By Felex Share

Zimbabwe has paid $8 million to Eskom of South Africa and Hydro Cahora Bassa (HCB) of Mozambique to avoid losing 350 megawatts as the country battles to liquidate arrears amounting to over $50 million. Eskom had threatened to switch off Zesa Holdings beginning yesterday. Zesa Holdings, Ministry of Energy and Power Development and Reserve Bank officials yesterday met Eskom management in South Africa where they presented an acceptable payment plan.

The power utility management on Monday met HCB officials in Harare over Zimbabwe’s debt which stands at $10 million.

Mozambique supplies Zimbabwe with 50MW, while Eskom — which is owed about $40 million — gives the country 300MW.

Speaking from South Africa, Zesa chief executive Engineer Josh Chifamba yesterday said the meeting with their counterparts was fruitful.

“We had tense and rigorous discussions,” he said.

“We had tough negotiations but finally they accepted our payment plan which they expect us not to default on. Any default means curtailment of power.”

Eng Chifamba declined to discuss the figures involved saying “that is confidential information”.

A source however, said: “The inclusion of Ministry of Energy and Power Development and RBZ officials was meant to strengthen Zesa’s commitment.

“The officials were guaranteeing and what is needed now is for them to walk the talk. We were on the verge of being switched off and that would have had a devastating impact on agriculture and the economy. To avoid being switched off and in the face of forex challenges we managed to pay $8 million to the two regional power utilities. They payment plan presented means the debt has to be cleared in the next four months.”

This is the second time in as many months that Zimbabwe faced a load shedding threat after Zesa Holdings failed to honour a payment plan it agreed on with the regional power utilities.

Zesa attributes the failure to foreign currency shortages.

Any load shedding at the moment will deal a major blow to industry as well as agricultural activities at the Grain Marketing Board depots and the winter wheat farming underway.

Zesa in May agreed to pay Eskom about $10 million monthly to clear its areas amounting to over $45 million.

This would have seen the debt being liquidated in four months.

At the same time, the power utility agreed to pay for current supplies.

Foreign currency shortages have seen Zesa failing to meet the payment obligations.

Zimbabwe has been relying on power imports from South Africa and HCB of Mozambique to boost supplies as a way of promoting production in the economy.

Zimbabwe consumes about 1 400MW daily.

Yesterday the power stations in the country were generating 1 159MW.

The country has been receiving steady power supplies since December 2015 as a result of various initiatives such as imports.

Zesa is refurbishing its power stations while also working on expansion projects in Kariba and Hwange.

The projects take time to complete hence the decision by Zesa to rely on power imports.

The country’s economic blueprint, Zim-Asset, identifies energy as a key enabler under infrastructure and utilities, as well as the value addition and beneficiation initiatives.

This cluster needs massive support and its failure spells doom for the country.

South Africa’s exports to Zimbabwe have dropped by 10% on the back of a ban imposed on various South African products last year, a report says.

The ban, which covered food, building materials, furniture, toiletries and other products sparked violent protests from cross-border traders in Beitbridge.

Tight controls

The state ZBC broadcaster said on Tuesday that figures seen by it at an ongoing SADC Industrialisation Week in Johannesburg “indicate that South Africa has incurred a 10% drop in exports to Zimbabwe on the back of the tight controls”.

Tens of thousands of unemployed Zimbabweans, who earn a living by travelling to South Africa to buy cheap products for resale back home, were the ones most affected by the ban.

Cash woes persist

The government enforced the ban, known as Statutory Instrument 64, in a bid to boost local industry and prevent outflows of scarce foreign currency.

But cash woes remain, and Central Bank Chief John Mangudya said last week that out of the 400 million US dollars imported since January, around 200 million US dollars had been siphoned off into the informal sector.

The Confederation of Zimbabwe Industries said the capacity of local producers increased to more than 47% in 2016 from around 34% in 2015 after the import regulations came into force.

News24

By Ivan Okuda

Kampala — The Bank of Uganda Governor, Mr Emmanuel Tumusiime-Mutebile, has revealed that President Museveni gave the “go ahead” to close Crane Bank whose management the central bank took over last October due to its under-capitalisation.

“You would be mad to do such a thing (closing a bank) without briefing him (the President) on such an important action. He (Museveni) said ‘go ahead’,” the governor told this newspaper in an interview on Sunday.

