Identifier
Created
Classification
Origin
08HARARE947
2008-10-21 13:43:00
CONFIDENTIAL
Embassy Harare
Cable title:
RESERVE BANK,S PROFLIGACY ON PATRONAGE VEHICLES
how-toVZCZCXRO0513 PP RUEHDU RUEHMR RUEHRN DE RUEHSB #0947/01 2951343 ZNY CCCCC ZZH P 211343Z OCT 08 ZDK FM AMEMBASSY HARARE TO RUEHC/SECSTATE WASHDC PRIORITY 3593 INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE RUEHUJA/AMEMBASSY ABUJA 2104 RUEHAR/AMEMBASSY ACCRA 2367 RUEHDS/AMEMBASSY ADDIS ABABA 2487 RUEHBY/AMEMBASSY CANBERRA 1763 RUEHDK/AMEMBASSY DAKAR 2118 RUEHKM/AMEMBASSY KAMPALA 2539 RUEHNR/AMEMBASSY NAIROBI 4971 RUEAIIA/CIA WASHDC RUEHGV/USMISSION GENEVA 1636 RHEHAAA/NSC WASHDC RHMFISS/JOINT STAFF WASHDC RUEHC/DEPT OF LABOR WASHDC RUEATRS/DEPT OF TREASURY WASHDC RHEFDIA/DIA WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK RUZEHAA/CDR USEUCOM INTEL VAIHINGEN GE
C O N F I D E N T I A L SECTION 01 OF 02 HARARE 000947
SIPDIS
AF/S FOR B. WALCH
AF/EPS FOR ANN BREITER
NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN
TREASURY FOR D. PETERS
COMMERCE FOR BECKY ERKUL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
E.O. 12958: DECL: 10/21/2018
TAGS: ECON PGOV EFIN ASEC ZI
SUBJECT: RESERVE BANK,S PROFLIGACY ON PATRONAGE VEHICLES
Classified By: Ambassador James D. McGee for reason 1.4 (d)
-------
SUMMARY
-------
C O N F I D E N T I A L SECTION 01 OF 02 HARARE 000947
SIPDIS
AF/S FOR B. WALCH
AF/EPS FOR ANN BREITER
NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN
TREASURY FOR D. PETERS
COMMERCE FOR BECKY ERKUL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
E.O. 12958: DECL: 10/21/2018
TAGS: ECON PGOV EFIN ASEC ZI
SUBJECT: RESERVE BANK,S PROFLIGACY ON PATRONAGE VEHICLES
Classified By: Ambassador James D. McGee for reason 1.4 (d)
--------------
SUMMARY
--------------
1. (C) A Zimbabwean businessman based in Namibia described to
us how the Reserve Bank of Zimbabwe (RBZ) is importing and
financing hundreds of vehicle for distribution to cronies and
opposition party officials alike. The RBZ is financing the
purchase of this popular source of patronage with money
obtained illicitly on the parallel market, and at any price,
which is contributing to hyperinflation and the unprecedented
fall in value of the local currency. What is most
disturbing, if true, is that this patronage is now directed
at the MDC in an effort to compromise the party and its
officials once the MDC assumes power. END SUMMARY.
--------------
Buying Vehicles "At any Price"
--------------
2. (C) On October 16, a prominent local car dealer invited
econoff to sit in on a meeting with a businessman who
imported vehicles and other commodities for the Reserve Bank
of Zimbabwe. The purpose of the invitation was to allow
econoff to observe firsthand the scale and mode of financing
of one side of the RBZ,s patronage system.
3. (C) The importer was Zimbabwean Raymond Tendai Chamba,
"Managing Director ) New Business Initiatives" of the
company Family Choice, located in Tsumeb, Namibia (website
www.familychoicesugar.com). Chamba said the RBZ had recently
placed orders for 642 passenger vehicles, predominantly Isuzu
single-cab pickup trucks, but also Prados, plus 200 commuter
vans under its "resource mobilization" program. Family Choice
was currently importing ten vehicles a week for the RBZ.
4. (C) Chamba said the RBZ paid him USD 65,000 per pickup
truck--50 percent in foreign exchange paid primarily in cash
through Billy Rautenbach, and the rest in local currency for
the dealer to exchange himself on the black market. (NOTE:
Rautenbach is a Zimbabwean businessman of ill repute who
excavates and exports coal from the Hwange Colliery. END
NOTE.) For the minivans, the RBZ paid USD 70,000-80,000 per
vehicle. Chamba said the RBZ was willing to pay "any
exchange rate" for the local-currency portion of the
purchases. For example, on October 16, the RBZ was paying
the importer at the exchange rate of Z$90 million:US$, at a
time when the parallel rate for checks was Z$40 million:US$.
If the market moved against the dealer, the RBZ topped up the
difference. Chamba said the profit margin on sales was
excellent: The wholesale price of the ISUZU pick up was
slightly under USD 30,000 and the importer,s total cost was
about USD 48,000, leaving Chamba with a profit of USD 17,000
per vehicle. The RBZ paid the vehicle import duty in local
currency.
-------------- --------------
Patronage for Cronies; Compromising the Opposition
-------------- --------------
5. (C) The vehicle import business was brisk, especially
since the RBZ had decided that all new Ministers and Deputy
Ministers would get five new vehicles each--three more than
HARARE 00000947 002 OF 002
under the last government, according to Chamba. In addition,
the RBZ was compensating ZANU-PF stalwarts who had lost their
seats in Parliament in the March election with new vehicles.
Chamba claimed that the vehicles were also being given to MDC
elected officials, particularly at the councilor level. He
suggested that, since March, half the MDC elected officials
had been compromised with gifts from the ruling party of
houses, vehicles, home furnishings, and electrical goods such
as flat screen TVs.
