The Destructive Force of Corruption – We Lost US$25 Billion in Marange Alone, At least US$100 billion since independence

0Shares

– By EDDIE CROSS

In my business life I have handled several billion dollars of revenue and expenditure over a period of 65 years. In that time, I have been blatantly approached and asked for a bribe once – by a local politician who was the Governor of the Province in which I had a large business. Interestingly, I cannot recall ever being offered a bribe for a decision or opportunity. I can only put that down to the fact that people instinctively know that any such offer would have immediate and very negative results.

When I was at University in Harare, I was a part time Chaplin to Harare Central Prison and spent most Sundays there. In the process I got to know many of our most notorious criminals. Among them were prostitutes who had been arrested for practicing their trade. The one characteristic I learned from both, was their complete lack of any illusions about themselves, in some cases brutal honesty rarely found outside those walls. The one lesson I learned from the girls, is that they could identify a potential client from a distance. They knew who would take up their offers and who was not a prospect.

I think bribery has many of the same characteristics. I had one instance where I was going into a meeting when I was diverted by a very attractive young lady into a room with two directors from the company I was going to meet. It became clear to me that I was going to be offered a bribe, however the one Director looked at me and signalled his colleague to stop talking. The offer never came, he knew that if he had, the meeting would be much worse than it actually was.

But unfortunately, I live in a country where corruption on a massive scale, is a common feature of everyday life. The scale of such corruption is staggering when you view it against our economy and the general quality of life that our people enjoy. If your Government does not take it seriously or be willing to punish those who are in their ranks, for corruption, then you are in big trouble.

One country that has taken corruption seriously is China. It is one of the many things that they have done right and as a consequence they have lifted 1,3 billion people out of abject poverty in the past 50 years. China executes those found guilty of corruption – 250 000 people since 1975, some of them senior Members of the Communist Party and their leadership. I remember when Rawlings, new President of Ghana rounded up 15 well known crooked businessmen, took them to the beach and had them executed in public, as an example.

De Beers, the largest diamond company in the world, found diamonds at a place called Marange in Zimbabwe. They kept it quiet because they did not want the diamonds on the market, driving down prices. A small team of Zimbabweans took over the claims and found gem quality diamonds in a few weeks. The State did not respond as the Botswana Government has. They took action to take over the site in 2006. In the next 15 years US$25 000 000 000 (US$25 Billion) worth of raw diamonds were extracted from the site. A tiny proportion (less than 1 per cent) found its way into the national coffers and at a rally the President complained that US$15 000 000 000 (US$15 Billion) was “missing”. He personally was partly responsible through the ownership of one of the companies looting this vast bonanza. One diamond from the site was sold in Vietnam for US$15 million dollars.

In 2014 after the collapse of international oil prices (down to US$37 per barrel) a consortium of large companies kept local prices at the level they had been and skimmed off the surplus revenue in the Far East. In this way they syphoned off probably close to US$2 000 000 000 (US$2 Billion) which went into private accounts in Malaysia, Hong Kong and other locations. A complex network of Companies were involved. That is nearly US$30 cents per litre at the pump in Zimbabwe.

I have been complaining about corruption at a company known as Cottco in Zimbabwe. I am especially anguished by this because in 1967 I was part of the organisation that sponsored the cotton crop in Zimbabwe and formed the Cotton Marketing Board to handle the output. We built up the crop to nearly 500 000 tonnes a year produced by up to 500 000 farmers. We were the second largest cotton growing county in Africa. After Independence in 1980 the Board was privatised and for a long time ran the Company quite well. Not difficult because cotton is a form of “white gold” and those who control the ginneries can make large profits.

However, the Directors and shareholders found they could skim off revenue from export sales and gradually they increased this activity. They got greedy and eventually were taking up to half of export earnings offshore by under invoicing sales to themselves both in South Africa and the Far East. Prices to the farmers collapsed, large scale commercial growers withdrew from the industry and independently owned ginneries closed down or were sold. Small scale growers – nearly 300 000 of them, simply suffered, not understanding what was happening and unable to take effective action. Cottco became a monopoly reinforced by State policy.

This year we will reap 65 000 tonnes of seed cotton – half of last year and only 15 per cent of our peak production. By my calculation corruption in Cottco cost the industry in 2021 nearly US$50 million, or US$33 cents per kilogram – significantly more than was actually paid for the crop. Cottco saying they could not afford more than 35 cents a kilogram and the Ministry of Finance topping up with 21 cents a kilo to give farmers a reasonable return. Export sales at US$86 million were substantially below what they should have been. This is in addition to the millions stolen from the Company by the senior management and political affiliated individuals. The big loser was the 300 000 families who had grown the crop. Affecting perhaps 2 million people.

Transparency International estimates that corruption has cost us over US$100 billion since Independence – that is US$7 000 for every man, women and child in this country. It far exceeds foreign aid and is 6 times our total foreign debt. Its past the time since we should take this seriously. Its time for action, not talk or catch and release practices.

–Eddie Cross is an economist