RBZ fiasco replay of FML saga Dr Gono will lose

Centre Dr Gono cursed to suffer the same fate that befell FML's Norman Sachikonye Right and Douglas Hoto for abuse of power at the central bank

History has a tendency of repeating itself. The setting may be different but there is a striking resemblance of events unfolding at the Reserve Bank of Zimbabwe (RBZ) to events at insurance giant First Mutual Life (FML) in 1998.

On 10 November 1998 the nation woke up to a front page splash by the Herald revealing juicy news of fiduciary impropriety that had taken place at FML that involved policy holder investments in Econet Wireless and Kumusha farm in Shamva.

The story was packed with incidences of the FML management involvement in improper investment of policyholder funds and receiving kickbacks for their corrupt activities at the same time the organisation had fired scores of employees who had gone on strike over refusal by the organisation’s management to allow them to form a Managerial Workers Committee (MWC) and grand them reasonable cost of living adjustments of salaries preferring rather to embark on a restructuring exercise that was intended to silence leadership of the MWC.

FML had allegedly invested policyholder funds amounting to a then staggering ZW$125 million in Pre-listing private placement arrangements with Econet Wireless broken down into ZW$90 million for preferential debentures and ZW$30 million for Econet shares.

The dismissed employees blew the whistle on the company and went further to cause the company’s management a host of other problems not least of them at the 1999 Annual General Meeting when armed with proxies from sympathetic policyholders they forced deferment of a resolutions reappointing directors and their remuneration only for the board to survive because government failed to act in favour of the employees who had clearly established a case for its removal.

The Mawere Commission appointed by the State to investigate FML unearthed numerous cases of fiduciary impropriety and outright theft in the Society.

Among the victims of the investigation were Board Members, Fund Managers and Corporate Executives Richard Chitumba, Neil Teneiuoth, Nicholas Goche Jr and Antony Light (Fund Managers forced to resign over unprocedural investments and receiving of bribes. Antony Light is still being hunted by the Police for the crimes.

This was to be followed by Phil Thompson (Chairman; disqualified not policy holder) Elias Ngugama (Vice Chairman; resigned in protest to worker grievance mishandling) Phil Jumbe (Chairman; resigned in protest to mishandling of corporate governance) William Nyemba: resigned due to conflict of interests over Trust Bank/FML dealings, Nigel Chanakira (Board member; resigned due to FML/Kingdom Bank and Econet Wireless conflict of interests.

Next to go were John Smith ( Actuary and deputy CEO; denied work permit after dismissed employees protested extension that was working against Douglas Hoto’s prospects) Don Edgerton (CEO retired to pave way for demutualisation) Nigel Hodder (Corporate Secretary forced to resign due to demutualisation)
FML was then demutualised with Norman Sachikonye at its helm as CEO.

The company was to be suspended from trading on the Zimbabwe Stock Exchange over the dramatic collapse of its Asset management subsidiary the dismissed employees had long fingered was the conduit of management malfeasance with investor funds.

This was to trigger Norman Sachikonye (CEO’s ; forced to resignation over demutualisation disputes and collapse of FML Asset Management Company) Douglas Hoto (CEO; forced to resign over demutualisation shares expropriated by senior management) Theodore Moyo (Human Resources Manager forced to resign after FML control was wrestled from management owned shelf company Capital Alliance by Renaissance Asset Management fronting Strive Masiyiwa) Shireen Ormashar Legal Advisor (forced to resign by Renaissance hostile takeover) Godfrey Jowah (Head of Asset Management; forced to resign by hostile renaissance asset management takeover) Jacqueline Sibanda (Public Relations Manager) together with David Murangari, Long, MD Frudd (Board Chairman and members; forced to resign by Renaissance Asset Management.

These men and women executives were all victims of an ill advised vindictive agenda against innocent employees and junior managers that went awry when the junior staff refused to be dismissed without a fight.

Sadly due to poor financial resources and lack of support from the State of the 17 employees and Assistant Managers FML dismissed in 1998 only one has managed to successfully defend his case through the Courts.