6. (C) Chamba said Family Choice had also imported food for
distribution under the BACOSSI program until funds had
recently run out. He also claimed that Family Choice was
importing a shipload of wheat per month from South America to
Zimbabwe for the RBZ, and that he was currently negotiating
with the RBZ to import IT systems for ministries.
--------------
Bio Note
--------------
7. (C) Bio Note: Post's Non-Immigrant Visa records show that
Tendai Raymond Chamba, who had a slight American accent, was
arrested in the U.S. for assault against a fellow graduate
student and deported to Zimbabwe under escort in October 2001.
--------------
COMMENT
--------------
8. (C) Chamba's account provides evidence that, despite
deplorable economic conditions, ZANU-PF/RBZ patronage
continues. Off-budget spending such as this is driving
hyperinflation and the unprecedented fall in the value of the
local currency. What is most disturbing, if true, is that
this patronage is now directed at the MDC in an effort to
compromise the party and its officials once the MDC assumes
power. END COMMENT.
MCGEE
SIPDIS
AF/S FOR B. WALCH
AF/EPS FOR ANN BREITER
NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN
TREASURY FOR D. PETERS
COMMERCE FOR BECKY ERKUL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
E.O. 12958: DECL: 10/21/2018
TAGS: ECON PGOV EFIN ASEC ZI
SUBJECT: RESERVE BANK,S PROFLIGACY ON PATRONAGE VEHICLES
Classified By: Ambassador James D. McGee for reason 1.4 (d)
--------------
SUMMARY
--------------
1. (C) A Zimbabwean businessman based in Namibia described to
us how the Reserve Bank of Zimbabwe (RBZ) is importing and
financing hundreds of vehicle for distribution to cronies and
opposition party officials alike. The RBZ is financing the
purchase of this popular source of patronage with money
obtained illicitly on the parallel market, and at any price,
which is contributing to hyperinflation and the unprecedented
fall in value of the local currency. What is most
disturbing, if true, is that this patronage is now directed
at the MDC in an effort to compromise the party and its
officials once the MDC assumes power. END SUMMARY.
--------------
Buying Vehicles "At any Price"
--------------
2. (C) On October 16, a prominent local car dealer invited
econoff to sit in on a meeting with a businessman who
imported vehicles and other commodities for the Reserve Bank
of Zimbabwe. The purpose of the invitation was to allow
econoff to observe firsthand the scale and mode of financing
of one side of the RBZ,s patronage system.
3. (C) The importer was Zimbabwean Raymond Tendai Chamba,
"Managing Director ) New Business Initiatives" of the
company Family Choice, located in Tsumeb, Namibia (website
www.familychoicesugar.com). Chamba said the RBZ had recently
placed orders for 642 passenger vehicles, predominantly Isuzu
single-cab pickup trucks, but also Prados, plus 200 commuter
vans under its "resource mobilization" program. Family Choice
was currently importing ten vehicles a week for the RBZ.
4. (C) Chamba said the RBZ paid him USD 65,000 per pickup
truck--50 percent in foreign exchange paid primarily in cash
through Billy Rautenbach, and the rest in local currency for
the dealer to exchange himself on the black market. (NOTE:
Rautenbach is a Zimbabwean businessman of ill repute who
excavates and exports coal from the Hwange Colliery. END
NOTE.) For the minivans, the RBZ paid USD 70,000-80,000 per
vehicle. Chamba said the RBZ was willing to pay "any
exchange rate" for the local-currency portion of the
purchases. For example, on October 16, the RBZ was paying
the importer at the exchange rate of Z$90 million:US$, at a
time when the parallel rate for checks was Z$40 million:US$.
If the market moved against the dealer, the RBZ topped up the
difference. Chamba said the profit margin on sales was
excellent: The wholesale price of the ISUZU pick up was
slightly under USD 30,000 and the importer,s total cost was
about USD 48,000, leaving Chamba with a profit of USD 17,000
per vehicle. The RBZ paid the vehicle import duty in local
currency.
-------------- --------------
Patronage for Cronies; Compromising the Opposition
-------------- --------------
5. (C) The vehicle import business was brisk, especially
since the RBZ had decided that all new Ministers and Deputy
Ministers would get five new vehicles each--three more than
HARARE 00000947 002 OF 002
under the last government, according to Chamba. In addition,
the RBZ was compensating ZANU-PF stalwarts who had lost their
seats in Parliament in the March election with new vehicles.
Chamba claimed that the vehicles were also being given to MDC
elected officials, particularly at the councilor level. He
suggested that, since March, half the MDC elected officials
had been compromised with gifts from the ruling party of
houses, vehicles, home furnishings, and electrical goods such
as flat screen TVs.
6. (C) Chamba said Family Choice had also imported food for
distribution under the BACOSSI program until funds had
recently run out. He also claimed that Family Choice was
importing a shipload of wheat per month from South America to
Zimbabwe for the RBZ, and that he was currently negotiating
with the RBZ to import IT systems for ministries.
--------------
Bio Note
--------------
7. (C) Bio Note: Post's Non-Immigrant Visa records show that
Tendai Raymond Chamba, who had a slight American accent, was
arrested in the U.S. for assault against a fellow graduate
student and deported to Zimbabwe under escort in October 2001.
--------------
COMMENT
--------------
8. (C) Chamba's account provides evidence that, despite
deplorable economic conditions, ZANU-PF/RBZ patronage
continues. Off-budget spending such as this is driving
hyperinflation and the unprecedented fall in the value of the
local currency. What is most disturbing, if true, is that
this patronage is now directed at the MDC in an effort to
compromise the party and its officials once the MDC assumes
power. END COMMENT.
MCGEE