the sanctions list in 2001 and for 23 years we were not free Zimbabweans as some amongst us. Again for another day. We will always come out of retirement and defend the country when someone tries to burn it by setting the record straight when necessary.
The country survived through a series of non conventional gymnastics at a time when it was easier to give up than to accept thankless national service with all its risks in an environment of severe sanctions, international isolation, mono-currency and politically driven hyperinflation. It was a period most people witnessed the futility of trying to turn around our economic fortunes in an environment of needless political confrontation and conflict among fellow citizens. Again, that’s for another day.
THE RBZ GOLD CONTRACT OF 2006
When making public statements from positions of authority, we must resist the temptation to be excitable and ambiguous, particularly when dealing with matters that could harm the confidence of key institutions such as a central bank. Facts and full facts backed by understanding the technical side of the matters at hand as well as context are important.
Faced with a “no forex reserve” situation for both government and industry, it was incumbent on the sitting governor to find that forex by whatever legal means and be accountable for every move taken by the central bank and its officials. It was also important to keep the principals, especially the president, fully in the picture and to ensure that at the end of each year, the bank’s books were audited by at least two of the big five external international audit firms and results submitted on time to the minister of finance and parliament.
The RBZ, during my tenure, was at different times annually audited by Delloite & Touché, KPMG, Ernest & Young as well as by Kudenga & Co BDO. At no time during my ten years at the bank did we get qualified accounts.
In May 2006, the RBZ, after getting express approval from President Mugabe, entered into an agreement with a large jewelry company based in Saudi Arabia. The contract sought to provide Zimbabwe with an immediate cash injection of US$150 million. At the same time, we negotiated with a large South African bank to deposit that money with them as cash security in exchange for a guarantee line of credit four times that amount, that is US$600 million, which was to be used for importation of goods and services from South Africa particularly electricity, fuel, grain, fertilizers, mining inputs, machinery etc. on a three-month revolving basis for 12-24 months as long as the cash backing was there.
The guarantee was to cost us 1-2 percent negotiable at the time of execution while the Saudi deal required us to supply over the same period a total of 200,000 Troy ounces of gold at a discount of 34 percent London Bullion price on day of trading/delivery.
The discount was on paper very steep but overally when we worked out the sums against the imminent risks that were facing us, we saw ultimate benefit to this economy through the multiplier effect of running the US$600 million facility on a three months cycle for 24 months against gold which was still underground worth between $140-150 million to be supplied over a 24 month period while the economy got $600 million for immediate use at a cost of 1,5 percent per annum fees.
THE ARITHMETIC
200,000 Troy Ounces value $150 million
————
Cost (Discount) 34 percent ($51 million)
Guarantee Fees to SA Bank ($18 million)
————
Total facility cost over 2 years US$69 million
————
Income Side:
——————-
Raising Fees charged to Zim customers per quarter:
0,0075x$600 x 8 = $36 million
Interest @ 5 percent/quarter $60 million
Interest on int & fees (US$7 million)
————-
Total income to the RBZ $103 million
Less cost of facility ($69 million)
—————
Net income to RBZ $34 million
—————-
Equivalent to a gain of 50,000 Troy ounces of gold in the 2 years the facility was planned to run for.
That amount would have been more than sufficient for the nank’s own operating expenses without the need to knock on treasury for support from tax-payer funds.
The bank was required to pay $5 million worth of gold as a deposit and this was paid. When the lender couldn’t deliver the cash backing per contract, the agreement was cancelled and RBZ got back its US$5 million. No prejudice to anyone.
It is important to also realise that we were dealing with an internationally recognised jeweler and the Saudis are generally very honest people. And to say “our gold reserves were stolen” is wrong. We despatched about 7,500 or so Troy ounces worth $5 million. We got back our $5 million. At that time, in May 2006, gold prices were about $700/oz if I am not mistaken.
SOME BASICS
What is the meaning of gold reserves?
The term reserves generally refers to any surplus to immediate requirements. Gold reserves in this case would mean that RBZ had accumulated at some stage, surpluses to its immediate needs but nothing could be further from the truth. I got into a car that had no fuel on December 1, 2003, and I did my best to drive it on empty.
The Saudi contract was going to be fulfilled over a 12-24 months from incremental gold coming from the ground. We had done our homework as far as who the off-takers of the facility were going to be. It was not a blind shot so to speak.
To then mislead the public by saying RBZ lost the nation’s “gold reserves” is surely technically wrong and dangerous, worse when we seek to badmouth and besmirch the dead. Inga zvinonzi “wafa wanaka” wani? Why this penchant towards hate speech against those you were with in the bush but never against Ian Smith? Nobody has bothered to find out how the RBZ was being run during the 15 years of sanctions and what some of us found in whatever records remained in there.
I certainly am not a direct descendant of St Peter or any of the Apostles who probably did not make mistakes but whatever mistakes my team and I made during my tenure were neither deliberate nor fraudulent as all the audited set of books during my time there can attest.
It is this same kind of irresponsible talk we witnessed from Ambassador Chris Mutsvanga who also happens to be my uncle, which in September/October 2021 led to ZACC spending public money and hours on a wild goose chase after an anonymous someone misled ZACC to think the same way as many Zimbabweans have been emotionally whipped to think.
ZACC carried out extensive investigations into this matter under Ref. 58/12/20 and 102/11/20 examining documents and interviewing RBZ governor Mangudya, Azvinandaa Saburi (director of financial markets who signed the contract with Saudis under my authority) and others including myself in September 2021 and concluded that everything was above board and that there was no prejudice to anyone including the RBZ and the nation at large.
VERIFYING FACTS
It is key and important for people entrusted to speak on behalf of important organiSations and political parties to always check their facts thoroughly for the sake of their own credibility and that of others.
I forgive my sekuru for he was misled into believing that something was really amiss and more importantly, he was in the People’s Republic of China as our ambassador at the time we were battling to sort this economy out so he wouldn’t have been aware of some of the difficulties we went through to try and raise funding, including that required to support our esteemed embassies.
This country could benefit more from our individual and combined efforts if we sincerely direct them towards what President Mnangagwa and the Second Republic are trying very hard under difficult circumstances to achieve than to engage in blame-games that will not strengthen our new currency or take us forward, especially during the country’s period of Uhuru brought about by my sekuru and others.
Happy 44th to us all. I cherish the wonderful work being done by the Second Republic and salute all our national heroes and heroines, gallant fighters of our liberation war, mujibhas and chimbwidos.
Be advised all, that no gold was lost during my time as governor.
Dr Gideon Gono.
RBZ Governor During Biting Sanctions (2003-13)
17 April 2024