In 1998 alone FML spent a staggering ZW$18 in Public relations advertisements and Legal costs concerned with its pursuit for the employees dismissal and to gain policyholder and investor confidence in the institution to no avail.

The former Assistant manager is currently engaged in a crucial fight to be paid salary and benefits as well as damages awarded to him by the Labour Court in 2004 and approved by the Supreme Court.

The quantification process in the matter Jackson Muzivi vs First Mutual life case No 2LC/H/217/99 shows that the former FML Assistant Manager is battling to recover back pay awarded to him for the period 1September 1998 to 30 April 2004 when due the Court ordered his reinstatement without loss of salary and benefits.

Among the more critical benefits awarded to Muzivi but still to be quantified are a motor vehicle, house to replace the one FML illegally sold when it terminated his contract illegally, two years salaries as damages and nearly 10000 FML shares.

Similar events are unfolding at the RBZ. Governor Gono is engaged in a lethal fight for continuation as the Governor of the Central Bank with the new minister of Finance Tendai Biti.

At the centre of the dispute is the quasi fiscal activities the Central bank governor embarked on during his first term in office which the Minister with concurrence from National and International financial experts allege contributed to the dramatic collapse of the country’s economy.

Gono has secured backing from his Principal Robert Mugabe who appointed him for a further 5 year term after his initial term expired in September 2008 notwithstanding that his appointment had not been approved by Coalition Partners in the new order in charge of the country.

The appointment has become a political watershed for the coalition government principals threatening the very existence of the coalition.

Gono has been forced out of quasi fiscal engagements by the political reality obtaining in the country but is trying to find ways to remain politically prominent by trying to use residues from quasi fiscal activities of the central bank to curry favours with influential governmental and political players.

The public relations offensive he has mounted of purchasing scores of pages of advertisement space in State Controlled media supplements is no different from the campaign FML mounted when it was exposed by the disgruntled workers it had fired costing it ZW$18 million in the first year in 1998.

Sadly the central Governor like FML is using other people’s money to defend the indefensible.

The money Gono is using in the advertisements to explain his misdeeds can be better utilised on employee salaries at the central bank where worker morale has hit rock bottom over unpaid salaries for nearly three months.

Instead the Governor is working on a restructuring exercise poised to lay off thousands of workers and repossessing car benefits that would automatically form part of the employee’s severance packages ahead of the retrenchment exercise being formalised at the central bank.

The repossessed cars have been unprocedurally offered for the free use of newly elected legislators creating political discord in Parliament and government.

While the dispute over the car lending by the bank to legislator rages on the Governor has now offered winter wheat farmers fertiliser to offset amounts he raided from them and used to finance Zanu PF political campaigns.

The source of the fertiliser on offer from the RBZ governor remains undisclosed and appears to be stocks imported from SADC donations for the past summer agricultural season that were strategically withheld for purposes of political initiatives hinged on land and agricultural support themes of Zanu PF.

FML used similar diversionary tactics to mislead and pacify restless policyholders with offers of 3000 free shares on demutualisation and got the support they yearned.

Immediately thereafter the management team that crafted the demutualisation initiative fell victim of the project they had crafted to benefit themselves with 25% ownership of the company without paying a cent for such a substantial stake.

Most of the greedy senior managers were forced out of the organisation and lost the shares to Renaissance Asset Management a subsidiary of the company they had contracted to manage the demutualisation process.

In a case reminiscent of the greedy dog tail that barked at its reflection from water under the bridge it was crossing thereby losing the borne it was biting the senior managers of FML not only lost lucrative jobs but also the shares they had clandestinely parcelled each other.

FML is today a pale shadow of the insurance giant it had grown to be in 1998. New major shareholders have stripped its assets and transferred them to Afre. The company’s reputation is in tatters and several rebranding exercises have failed to restore its past glamour which saw it build the most trendy headquarters and business parks throughout the country.

Most experienced managers have left the company in disgrace and its service levels have been negatively affected.

No matter how long Gideon Gono holds onto his job against the wishes of the taxpayers he will eventually face an inglorious exit from the organisation.

Not many will shed a tear for him.