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Zimbabwean Elite Implicated in Zisco Scandal

Top politicians allegedly stripped state-run firm of assets, an internal government probe has reportedly revealed.
By IWPR
In what is shaping up to be the biggest corruption scandal since Zimbabwe gained independence more than 26 years ago, Vice-President Joice Mujuru is said to have been named in an official report claiming that she and other government ministers were involved in the alleged looting of the state-run Zimbabwe Iron and Steel Company, Zisco.



The report by an elite government crime investigation unit is believed to have been suppressed, but Dumisani Muleya, the international award-winning chief reporter of the weekly Zimbabwe Independent, claims to have been leaked a copy marked "secret". Muleya began releasing details of the report in the newspaper’s November 17 edition, and has promised further revelations.



The title has become the main media thorn in the side of the ruling ZANU PF party following the forced closure of four other independent newspapers and of all independent radio and TV stations.



Dubbed "Steelgate", the tentacles of the Zisco affair spread wider with every passing day.



Zisco is the largest steel plant in Africa outside South Africa. Based at Redcliff, just outside the Zimbabwe Midlands city of Kwekwe, steel production at the troubled plant has collapsed from 14,200 tonnes a month two years ago to less than 1,000 tonnes now.



The failing company has been propped up by massive government subsidies.



It was hoped that the Indian multinational group Global Steel Holdings Limited, GSHL, would ride to Zisco's rescue when it agreed earlier this year to invest 400 million US dollars in the rehabilitation of the increasingly derelict plant.



But GSHL now appears to have abandoned plans to take on the management of the Zimbabwean steel firm.



As leaks about the Zisco affair multiplied, the National Economic Conduct Inspectorate, linked to the finance ministry and the Central Intelligence Organisation, CIO, compiled a report into allegations of asset stripping.



Parliament's trade and industry committee, shocked by the withdrawal of GSHL and suggestions of massive government corruption, opened hearings into the Zisco affair.



At the first hearing on September 20, Industry Minister Obert Mpofu caused a sensation when he said that ministers and members of parliament had been looting Zisco and that this was why the Indian group had walked away from the deal. "While they [GSHL] were here, they discovered that the company was being bled," said Mpofu. "There were people that were making money from Zisco. There was a team sent in by the ministry of finance to investigate and they produced a thick document and you would be shocked if you see it.



"Some of the people are my colleagues in this chamber. Influential people have engaged in underhand dealings that have left the company bleeding."



Panic spread through the government, which moved quickly to prevent publication of the inspectorate’s report. Intelligence officials are understood to have advised President Robert Mugabe that releasing the report would jeopardise the country's hopes of attracting desperately needed foreign investment.



As Mpofu prepared to give evidence at a second meeting of the trade and industry committee on September 27, a clerk is reported to have rushed into the room and said Vice-President Mujuru needed an urgent meeting with him and his team.



The hearing was adjourned and when Mpofu returned, committee sources said he looked chastened. He said he had been "quoted out of context... by people with agendas" who were up to "mischief".



He went on, "I'm not aware of any particular minister or senior person or MP or anybody [who is involved in Zisco]. Even the report was not commissioned by me ... I have not even got that report."



However, Mpofu continued to maintain that companies owned by ministers had joined in the alleged pillaging of Zisco.



The committee, angered by Mpofu's reversal of his story, has now begun a process in parliament for him to be charged with perjury for the statements made during the Zisco hearings. If found guilty, he could be fined or jailed for up to two years, or both.



Gushungo Gondo, a leading economic columnist with the weekly Financial Gazette, lambasted the MPs for not compelling Mpofu at the first committee meeting to name the top people allegedly involved in Steelgate.



"The committee's failure to ask probing questions was, for want of a better expression, extremely disappointing," wrote Gono. "It was inexcusable. The committee proved toothless.



"Why the shameless attempt to cover up? Why is the government… passive in pursuing corruption cases that involve ZANU PF bigwigs, but intensely aggressive when it comes to those cases involving the ruling party lightweights and others?"



