Mugabe wants to grab Standard Chartered over China deal that went sour
Robert Mugabe and his cabinet ministers in Zimbabwe coalition government are targeting British-owned multinational financial services group Standard Chartered, which has operations in the country, for seizure after it blocked Harare's uranium deal with China.
Documents seen by the Sunday Times this week show Standard Chartered Bank in Harare angered Mugabe and loyalists in thwarting Harare’s first uranium mining project with China last year, citing sanctions imposed by the European Union and the US on a local state mining company.
Standard Chartered refused to process financial transactions involving Zimbabwe Mining Development Corporation (ZMDC) and China Uranium Corporation, saying the local company was on the sanctions list.
Government insiders said this riled Mugabe and his officials. In January, Reserve Bank governor Gideon Gono, in his monetary policy statement, slammed unnamed banks for perpetuating sanctions. It has emerged that one of those banks was Standard Chartered, one of the biggest in Zimbabwe.
Bankers were summoned on Tuesday by Mugabe’s loyalists, co-Vice-President John Nkomo, Minister in the President’s Office Didymus Mutasa, Information Minister Webster Shamu and Zanu-PF spokesman Rugare Gumbo, to discuss the anti-sanctions campaign and indigenisation. This intensified pressure on banks, including Standard Chartered, to comply with Mugabe’s demands or risk seizure.
Standard Chartered has operations in more than 70 countries with a network of more than 1700 branches and outlets, including subsidiaries, associates and joint ventures. It employs about 80000 people worldwide.
A letter from ZMDC acting CEO and GM Sam Siziba, dated October 12 2010, to Gono seeking assistance on the issue shows Standard Chartered blocked ZMDC’s uranium project with China Uranium Corporation.
The project was going to be done through Afri-Sino Resources Ltd, a company jointly established by China Uranium Corporation, New On Investment and ZMDC. The capital investment to be injected would have come from the Chinese investors.
"In order to guarantee a normal company operation it needs a safe channel of capital transfer. The current channel of capital transfer is through bank account opened in Standard Chartered Bank Zimbabwe," Siziba wrote to Gono.
"But please be advised that they are facing serious challenges in receiving capital investment from China."
Siziba wrote that Standard Chartered blocked the project.
They then visited the website of OFAC – a US Treasury agency operating under the auspices of the under-secretary of the treasury for terrorism and financial intelligence – which showed MMCZ and ZMDC are on their sanctions list.
OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign assets, organisations and individuals.
Siziba wrote that more money entering Zimbabwe from the Chinese for the project through Standard Chartered was also blocked.
"This obviously shows that our joint-venture company has been targeted by OFAC, for it is related with ZMDC and MMCZ. Therefore the current channel of capital transfer is blocked," Siziba said.
"Chinese shareholders are not a basis of comprehensive investigation, the opening of offshore bank account in a third place (for them Beijing is an appropriate option) is currently the best solution. As the joint venture partner, we are fully aware of their difficulties and support their efforts of applying for the opening of offshore bank account."
Mugabe warned on Wednesday at the launch of his anti-sanctions campaign that, with his indigenisation and black-empowerment laws, he would grab companies that belong to countries imposing sanctions. He said the seizures would start with UK companies.
"It is not enough to speak against sanctions," Mugabe said. "We can’t keep hosting more than 400 British firms here, including mines. It is now time to take measures against them.
"I have said the indigenisation and empowerment process should start with those firms," Mugabe said. "We must take them over. We can also boycott their products."
Mugabe’s Zanu-PF resolved in December at its annual conference in Mutare to grab foreign-owned companies.
The British Foreign Office said this week Mugabe’s remarks were "irresponsible", a comment echoed by British Prime Minister David Cameron.
- Zimbabwean bankers are resisting indigenisation, saying the sector is dominated by locals, owning 68% of the banks, even though they have a smaller segment of the market.
This campaign sets the scene for a bruising battle between banking executives and Mugabe as Harare tries to force banks to comply with indigenisation and empowerment demands.
Zanu-PF officials accused some banks of supporting "illegal international sanctions" by taking instructions from their international parent companies. They said the misguided banks had to change or face seizure.
Bankers were told that, because of their misguided practices, some internationally owned banks were deliberately declining to lend to Zimbabwean companies and individuals appearing on the illegal European Union and American sanctions lists.
Foreign banks were also accused of paralysing the money and capital markets by sterilising huge domestic deposits, ensuring that the funds did not reach the productive sectors of the economy through lending. – TimesLive