Crane Bank, which a forensic audit later found was wholly owned by businessman Sudhir Ruparelia, was Uganda’s fourth-largest commercial bank by the time of its dramatic collapse.

The central bank sold some of its assets and liabilities to dfcu Bank, but remained with the other liabilities the buyer could not take, and these developments culminated in Crane Bank and BoU jointly suing Mr Ruparelia.

The latter is yet to file his defence, although this newspaper understands that there are ongoing frantic informal efforts to delay the case, if not circumvent it altogether.

In the Sunday interview, Mr Mutebile said they discovered “too late” that Mr “Ruparelia had been involved in fraud, for lack of a better word, involving theft of depositors’ money”.

The BoU Governor said he was “sorry” and would take responsibility for “what went wrong” but added that “I am not criminally culpable”.

Asked who then is criminally culpable, he replied: “Ask the [BoU] Executive Director for Supervision [Ms Justine Bagyenda]”.

We were unable to reach Ms Bagyenda by press time.

Mr Mutebile declined to discuss if he had spoken to Ms Bagyenda about a supervision lapse that threatened to endanger Uganda’s entire financial sector. He said a decision about whether or not to shake up the central bank staff would depend on the outcome of the court process.

The BoU Governor said the internal fraud at Crane Bank was “well hidden”, explaining delays in detecting it, and he described as “nonsense” suggestion that the bank was too powerful and politically explosive for them to handle.

Full interview

On July 10, the media reported that Bank of Uganda which closed and sold Crane Bank in 2016 to dfcu Bank had sued its former proprietor Sudhir Ruparelia and his Meera Investments. In the suit still pending before the High Court, the central bank is seeking to recover Shs400 billion Mr Ruparelia allegedly stole from Crane Bank. BoU Governor Emmanuel Tumusiime-Mutebile, in this interview with Daily Monitor’s Ivan Okuda, opens up on the crisis.

The question on the lips of many Ugandans is, where was Bank of Uganda when the mess at Crane Bank Ltd happened?

We discovered too late that Sudhir Ruparelia had been involved in fraud, for lack of a better word, involving theft of depositors’ money.

How too late was this?

Recently. Late last year.

BoU licensed this bank in 1995 and for that long you only realised last year that something was amiss?

We had to have a forensic audit first which went behind the audits performed by the former auditors.

What did the forensic audit unearth?

It found out, among others, that some of the claimed shareholders were not shareholders and the bank was owned by Sudhir almost 100 per cent. As a result of that forensic audit, one of the claimed shareholders Kantaria paid $8 million.

Where and to who was this money paid?

It was paid by Kantaria to Bank of Uganda. I can always check the account to which it was paid and get back to you but it was paid to BoU.

You (BoU) have been sued by NBC, businessman Amos Nzeyi and another citizen for gross statutory negligence and collusion.

How could we have colluded if we didn’t know what was happening? How could we have been negligent if we didn’t know what was happening?

One would say you slept on the job or perhaps Sudhir gave you sleeping pills by way of inducements that got you sleeping on the job.

How then could Kantaria have paid [Bank of Uganda] if we were colluding? Kantaria was challenged on how he was receiving money from Sudhir when he was not a shareholder.

With the institutional machinery you have at your disposal, the explanation that you didn’t know what was happening just can’t fly!

It was hidden very well. Sudhir had been audited every year but the auditors failed to see this criminality. It was only discovered after a forensic audit.

Why did it have to take a forensic audit to discover this?

Because unlike ordinary audits, a forensic audit goes behind the figures, they work like Criminal Investigations Department (CID) of police.

BoU relies on these auditors to ascertain the health of commercial banks… . Am I correct to say these auditors who kept giving you a clean bill of health for Crane Bank are incompetent?

No. It wasn’t their job. Theirs is to study reports as given to them and ask if one and two add up. Forensic auditors on the other hand go behind those figures and that is how they uncover the theft.

Why aren’t forensic audits done often? How could Crane Bank and indeed any other bank, not have been forensically audited for more than 15 years?

It is costly and undermines confidence in institutions. We had never had a forensic audit on Crane Bank. A forensic audit is only put in place when and where there is a problem or suspicion of wrongdoing going underground.

Ordinary folks out there saw gaps in Crane Bank; how could BoU fail to smell a rat?

