Cash Barons – Flatwater Revisited

A case has been made that Zimbabwe is under siege and, therefore, the end should justify the means. In about 56 days, Zimbabweans will be faced with a choice about who should shape their future and they will have to think seriously about the role of state institutions in undermining or promoting their collective interests.
The RBZ has boldly asserted that it has been forced to go beyond its mandate because of extraordinary conditions prevailing in the economy. It is has been pointed out that the actions of the Western countries combined with the nefarious activities of unscrupulous business and political actors have created the economic mess.
The recent cases involving the disbursement of funds by the RBZ to a relatively unknown company, Flatwater, to procure tractors as well as the handling of the Dorothy Primrose Mutekede matter have exposed the role of the RBZ in undermining public confidence in state institutions.
On the Flatwater matter, the court was told last week by the RBZ financial intelligence director, Mr. Mirirai Chiremba that Flatwater was chosen because it had a good track record dealing in foreign currency related transactions ignoring the fact that such a record has been used in targeting other persons such as Mushore, Muponda, Kuruneri, Makamba not forgetting yours truly and only recently Van Hoogstraten for prosecution.
The state prosecutor had submitted that there seemed to have been a conspiracy between Flatwater and RBZ as there appeared to have been no due diligence and proper agreement between the two parties before Z$7 million was disbursed to Flatwater.
Chiremba said that Flatwater had dealt with several renowned companies like Delta, Blue Ribbon and had in the past supplied the central bank with more than 300 tractors under the purportedly the same program.
What is strange from the testimony of Chiremba is that the representatives of Flatwater who appeared previously before the same magistrate, Tendai Chivaviro and Misheck Manjoro, forgot to present the same resume of the company and omitted to mention that the company had been involved in similar transactions with third parties who also should be investigated for possible foreign exchange violations.
It is strange that the state prosecutor found it fit to ask for an order to compel the RBZ to explain its role in a transaction that clearly had ramifications for the integrity of the state if Flatwater was a well established and financially sound company.
Misheck Manjoro and Tendai Chivaviro have already admitted to violating the exchange control regulations by playing a role in a scheme financed by the RBZ. If the RBZ was satisfied that Flatwater, a company incorporated under the laws of Zimbabwe, had access to foreign currency without alerting the police as has been the case in similar circumstances, then surely this is a case of selective application of the law.
Chiremba informed the court that Flatwater had previously supplied the RBZ with 300 tractors without explaining how a Zimbabwean registered company that is subject to the same punitive exchange control regulations would have access to foreign currency that other companies in similar circumstances do not have.
The relationship between Gono and the CEO of Delta is well known to confirm that Flatwater may have been used as a vehicle for Friends of Gono (FOG) to access foreign currency without being subject to normal rules applicable to Enemies of Gono (EOG).
Delta’s sales are in local currency and yet its inputs are largely in foreign currency. The question then becomes how Delta has been immune from foreign exchange violations unless it belongs to the category of companies that are untouchable. The Coca Cola Company supplies concentrate to Delta that has to be paid in foreign currency as is the case for imported tractors. Zimbabwe is in short of foreign currency and the suppliers of foreign currency including those in the diaspora are unwilling to part with it at the insulting official exchange rate.
Gono is fully aware as many business people are that the prevailing official exchange rate is unworkable. Instead of telling the truth to his principal, President Mugabe, Gono has chosen to lie and protect only his friends like Blue Ribbon and Delta. He wants the country to believe that companies like Flatwater would be stupid enough to part with foreign currency sourced from dubious sources that may well turn out to be some of the big names in the export business at the official exchange rate.
An inescapable conclusion can be drawn from Chiremba’s testimony that Flatwater has acquired a track record of illegal transactions that fall into a category of generally corrupt transactions in which the state is constructively involved in. The only mechanism through which shadowy companies like Flatwater can operate is through the sanction of the RBZ. It is evident that something went terribly wrong prompting the RBZ to report the matter to the police as if they were innocent role players.
Chiremba had this to say about the company: "Flatwater has a good track record, we have worked well with the company, so we had no reason to doubt its credibility." In what context would a central bank work well with a private non banking company? How was the company selected by the RBZ? Why would the RBZ be party to a transaction involving the procurement of foreign goods and pay for such goods in local currency without taking any interest on the source of the foreign funds and the implied exchange rate?
The court was told that Flatwater, a purportedly sound company, had failed to acquire the outstanding 59 tractors because US$1.6 million belonging to the company had been locked in the collapsed Premier Bank. Allegations have been made about Gono’s personal interest in Premier Bank. Could it be the case that Chiremba had no choice but to cover up the role of the RBZ by implicating a bank whose independence is questionable in a transaction that has helped unmask the illegal operations of the RBZ? It has not been explained how Flatwater would be in a position to have foreign currency in its possession in a local bank. Where did Flatwater get the foreign currency?
What emerged after Chiremba’s testimony is that the lawyer representing Flatwater, Steven Chibune, had no choice but to apply for the directors of the company to pay Z$200 billion installments for six months as repayment for the money allegedly locked in the collapsed Premier Bank. Why would Chibune find it fit to make this application if the funds belonging to Flatwater were legitimately locked in a collapsed bank? Would it not have made more sense for Chibune to apply to join in the Premier Bank estate in the litigation? The only rational explanation is that no funds were locked in Premier Bank.
It is curious that Chibune offered a number of alternatives for the recovery of the funds that disappeared from Flatwater. He also proposed that an order be granted for the state to recover its money from the title deeds it was holding as part of the bail conditions the directors had been tied to when it is common cause that the state was not involved in the transaction. Even Chibune seems to have accepted that it was, indeed, the state that had contracted with Flatwater instead of the RBZ.
He made the point that: "The fiscus has a number of options to recover its money. It is within this court's powers to make an order to recover the outstanding money since it holds the title deeds of properties owned by the accused persons whose value is well above the money complained of." If one accepts that the rule of law is still prevailing in Zimbabwe then surely it is absurd for Chibune to make this concession that the state was a contracting party in what appears at face value to be a civil matter. The statement by Chibune confirms that there was no formal agreement between the RBZ and Flatwater suggesting that there could well be more such transactions involving people’s money.
It is not strange that it was the same Chiremba who failed to protect the evidence against Ms. Mutekede. Is the RBZ above the law? It is scary to know that the RBZ has no qualms dealing with companies whose bona fides is clearly questionable and yet purport to occupy a high ground on key moral and ethical questions in terms of business transactions.
It is unfortunate that an environment now exists in Zimbabwe in which members of the judiciary finds themselves financially embarrassed to the extent that they have no choice but to rely on the RBZ for financial support. In such an atmosphere, no justice can be expected and the RBZ’s partners in crime like Flatwater are then presented as angels in shinning armor while other role players not aligned to the system are vilified for the same conduct.