The RBZ-ZAMCO-CBZ axis

1. This thread is a summary of a section of the #BSR this week. I explain the opaque arrangements concerning a state entity called ZAMCO and how large debts acquired by ZANU PF’s political elites were foisted on the shoulders of ordinary taxpayers.

2. The principal actors in this systemically corrupt arrangement whose authors gave it a veneer of legality are the central bank RBZ, which formed ZAMCO to buy non-Performing Loans from banks of which the principal beneficiary was CBZ. Add RBZ Governor, John Panonetsa Mangundya.

3. In brief, non-performing loans (NPLs) are bad bank loans which are no longer being repaid by borrowers. A bank might have NPLs for any number of reasons including the fact that some borrowers act with impunity because nothing will happen to them if they don’t repay the loan.

4. This is what political elites do & ZANU PF elites have used CBZ to siphon money through loans which they simply never pay back. It is these loans that become NPLs. NPLs in the banking sector grew in the USD era from an industry average of 4,24% in 2009 to 15,93% in 2015.

5. There are persons who were borrowing USD loans but simply not paying back. CBZ had some of the highest NPLs. It was still the highest at 15.71% in 2018, compared to the industry average of 6.68%. This was 4 years atfter CBZ had already sold US$698 million NPLs to ZAMCO!

6. So it is hardly a coincidence that ZAMCO was formed the same time that RBZ Governor took office. Where was he before that? He was the CEO of CBZ, which went on to become the biggest beneficiary of the ZAMCO scheme. By 2018, 61% of all NPLs bought by ZAMCO were from ... CBZ!

7. To appreciate CBZ’s fortune the next highest seller was BancABC at 7.07%. International bank Standard Chartered sold only US$1,9 million (0.17%) and Stanbic sold US$3,3 million (0.29%). Overall, CBZ sold six times more NPLs to ZAMCO than all the other 18 banks combined.

8. CBZ & ZAMCO will argue that everything was in a willing buyer willing seller basis and no bank was prevented from selling to ZAMCO. This is the veneer of regularity referred to. Soundly run banks had less NPLs & go after the security that was pledged when loans were taken.

9. How did ZAMCO pay for the NPLs? By 2018, US$1 billion worth of NPLs had been bought from banks. The RBZ issued Treasury Bills to pay, contributing to the rise in the country’s domestic debt to US$9 billion. Banks such as CBZ were happy to be relieved of the burden of NPLs.

10. But taxpayers had effectively been saddled with the bad loans. The Public Accounts Committe of Parliament chaired by @BitiTendai found that only 260 of the NPLs acquired by ZAMCO had been repaid leaving a balance of 882 still outstanding.

11. The million dollar question is who, apart from banks like CBZ are the BENEFICIARIES of the ZAMCO scheme. I keep calling it the scheme but it’s so opaque it might as well be called the scam. All those who owed the NPLs, especially CBZ debtors, were the big beneficiaries

12. They were relieved of pressure on their commercial loans. But there’s no pressure to pay ZAMCO. So WHO are they? WHO are these borrowers whose NPLs were bought by ZAMCO? This is the crux of the matter. It’s important to peel the veil to see who the BENEFICIARIES are.

13. You would think the RBZ & ZAMCO having spent public funds to buy these NPLs would be more forthcoming with names. But they haven’t been. The Public Accounts Committee has had to push hard. Even the legal adviser to Parliament backed this demand for the #ZAMCOlist

14. I’m told the #ZAMCOlist is now in the hands of the Speaker of Parliament, Jacob Mudenda. But apparently, he is withholding it, claiming it contains sensitive information. This is ridiculous. The public who are paying for these NPLs have a right to know who they are paying for

15. It would be good to know if the RBZ Governor or other CBZ executives or their associates had any NPLs that were sold to ZAMCO. Also good to know whether current and former PEPs are among the beneficiaries of this dubious arrangement. Demand the #ZAMCOlist

16. Surely there is someone out there, an insider at @CBZHoldings ZAMCO, @ReserveBankZIM or @ZimTreasury or elsewhere who has access to this important public information. The Zimbabwean public deserves to know. Meanwhile, put pressure on the Speaker to discolose the #ZAMCOlist.

17. This is how systemic corruption grows. The system creates in-built safety valves which ensure political elites can take as many loans as they want, live lavish lifestyles but evade their responsibilities which they shift to the public. They have done it before & they continue

18. Political elites will tell you that they have taken wage cuts but behind the scenes they more than make up for it through these loans from banks like CBZ which they simply don’t pay and shift to the taxpayer through schemes like ZAMCO. Please demand the #ZAMCOlist.

19. The full #BSR on systemic corruption is here: https://www.bigsr.co.uk/single-post/2020/06/27/Big-Saturday-Read-Understanding-systemic-corruption-in-Zimbabwe #ZAMCOList