Steal Crown Jewels
How to steal the Crown Jewels.
Many people who watch Africa cannot understand how poor countries can
sustain leaders who rapidly become some of the richest people on earth.
do they do it?
Take Mobutu in the Congo, he was estimated to have accumulated a
fortune of over US$4 000 000 000.00. This huge sum could have almost
off the international debts of the country at the time. Then one of the
Military leaders in Nigeria accumulated a fortune at the astonishing
over a billion US dollars a year during his tenure. That is US$2,7
dollars a day!
The new leader of Mozambique, one of the poorest countries on earth, is
only a long time Marxist but is now the richest man in the country.
chaotic and impoverished Angola, the leadership lives in a lavish
has enormous sums of money stashed in secret overseas accounts. Just
this sudden wealth achieved?
First of all they do it very secretly - using their power at home to
withhold the information from the watching eyes of the media. Secondly
do it with the connivance of overseas banks and financial agencies that
specialize in looking after such wealth and in keeping it out of sight.
It helps if you have oil. It is now a known fact that a third of
oil revenues (about US$3,5 billion a year) finds it way into the
accounts of the powerful elite that runs the country. But what is less
known is that these same people take a cut on just about everything
country buys. These funds are paid with the full knowledge of the
authorities in the paying countries and go into a network of accounts
foreign banks so complicated that they would make Bill Gates proud.
But the main mechanism used is that wonderful invention of the Breton
agreements and the West - the Reserve Bank and the Ministry of Finance.
tribal Chief ever invented such a simple mechanism for milking the
and enriching the powerful.
In Zimbabwe, the Zanu PF regime has been using these institutions for
to line their pockets and entrench their power. Just take a few
Foreign exchange inflows from official sources run at about US$33,5
a week. The real value of this flow of resources is about Z$340
fact the State only pays out via the Reserve Bank Z$200 billion leaving
hidden surplus value of Z$140 billion a week or Z$7,3 trillion a year.
is Z$650 000 a year for every Zimbabwean in the form of a hidden tax.
Then take another favorite collecting point - gold sales. Zimbabwe is
the 6th largest gold producer in the world. Not much after South Africa
Russia or Australia, but still significant at about 35 tonnes a year.
law in Zimbabwe, as in all African States, says that producers must
this to the Reserve Bank at a price fixed in local currency. So about 1
million Zimbabweans slave away digging gold out of the harsh soil and
sell this (about two thirds are sold to the Reserve Bank - the rest is
smuggled out) for a set sum in Zimbabwe dollars printed by the Reserve
This payment in recent years has been well below its real value as
determined by the market for gold and the local market for the Zimbabwe
Cheap gold not only implies another tax - valued last year at about
trillion but also an internationally convertible source of hard
can be sold in international markets or hidden in overseas bank vaults.
Whatever the Reserve Bank does with its gold purchases the effect is to
convert real value into paper money with a rapidly declining value.
These two simple mechanisms are used to steal money from ordinary
They are part of the reason why inflation is so high and the value of
currency falls by the day. In one sense they constitute a hidden tax,
another they are a major source of corruption and patronage. This
how people closely connected to the ruling Party are able to accumulate
wealth very rapidly. It also explains the need for secrecy in Reserve
dealings and in foreign exchange matters.
In Zimbabwe it also explains why the new Reserve Bank Governor has used
very considerable influence and power to criminalize the parallel
foreign exchange. For this reason many business persons, whose business
could not have survived in recent years without certain open market
activities, have found themselves under investigation and many have
huge bribes to escape further punishment. Others have been imprisoned
many of Zimbabwe's brightest and best have fled the country, leaving
considerable corporate holdings and assets. There is much evidence that
Governor himself - in his capacity as the State Presidents personal
and the CEO of a major commercial Bank has undertaken open market
activities, which are today regarded as criminal acts. The selective
investigation and punishment is again typical of such regimes in
But the ripple effects of activities of this nature spread very wide.
South Africa there is clearly a deliberate policy to over value the
This then enables the newly powerful to use the Rand - which can be
for a fraction of its face value, to buy assets cheaply. This is the
underlying mechanism being used to transfer assets to the new elite. At
same time a strong Rand counters the inflationary pressures created by
rather loose monetary policies that this requires. But the impact of
strong Rand on all exporters and on manufacturing is serious and
It is hindering job growth and undermining the traditional pillars of
South African economy.
In Zimbabwe the same policies - pursued with reckless abandon by this
regime, has called the death knell for major exporters such as the
industry and agriculture. It cost over Z$60 million to grow a hectare
tobacco this year - the farmers will be paid about US$2 per kilogram
this will translate at present exchange rates into Z$36 million
quick way to go bust, even if you got your land and all the assets on
nothing from a criminal regime.
Bulawayo, 22 February 2005.