Anti-corruption minister Munyaradzi Paul Mangwana threatened that those involved in Steelgate would be arrested if there was enough evidence to prosecute them.



"Very soon we will take action and police will make arrests of those who were involved in corruption at Zisco, irrespective of their political or social status," he said. "It doesn't matter if they are ministers or MPs. As long as they were involved, they will be arrested. If we find that a crime was committed by whoever, we will call in the police and provide evidence for prosecution."



But a short time later Mangwana too retreated, telling Voice of America radio that he could no longer comment on the Steelgate report because it was an "intelligence" document.



The ZANU PF party launched its own separate investigation following suggestions that it might have lost huge sums of money from corrupt internal practices relating to Zisco.



The party inquiry mainly targeted Rural Housing Minister Emmerson Mnangagwa, formerly the powerful speaker of parliament, who is competing with Vice-President Mujuru to succeed 82-year-old Mugabe as state president. Mnangagwa was in charge of the ruling party's finances when the graft is said to have been happening.



The ZANU PF probe was launched before leaks of the apparently suppressed inspectorate report named Mujuru as one of those suspected of looting Zisco.



The Zimbabwe Independent, which has investigated Steelgate in as much depth as allowed by Zimbabwe's oppressive media laws, has described the scandal as the biggest since independence in 1980 and has alleged that it involves members of the state presidency, cabinet ministers, MPs and ZANU PF officials.



The state presidency comprises Mugabe, his two vice-presidents, Joseph Msika and Joice Mujuru, and ZANU PF national chairman John Nkomo.



Mujuru is wife of former defence force chief Solomon Mujuru, one of the most powerful men in Zimbabwe. Under the war name of Rex Nhongo, General Mujuru led Mugabe's Mozambique-based guerrilla army during the 1970s war of independence in what was then white-ruled Rhodesia. Since stepping down from military duties, he has become one of Zimbabwe's richest businessmen.



Neither Mujuru, Mnangagwa nor any other ministers have commented on the reports and abundant allegations concerning ministerial enrichment at the expense of Zisco. But Mugabe’s official spokesperson, George Charamba, speaking to the state-owned Herald daily newspaper, denied any looting of Zisco by government officials.



But in a radio interview, Muleya of the Zimbabwe Independent said, "There have been a great deal of attempts in government circles to scramble to bury the Zisco report in order to hide the disclosures that are made in it. Ministers have been making a lot of contradictory statements to obfuscate the issues."



The alleged looting of the Zisco steelworks is said to have been achieved, among numerous methods, by bid-rigging for contracts, and the allocation of large amounts of foreign exchange to top government officials and their associates who claimed to be doing business on behalf of the company. Huge sums in foreign currency are claimed to have been lost through overpricing by suppliers connected to big fish in government and the ruling party. Abuse of company credit cards, management fees and directors' expenses as well as false claims for air fares, hotel bills, purchases, and entertainment are alleged to have further contributed to huge losses.



As the whistleblowers continue to threaten further disclosures, speculation is rampant about how far up the stream the big fish swim.



Prior to the leak to the Zimbabwe Independent, powerful government members appear to have succeeded in keeping the report by the National Economic Conduct Inspectorate under lock and key. Government sources told IWPR that ministers and others privy to the findings of the report have been ordered not to release it in whole or in part.



However, according to the Zimbabwe Independent, some insiders say they will not allow the authorities to sweep the issue under the carpet given the evidence pointing to the systematic looting of public assets. The whistleblowers argue that ZANU PF is suppressing the report because its detailed contents could blow the ruling party clean out of the water.



John Makumbe, a lecturer in politics at Harare's University of Zimbabwe and a local representative of the international anti-corruption organisation Transparency International, said, "The level of asset stripping taking place under Robert Mugabe's watch has risen to astronomical proportions. It is unfortunate, however, that he sits there… incapable of stopping the rot, let alone arresting and prosecuting any of the perpetrators of these heinous crimes."



Joseph Chikonamombe is the pseudonym of an IWPR journalist in Zimbabwe.



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