The Meikles specification saga – implications on the rule of law

Since the appointment of Dr. Gono as Governor of the RBZ in December 2003, a number of businesspersons have been specified in terms of the Prevention of Corruption Act.

At the time of his appointment as Governor, it was generally felt in government circles that the economic crisis was largely a direct consequence of corruption and financial indiscipline in the private sector.

The thinking in government was that using the Prevention of Corruption Act, the economy would rid itself of alleged corruption and in so doing lift the country up. Regrettably this did not happen hence the shift of emphasis to targeted sanctions as the source of the economic and political crisis confronting Zimbabwe.

Notwithstanding the change of focus to sanctions removal, there has not been any fundamental change in thinking on whether in fact; the approach of victimising businesspersons yielded the kind of results expected. The first victim was ENG Capital and its shareholders. Then came Mr. James Makamba and with him externalisation as a criminal charge worse than murder was born.

Mr. Makamba was to languish on remand in custody for about 8 months and he was later joined by former Minister of Finance, Dr. Chris Kuruneri. Many more were specified and no one has taken stock of the impact of specification on economic performance. With more businesspersons being targeted, the economy continued to nose-dive confirming that all the actions of the state were either misdirected or a genuine attempt to distract attention from the core issues at play.

Although the so-called anti-corruption crusade took a political character with the majority of victims being black, the matter never attracted the attention of political actors in the context of the SADC-facilitated talks that eventually led to the formation of the inclusive government.

Before the formation of the inclusive government, principal state and political actors were drawn from the same party that shared an ideology that the state can do no wrong. The responsibility for specification was placed on the Minister of Justice, Legal and Parliamentary Affairs, Hon. Chinamasa. After the government reshuffle before the elections of last year, a new Ministry was created under the name, Ministry of State Enterprises, Anti-Corruption and Anti-Monopolies. An Anti-Corruption Commission was then established in terms of the Constitution of Zimbabwe.

The Ministry of Anti-Corruption was abolished with the advent of the inclusive government. With the specification of Moxon and subsequently companies deemed to be connected to him, the attorneys representing the specified persons, Mr. Sternford Moyo, have raised an interesting legal point that has implications to many who remain specified notwithstanding the confusion regarding who is in charge of the administration of the Prevention of Corruption Act.

Mr. Moxon is seeking an order in the court application under HC2857/09 before the High Court of Zimbabwe that the appointment by the co-Ministers of Home Affairs of forensic auditors Budhama Chikamhi and Cleopas Mukungunugwa as investigators be declared as a legal nullity.

The facts of the Meikles matter are that a battle for control of KMAL between Messrs. Moxon and Chanakira has spilled into the domain of state actors amid allegations that the state has been rented as leverage by Mr. Chanakira to gain an advantage against Mr. Moxon. Mr. Chanakira was the complainant against Mr. Moxon raising allegations of externalisation in respect of certain transactions that relate to assets situated in a foreign state, South Africa. Based on these allegations, Minister Undenge purporting to act as the Minister of State Enterprises, Anti-Corruption and Anti-Monopolies specified Mr. Moxon and appointed an audit firm as Investigator.

At present, there appears to be no Minister administering the Prevention of Corruption Act notwithstanding the fact that recently a number of businesspersons were de-specified by the co-Ministers of Home Affairs. If as observed by Mr. Moxon, there is no Minister assigned to administer the Act as required, then the de-specification as well as all the specifications that are purportedly in force is null and void. An Investigator as agent needs a principal to report to. If the Principal is no longer in place, can an agent be appointed to report to a Minister without legal standing.

The line of argument that Mr. Moxon has taken is not only interesting but raises fundamental questions about integrity of the state. It is evident that the manner in which the pre-inclusive government political culture operated has been adopted by the inclusive government seamlessly. We have seen the MDC condemning the action notwithstanding the fact that one of the co-Ministers is a nominee of the party.

The mere fact that the specification order was signed after the formation of the inclusive government confirms that there are people in the state who continue to believe notwithstanding the dollarization of the economy that externalisation is a criminal charge that merits the intervention of the state.

Mr. Chikambi supported by Mr. Melusi Matshiya, the permanent secretary of the Ministry of Home Affairs, have opposed Moxon’s application arguing that a number of irregular transactions allegedly made by Moxon including a disposal of 25% equity of T M Supermarkets to Pick ‘n’ Pay retailers and the externalisation of US$8.4 million from the transaction. It is also alleged that Mr. Moxon and not Meikles Africa Limited externalised US$7.4 million being the proceeds from the disposal of shares in the jurisdiction of South Africa to a South African and not Zimbabwean company, Mvelaphanda Group.

Chikamhi in the court papers accuses Moxon in his personal capacity of being the mastermind behind the alleged undervaluation of the Cape Grace Hotel that was sold for cash. He does so purportedly on behalf of the shareholder, KMAL, arguing that the disposal to Mentor Holdings Limited represented by Mr. Steven Lavenburg was not above board.

Any rational observer would agree that the state of Zimbabwe has no right to interfere with the administration of companies and more significantly that any attempt to make Mr. Moxon accountable to Zimbabwean authorities on transactions relating to assets situated in foreign territories violates international law as doing so would effectively given the Prevention of Corruption Act extra-territorial application. If Mr. Moxon committed an offense then it is for the forum courts in South Africa to adjudicate.

What is critical is that all investors follow this landmark case as it further exposes the fact that no investor is safe when the wheels of justice and transparency are off. Yesterday, it was Muponda for example, and today it is Moxon. What will tomorrow bring? Only God knows.

However, the government must observe its own laws before compelling others to do the same. There is no choice but to accept the argument advanced by Moxon that the specification has no force or effect and is, therefore, a nullity. As we continue to watch the inclusive government negotiate its moral compass, we can only support the efforts by Mr. Moxon to bring to the attention of the investing public that a lot more needs to be done to remove domestic sanctions against progress and prosperity.