Financial Gazette (Harare)
22 November 2008
editorial
ON Tuesday, Reserve Bank of Zimbabwe (RBZ) governor, Gideon Gono, drew the nation's attention once again to the incestuous behaviour of a few individuals who are making it their business to destabilise the financial and equities markets for the sake of enriching themselves without due regard to the consequences of their reckless actions on the country's ailing economy and its poor people.
The RBZ governor made startling revelations on Tuesday that the central bank had intercepted fraudulently-drawn bank cheques valued at a frightening $40 hexillion -- a figure about 68 billion percent more than the turnover of Delta Corporation for the six months to September 30 2008 -- that were destined for the bullish Zimbabwe Stock Exchange (ZSE) and other illegal parallel market activities that are cascading downwards to village level where some chiefs' compounds are now operating as bureaux de change.
To facilitate the drawing up of the fictitious paper money and the illicit stock and parallel market deals, the cunning money spinners have established an intricate web of accomplices who include bankers and stockbrokers.
A disappointed Gono, thrust at the centre of fighting monstrous inflation, had this to say on Tuesday: "Where a total of $40 sextillion (hexillion) is created from absolute thin air, no central bank in the world, even the best printing machines can sustain the cash requirements."
One can understand Gono's anger. The corrosive effect of graft is rubbing into key institutions that used to be bastions of morality, good corporate governance practices, integrity and honesty. Instead of playing their part as financial intermediaries, a number of banks are conspiring to ransack what is left of the country's battered economy by creating money from thin air which is then used to fund speculative activities in lieu of directing scarce resources towards production.
The local bourse has also been adulterated into one of the major drivers of inflation rather than being the provider of a platform upon which the embattled corporate sector can raise cheap capital to fund production, create new jobs and generate revenue for the fiscus.
While a few individuals are amassing the ill-gotten wealth, the majority are wallowing in abject poverty with listed and non-listed companies facing closure because they cannot access concessional working capital to stay afloat.
It goes without saying that the participants in these pyramid schemes are being incentivized by way of brown envelopes with those carrying much of the transaction risk taking the lion's share of the spoils.
The pillaging of the country's economy cannot be wished away as acts of self-enrichment anymore. It has reached alarming levels consistent with acts of terrorism against the country, which must be dealt with the same vigor the world is hunting down Osama bin Laden and his followers.
The irony of it is that it is the very same culprits who cry the loudest when the long arm of the law finally catches up with them. These are also the very same people who are quick to call in their political Godfathers for protection when the heat is turned on them.
It is worrying that these illegal activities are taking place under the noses of the ZSE Committee, the Securities Commission and bank chief executive officers (CEOs) whose responsibility is that of ensuring trade is conducted in line with the law.
People expect the ZSE Committee, the Securities Commission and bank CEOs to take a leaf from Jesus who, in the book of John, firmly dealt with traders who were abusing his Father's House. An agitated Jesus whipped moneychangers from the temple area, drove sheep and cattle outside the holy structure, scattering coins while overturning their tables.
The ZSE and CEOs of banks should not sleep behind the wheel while their institutions are literally being converted into casino slot machines. They should decisively deal with the thieves turning the country's investment vehicles into agents of economic ruin.
Switching trade on the ZSE to a single callover, as has been suggested by the bourse's CEO, Emmanuel Munyukwi, is not enough to counter the underhand dealings of stockbrokers and their associates. The exchange, in conjunction with the banks must hit the wayward stockbrokers where it hurts most, the pocket. The punishment, which should include revoking their licences, must be severe to deter future occurrences.
The task of ridding the economy of market imperfections cannot be left to the RBZ alone. While the resolution of the political crisis in Zimbabwe is at the core of the country's multifaceted problems, we are worried that criminals are now using that as a ruse to hide their misdemeanors destroying the country's economy.
Government should take the lead to stop the rot. The country's economy is going down the drain and the nation cannot afford the concentration lapses creeping into critical institutions and those leading them.
Hospitals are closing; infrastructure is collapsing and grinding poverty is stalking rural and urban dwellers, leaving a significant portion of the country's population at risk of starvation.
While the political settlement which had been hoped for is proving to be elusive, Zimbabweans should not despair. There is still hope that the protagonists in the country's crisis might eventually find a common ground because a house divided will not stand.
Just as Gono said, no matter how dark the night is; it will always give way to morning.
The ZSE has announced token measures to deal with the malpractices on the stock market after the RBZ had read the riot act to stop the illegal practices stoking the inflation fires beyond levels one can imagine.
One begins to wonder what bank CEOs and officials at the ZSE have been doing all along when stockbrokers and fund managers were pumping hot air into the stock market whose bull run is not supported by market fundamentals.
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