British Bank implicated in sanctions-busting scandal

HARARE – British-based financial institution Standard Chartered has again been sucked into the controversy surrounding the busting of European Union sanctions against Zimbabwe amid allegations that it has been giving loans to President Robert Mugabe’s allies through syndicated facilities offered by non-EU banks.

Influential political think-tank Africa Confidential said Standard Chartered has been routing loans through local banks in Zimbabwe as well as the African Export Import Bank (Afreximbank) and the Eastern and Southern African Development Bank (PTA Bank) in order to circumvent sanctions which the EU renewed for another year in February.

Under the sanctions, no European companies are allowed to do business with Mugabe and more than 200 officials and organisations linked to his Zanu (PF) party. “As Harare steps up pressure for the European Union to abandon its sanctions on Zimbabwe, it has emerged that a British-based bank has found a legal way to circumvent the ban on loans to President RobertMugabe’s allies,” the think-tank said.

The Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono revealed in July that Standard Chartered, Afreximbank, PTA Bank and a Chinese tobacco trader Tian Li were responsible for at least US$442.5 million in lines of credit approved by the RBZ which had gone to 23 Zimbabwean companies this year.

Gono, himself under EU sanctions, wrote: ‘Due to sanctions Standard Chartered Bank London mainly lends through syndicated facilities through Afreximbank (affiliated to the African Development Bank) and the PTA Bank (East and Southern African Trade and Development Bank).’

Standard Chartered however says all lending conformed to EU sanctions and was done through its wholly-owned subsidiary, Standard Chartered Zimbabwe. Afreximbank says Standard Chartered had a $50 million revolving credit facility which it lent to the Zimbabwe cotton company AICO, formerly Cotton Company of Zimbabwe. Sylvester Nguni, Minister of State to Vice President Joice Mujuru and also under EU sanctions, is an AICO shareholder.

Gono is also a shareholder through his investment in Sakunda Energy, a petroleum distribution company, as is Mujuru’s husband Solomon, also under sanctions, through various nominees, says a source close to AICO. According to Africa Confidential, Mujuru’s partners are hotel and banking tycoon Farai Rwodzi and Zanu (PF) Mashonaland East chairman and former provincial governor Ray Kaukonde.

Standard Chartered was in 2008 at the centre of another Zimbabwe sanctions inquiry by the British Foreign Office for allegedly
breaching EU sanctions on Zimbabwe. The bank was at the time said to be one of three British-based groups that allegedly provided an estimated US$1 billion in direct and indirect funding to Mugabe’s administration.

Together with Barclays Bank and the insurance firm Old Mutual, the banking group was accused of continuing to provide an economic lifeline to the regime. They were accused of providing loans to senior members of Mugabe’s government running farms grabbed by mobs organised by his Zanu (PF) party. Many of the farms, previously white-owned, were distributed to leading figures in the regime rather than to landless black Zimbabweans. – The Zimbabwean