Nobody had ever found out how Sudhir owned the bank 100 per cent. How could they discover these irregularities without a forensic audit? No one ever came out to assert the issues raised in the forensic audit report.

The Internal Security Organisation has the Economic Monitoring Unit, there is the Financial Intelligence Authority, CMI, ESO, etc. How could they all fail to detect this and feed you?

I cannot answer for the intelligence services of Uganda but I don’t think it is their work to go and do a forensic audit on commercial banks. These audits are done occasionally when irregularities are discovered.

At what point did it occur to you that BoU needed to do a forensic audit on this bank?

When suddenly we realised Crane Bank was losing capital and it was not clear where that money was going. If for instance, today you have Shs400m and tomorrow you only have Shs300 million, it becomes important to query where the Shs100 million went so suddenly.

So for all these years the bank was doing just fine as not to raise your eyebrows to necessitate a forensic audit? The forensic audit report I read before this interview shows irregularities date so many years back.

According to their ordinary audits, yes. Those ordinary audits had been explaining the financial condition and performance of the bank.

In essence these auditors can be accused of misleading the central bank by painting a rosy picture whereas there was deep rooted rot?

These are different functions. Audit companies are not forensic auditors. Ordinary audits will check if the figures presented to them are consistent in themselves while forensic audits go beyond the figures. If for example, those figures show Crane Bank had Shs100 million and one month later they show that money is gone, the forensic auditors ask where did this money go?

Are you going to bring these auditors to book?

No. Why? We know the difference between ordinary and forensic audits. Except if there is evidence to show there was collusion between auditors and the shareholders.

There are allegations of collusion between BoU staff and Sudhir and your executive director for supervision has been named as having a conflict of interest in this matter.

I have not seen any evidence though I don’t categorically deny the possibility of collusion.

This must be a difficult time for you; being on the receiving end of this fire.

No. How? It is not the first time we are conducting a forensic audit. It is only being overplayed because of who Sudhir is.

There is the blockbuster question. Who is Sudhir in the grand scheme of things?

I used to think he is an ordinary businessman. I don’t think so now.

Why the change of opinion?

Just because he lost so much money in Crane Bank so quickly.

The International Monetary Fund issued a statement to the effect that the mess could have been avoided had the central bank been more vigilant and asked you to pull up your socks.

They should have said if the supervisors of the commercial banks were more vigilant. Who was doing the work of supervision? Okay it was Bank of Uganda staff but not the entire BoU. BoU has an executive director in charge of supervision.

Are you passing the blame to your junior now?

I am responsible for what went wrong but I am not criminally culpable.

So who is criminally culpable for this muddle?

Ask the executive director for Supervision [Ms Justine Bagyenda].

I am asking you as the chief executive. Have you asked her to explain what went wrong under her watch?

I can’t discuss that in public.

But you are the head prefect of this institution

Yes, I am the head prefect of the institution but I am not criminally culpable.

Your criminal culpability is for the police and DPP to tell us, but what action shall you take on her?

I shall decide after the courts have ruled.

It is said Crane Bank had become so big that even BoU couldn’t touch it.

That is absolute nonsense. How come we touched it?

It is even said Sudhir had become so close to the powers that be, including the President that you could only look on?

How come we touched the bank? Answer that!

Perhaps the President pressed the destruction button and said it is time to clip Sudhir’s wings and only then could you intervene.

No. We didn’t even ask him before closing Crane Bank. Of course he was briefed. You would be mad to do such a thing without briefing him on such an important action. He said go ahead.

How did he react to the information relayed in the forensic audit report?

Oh! He didn’t believe it till much later.

Did Sudhir try to get the President to stop you?

No. As far as we know he wasn’t involving State House on this matter till we briefed the President.

How difficult a step was this to take?

It wasn’t difficult. It is part of my job. I have to do it.

It is certainly not as easy as you make it appear given the political games and stakes.

Because I have to brief the President before I act doesn’t mean I got permission from him. It would be foolish for anyone to close a bank without briefing him, that is why he is the head of State.

How did Sudhir react to these issues raised in the audit report?

He was shocked and denied everything he was told.

Shadow finance minister Nandala Mafabi has been on TV saying you should be jailed for this negligence.

Let Mafabi go to jail first.

Why?

