News24

Mugabe millions hard to trace

2002-02-19 10:34

Cape Town - The European Union on Monday slapped "smart sanctions" on Zimbabwe, including the freezing of assets in Europe of President Robert Mugabe and 19 of his closest associates.

But it might not be so easy to trace the so-called Mugabe millions.

The international banking community's co-operation would make it easier. But it would depend on donors, such as the World Bank or the European Union, who would be concerned about their funds being abused, to help trace money.

Tax havens

Capital outflows from top Zimbabwean officials to tax havens in Europe and the US have been increasing in the past months, the Financial Times of London reported.

Ed Royce, chairman of the Africa Committee of the US House of Representatives, warned of the danger of officials stripping the Zimbabwean national treasury. There was nothing to prevent Zimbabwe officials from moving money offshore, he said.

Jersey became the first offshore financial centre to urge its members to steer clear of funds deposited by Zimbabwe's elite. A list issued by the Jersey Financial Services Commission named Mugabe, his wife and 23 ministers and associates. But the list was out of date, and proved nothing.

Hard assets easier to trace

It would be easier to trace hard assets, such as properties, rather than a bank account held in a tax haven, auditors say.

Zimbabwean officials are likely to have used formal private banking channels to move their money offshore, or they may have set up corporate front companies to transfer their personal wealth overseas.

Others would have sought to avoid detection by the Zimbabwean central bank and formal banking sector by redirecting funds held outside Zimbabwe or by illegally taking out hard currency. South Africa, with its large banking system offering international investment access, would be a likely destination.

Banking confidentiality

Banks are not likely to provide information on their clients. Mugabe is the legitimately elected leader of Zimbabwe and would find protection in banking confidentiality.

Swiss banks did co-operated in an investigation into the assets held abroad by General Sani Abacha, former Nigerian president, after his death and proof of illegal accumulation of funds, but that is not likely to happen to Mugabe.

Allies would suffer most

Although Mugabe's government is riddled with corruption, few of the known cases can be linked to the president. He has consistently turned a blind eye to the corrupt activities of his ministers and his relatives, so they are the people who would fear the consequences of EU sanctions, Daily Telegraph in London reported.

A tough travel ban on President Robert Mugabe and 19 of his closest aides, includes foreign minister Stan Mudenge, cabinet secretary Charles Utete, speaker of the parliament Emmerson Mnangagwa, home affairs minister John Nkomo and security minister Nichola Goche.

Aid, arms and equipment cut

In addition to the freezing of financial assets all exports of arms and equipment to Zimbabwe, which could be used for internal repression, are being stopped. The EU also said it would not sign a new €128 million aid package for Zimbabwe expected to cover 2002-2006. Poverty relief, however, would continue.

"These targeted sanctions are aimed solely at those whom the EU judges to be responsible for the violence and violations of human rights," EU ministers said.

"The sanctions are designed not to harm ordinary citizens of Zimbabwe," the EU underlined.