Zimbabwe: Central bank strikes

  1. Posted on Friday 21 November 2008 - 09:59
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    Conrad Dube Mwanawashe, AfricaNews reporter in Harare, Zimbabwe Photo: Francis Ncube
    Zimbabwe central bank governor Gideon Gono has threatened to withdraw bank licenses of banks which he accused of indiscipline. He threatened stockbrokers he accused of perpetuating fraudulent activities on the Zimbabwe Stock Exchange because they affect economic recovery.
    At over 231 million % inflation, Zimbabwe money has become worthless. Photo by Francis Ncube.jpg
    Addressing bankers and journalists in Harare, Gono said the ugly head of indiscipline and corruption had threatened to wipe out the Zimbabwean economy. He accused banks of honouring fraudulently drawn cheques but warned that such banks would lose bank licenses.

    “Any bank where bank cheques are fraudulently drawn with effect from 20 November 2008 will automatically lose its trading license and the chief executive charged with criminality," said Gono.

    "In case where a bank does not report suspicious transactions and the transactions turn out to be fraudulent or money laundering proceeds, that bank's entire management and boards of the directors will be deemed unfit and improper to manage, oversee or preside over any banking institutions board in Zimbabwe," he said.

    The new measures announced by Gono include the cessation of accommodation to banks that are short on liquidity. "The Reserve Bank shall not give unsecured accommodation to any bank coming for assistance. Any bank that fails to secure its intended accommodation will be allowed to go under," said Gono moving away from his usual norm of placing such banks under curatorship.

    He ejected FBC bank from the clearing house for failure to fund their clearing obligations. The ruling ZANU PF has a major stake in FBC including some senior party officials. Gono said that he was aware of the shareholders of FBC but "this was not time for partisanship."

    Gono singled out the stock exchange, which has been a haven for most Zimbabweans, as having been used as the conduit for the ill-gotten wealth accusing the stock market of operating without strict rules to monitor irregular trading behaviour.

    Most Zimbabweans were hedging in foreign exchange or buying shares on the stock market to escape keeping money in the free-falling Zimbabwe dollar. “The ZSE has been, and continues to operate with no strict rules and regulations that prohibit rogue behaviour," said Gono.

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