Wednesday, 29 April 2020

BUREAU DE CHANGE LICENCING CORRUPTION EXPOSED AT RBZ


THE Reserve Bank of Zimbabwe (RBZ) has launched an internal investigation into possible corruption by some of its senior officials following a whistle-blower tip off on their alleged underhand dealings regarding the issuance of bureaux de change licences.

This came in the wake of the recent swoop on seven bureau de changes suspected to be involved in illicit foreign currency transactions.

RBZ governor John Mangudya last Thursday announced that the operating bureau de change licences of two private limited companies, Shons Finance Services and Superdeal Enterprises, which trades as Kwik Forex, had been suspended on allegations that they have not been declaring, or have been under-declaring, their foreign currency transactions in breach of the law.

They followed Cash Twenty-Four and Crediconnect, whose licences had been suspended earlier in the month.

The financial institutions had their bank accounts frozen on similar allegations a fortnight ago.

Cash Twenty Four, has since admitted to the offence and paid an administrative fine of ZW$2,5 million.

The central bank also swooped on three other bureau de change companies Stallion Financial Services, Forbes Financial Services and Juso Global who were operating without the required licences.

The RBZ’s Financial Intelligence Unit (FIU) is understood to be looking into the details of how the institutions’ licences were issued from February last year, when the government liberalised the exchange rate, to date after a whistleblower alerted them to possible corruption by responsible officials resulting in some doggy companies being licences.

RBZ and financial services sector sources said questions were also being raised about the lack of due diligence on the part of those charged with granting licences.

“There was an anonymous correspondence to the FIU early this month alleging that some RBZ officials could have had their palms greased in exchange for these bureau de change licenses, which explains why there is this mess.

“So in addition to investigating these companies’ operations, the FIU is also interrogating circumstances under which some of them obtained their operating licences.

“An informer has since raised suspicions about the possible involvement of some RBZ officials,” a source at the bank said.

“The other issue is that of negligence.

“It is most likely that no proper due diligence was taken in granting these licences, resulting in dodgy companies being granted operating licences.

“A proper due diligence exercise would have easily helped to screen these out.”

In written responses to the Zimbabwe Independent, Mangudya was unable to say who was being investigated.

He also said he had not been alerted to the whistleblower’s correspondence.
The central bank boss, however, said RBZ had sufficient mechanisms to deal with any corrupt officials.

“If there is anyone involved in corrupt activities, the bank takes very stern measures against such malpractice and the so-called informer should approach the bank with the necessary information,” Mangudya said.

He also dismissed allegations that the central bank does not carry out proper due diligence exercises when granting bureau de change operating licences, saying the RBZ sticks to stringent procedures laid down by the law.

He said the current cases were a result of market indiscipline.

“Bureaux de change are licenced in terms of the Exchange Control (Authorised Dealer with Limited Authority) Order published in the Statutory Instrument 104 of 2015 which is complemented by Operational Guidelines for Bureaux de Change.

“The Operational Guidelines for Bureaux de Change provide for specific requirements and incorporates operational improvements to the framework that is done through Exchange Control Directives and Circulars,” Mangudya said.

“The operational guidelines detail the licensing framework and include an application form which guides the applicant as to the information required to enable exchange control to assess the suitability of the applicant for a bureau de change licence.

“Any applicant, who meets the set minimum licensing criteria is eligible for a bureau de change licence.

“We should not confuse market indiscipline with the method of granting operating licences.

“The bank’s surveillance team is seized with the matter to ensure total compliance with rules and regulations and will not hesitate to deal with unscrupulous behaviour of some Bureau de Change,” he added.

The minimum criteria include a probity test, where the applicant is required to provide police clearance for directors and officers of the bureau de change, Zimbabwe Revenue Authority (Zimra) tax clearance certificate, anti-money laundering certificate and declarations by the shareholders or directors of the bureau de change that they have not received any criminal or regulatory penalty on matters relating any financial activity.

Corruption allegations related to foreign currency matters have stalked the RBZ a long time now.

In 2018, four central bank directors Mirirai Chiremba, Norman Mataruka, Gresham Muradzikwa and Azvinandawa Saburi were suspended on claims of illegally dealing in foreign currency. This followed accusations by controversial former Zanu PF youth empowerment activist, Acie Lumumba, but were all cleared of any wrongdoing. Zimbabwe Independent

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