I can also claim he is a criminal. How is he claiming I am a criminal?

Why did you sue Sudhir?

We went to court because we failed to settle the matter when Sudhir failed to pay in accordance with the agreement.

The Independent of Mr Andrew Mwenda has accused BoU and dfcu of perpetrating one of the most open frauds in this country in this claim against Sudhir.

Does Mr Mwenda or his Independent magazine know what fraud means?

Part of the claim is that whereas dfcu is collecting loans from former Crane Bank borrowers and those loans had security, BoU is also harassing Sudhir for money, some of which is being cleared by former Crane Bank borrowers.

That argument confuses two things. The loans as they were at Crane Bank have been secured, Crane Bank failed. BoU sold assets and liabilities, some were bought by dfcu and others were not, those that weren’t bought are still under BoU. Those bought by dfcu belong to dfcu.

Can you say sorry to the country for this mess?

I would say sorry but I shall keep my position which is that I accept responsibility but I am not criminally culpable in as much as I am sorry for what happened.

Parliamentarians are moving a motion to have BoU investigated.

I shall not go there until the case has been disposed of by the courts.

The Swiss Ambassador to Zimbabwe, Ruth Huber, says investment in will remain stagnant as long as the Harare fails to compensate whites whose farms were forcibly taken without proper dialogue.

She was speaking during the Swiss National Day Tuesday.

Huber told journalists that although investment from Switzerland has slightly increased in Zimbabwe, the difficulty has been to attract new investment in the current political and economic environment.

The Swiss envoy described the political environment as polarized.

She said potential investors in Switzerland inquire about previous investors and they hear about Swiss agricultural farmers that have lost their farms without any compensation until today.

“As we all know the frame conditions are not very favourable for attracting new investment. Cases of previous investors in agricultural production are unresolved.

“The current economic environment in the country is not easy for the private sector. The loss of farms by white commercial farmers is an issue that makes new investors hesitate. They are not so sure if the law is sufficient enough to protect their businesses.

“As much as investors out there would want to come and invest, they want to see how the elections will go. Investors are closely looking at the political situation in Zimbabwe as the country gears up for the 2018 elections. They want to see if elections are going to be free and fair as well as peaceful.”

The Ambassador, however, expressed hope in the compensation issue which she said is on-going as the two countries are still engaging in dialogue to see how some of the farmers from her country could be paid.

Huber said it is therefore important to acknowledge the positive contribution and the continued commitment of Swiss companies present in the country and the impact they are making through their know-how, investment, production of quality products and job creation.

In year 2000, the government embarked on a countrywide offensive land reform programme where white commercial farmers were forcibly evicted from their farms and lost millions of dollars for developments made on the properties as well as for agricultural output which the government has not paid for.

The government insists that Britain is responsible for the compensation of the farmers through the agreements made during the Lancaster House Conference in 1979.

A fortnight ago, finance minister, Patrick Chinamasa, claimed that he had paid some white farmers. However, his claim appeared to have shocked the whites who said they had not seen a cent from government.

The Acting President, Yemi Osinbajo, will on Thursday inaugurate a new world-class fertilizer plant built by Indorama Eleme Fertilizer and Chemicals Limited in Port Harcourt.

Laolu Akande, the Senior Special Assistant to the Acting President on Media and Publicity, made the announcement in a statement issued in Abuja on Wednesday.

According to the presidential aide, the plant with production capacity of 1.5 million metric tons of Urea fertilizer is considered the world’s largest single-train Urea plant.

Eleme Petrochemicals Company Ltd, now Indorama Eleme Fertilizer and Chemicals Limited, was privatised in 2006 after the sale of the federal government’s 75 per cent shares to a core investor through competitive bidding process.

The statement said that the plant, with production capacity of 4,000 metric tons of nitrogenous fertilizer per day, was built with 1.5 billion dollars. It is supported by a port terminal at the nearby Onne Port Complex, and a Gas Pipeline of 83.5KM for gas supply

It said that the construction of the plant would lead to green revolution in the agriculture sector in Nigeria other parts of Africa and beyond, in line with the economic diversification policy of the Buhari administration.

The statement said that besides making fertilizer available to farmers nationwide at affordable cost, the plant will boost crop yield for farmers and help in minimizing food grain deficit in Nigeria.

(NAN)