Financial Gazette (Harare)
7 August 2008
Harare — AN Arab businessman accused by the United States (US) of links to President Robert Mugabe's administration has taken steps to clear his name as the swathe of companies hit by the new wave of trade restrictions digest their full impact on their operations.
The current furore centres on the US government's incorrect contention made on July 25 that Thamer Al-Shanfari, former chairman of the defunct Cayman-based mining company Oryx Natural Resources Ltd (ONR), was involved in supporting the ZANU-PF government thro-ugh his company.
Al-Shanfari denied that he is linked to President Mugabe and his government and has made an application to the US Treasury to remove his name from their sanctions list and clear his name.
He expressed deep shock at the error in placing him on the sanctions list as a result of his alleged links with ONR.
Al-Shanfari's solicitors, the London-based firm The Khan Partnership, are filing an application to the US Treasury this week.
Lawyer Hassan Khan pointed to the fact that his client's involvement in Oryx ended on December 12, 2002, when he resigned as chairman.
"It is unacceptable that our client has been falsely accused in this way, based on a wholly inaccurate factual source presented to the US authorities and when the facts show that he has had no involvement in the company since 2002.
"Since that time control of the mine and the company has moved on several times: First African Diamonds Ltd. took over operation of the mine in November 2005, at which time production of diamonds actually ceased; Oryx then went into liquidation and into the control of liquidators Grant Thornton LLP (April 2007)," he said.
"We are taking formal steps to clear his name, beginning with a formal application to the US Treasury to have his name removed from the sanctions list.
"We will also be inquiring of the US authorities, through court action if necessary, as to the source of their inaccurate information and taking appropriate steps against the inaccurate source to ensure that these fabrications immediately cease," he added.
Last month the European Union (EU) and the US tightened sanctions against individuals blamed for the pre-election violence. ZANU-PF thugs allegedly killed more than 80 members of the Movement for Democratic Change (MDC) in the run-up to the June 27 run-off boycotted by the opposition leader Morgan Tsvangirai. These claims were denied by President Mugabe and his party.
The latest sanctions were enforced despite on-going talks in Pretoria, South Africa between President Mugabe's ZANU-PF and the two factions of the MDC led by Tsvangirai and Arthur Mutambara.
This time the US government has included media personalities and academics on the new sanctions list, which curtails their travel while freezing their finances offshore.
Al-Shanfari is among the 17 companies or entities linked to the ZANU-PF government.
These include Operation Sovereign Legitimacy, which is the commercial arm of the Zimbabwean Army, the Minerals Marketing Corpora-tion of Zimbabwe (MMCZ), a minerals marketing and export agent, the Zimbabwe Iron and Steel Company (ZISCO), ZB Bank Holdings, the Infra-structure Develop-ment Bank of Zimbabwe, Jon-gwe Prin-ters and the Zimba-bwe Mining Deve-lopment Corporation (ZMDC) among others.
The EU has broadened its sanctions to target 37 more individuals and, for the first time, four companies linked to President Mugabe's administration.
Analysts doubted if the widening of the sanctions would do more to hurt the companies concerned considering that there is little trade-taking place between Zimbabwe and countries in the Western and European trading blocs.
"Most of these companies such as ZMDC, MMCZ and ZISCO are now doing much of their trade with China and the rest of Asia," said a source.
"In a way, unless China starts to think otherwise, the Look East policy adopted by the government has come to these companies' rescue," added the source.
Sources, however, said the sanctions might hurt ZB Holdings and other financial institutions targeted for inclusion on the list. They said the institutions might require lines of credit facilities from offshore partners for on-lending locally, which will prove difficult.
"It is such a bad thing for a bank to fall under sanctions. It certainly does not inspire confidence at all for clients who might be interested in penetrating regional and other international markets," said another source.
The Financial Gazette can reveal that there is now mudslinging among business people to have their competitors included on the sanctions list in order to weaken them.
There have been attempts to link most prominent business people to ZANU-PF and the incumbent in order to hasten their inclusion on the sanctions list.
These hidden agendas are being peddled mostly through online publications known for their penchant for publishing unsubstantiated reports.
Last month the country's largest industrial representative body, the Confederation of Zimbabwe Industries (CZI), voiced its concern against sanctions.
CZI said declared or undeclared sanctions would further worsen the economic crisis in the country, adversely affecting industry.
Inflation has since gone past 2,2 million percent, the highest in the world and quite an unusual feat for a country not at war. Capacity utilisation in industry has fallen below 30 percent while unemployment is said to be in the region of 80 percent.
"Sanctions on Zimbabwe have been in place since the disputed 2002 Presidential election. The majority of the sanctions are said to be targeted sanctions, however, the United States has legislation in place that prevents their representatives on multilateral institutions such as the IMF and the World Bank from voting in favour of support for Zimbabwe.
"Given the fact that the United States has de facto veto power in these institutions, Zimbabwe is in effect cut off from financial assistance from both the IMF and the World Bank," said the CZI in a position paper presented last month.
CZI said the sanctions were a cost to the ordinary person and to business in Zimbabwe.
"Any position of added sanctions would make the situation of the ordinary Zimbabwean far worse than it is today, including business.
"This is a wrong way of solving the Zimbabwean problem. Sanctions to date have done nothing other than cause misery for ordinary Zimbabweans and the business enterprise from which they earn their living," said CZI.
In a presentation to the European Marketing Research Centre last year, central bank governor, Gideon Gono, called for a total re-think on sanctions.
Gono, who has been urging business leaders to speak out strongly against sanctions, said the majority of non-governmental organisations have realigned their policies in consultations with their donors.
"As a result, some donors have either responded by withdrawing their programmes or freezing further developmental assistance to the country," he said, adding that the country's relations with other countries, particularly the west remain constrained, leading to the suspension of bilateral loan disbursements to Zimbabwe.
"From time immemorial, Zimbabwe has never gone it alone in terms of balance of payments support. Evidence at hand clearly demonstrates that the country has depended in one way or the other on external support, both in the pre-independence and post independence eras," said the Reserve Bank of Zimbabwe governor.
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