FORMER Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono recently filed an additional affidavit at the High Court in which he is responding to specific allegations made by his former advisor, Munyaradzi Kereke. We hereby reproduce the second affidavit in full.
I DR. GIDEON GONO do hereby make oath and state that:-
1.1 I am the second respondent in this matter. The facts I depose hereto are fully within my knowledge and to the best of my belief true and correct. The contentions of law I make herein I do so on the basis of counsel’s advice which advice I fully accept.
1.2 I confirm that I have read the answering affidavit of the applicant in this matter. I am fully aware that ordinarily, the court will consider three pleadings in an application matter namely the founding affidavit, opposing affidavit and the answering affidavit. I find myself in the regrettable situation that the applicant, contrary to the rules of this honourable court, has made and provided fresh and new allegations and information in his answering affidavit.
1.3 In this regard, the fresh information that the applicant has provided, is scandalous, vexatious and defamatory to myself. To that, I have instructed my legal practitioners of record to make an application to expunge the parts of the answering affidavit that are offensive.
1.4 However, in the event that this court is not inclined to the above application, I pray that I be allowed to file the instant affidavit to answer only those aspects of new evidence that have been provided by the applicant.
1.5 I wish to add that the entire manner, in which the applicant has prepared his papers in particular the answering affidavit, is to advance seriously, scandalous vexatious and irrelevant material, purely and merely to damage my reputation. I need to place on record the professional damage that the applicant has caused to myself, my family and other innocent parties and of course I am aware of the courses of action that I will pursue. However, it will be in the best interest of justice, to allow my own response to those matters that have been raised afresh in the answering affidavit.
1.6 I am fully aware that, and persist with the point that, the application was driven by malice and hatred and nothing more. If the genuine intention of the applicant was to force the Anti-Corruption Commission, to deal with the matter, and assuming it had been correctly cited, then a simple case should have been made based on the report made in the alleged non action of Anti-Corruption commission. To then go into merits, which are irrelevant before this court is reflective of the malice.
1.7 In addition, as stated in my opposing affidavit to persist to seek the order sought, when the Anti-Corruption Commission itself has been seriously abused, is also strange. Over and above this, to the extent that the applicant persist in insisting that he is not making allegations against me but factual findings it also eludes one’s wisdom what the Anti-Corruption Commission will be investigating in a matter in which the Applicant alleges he has facts.
1.8 Thus, I beg the indulgence of this honourable court in filing this affidavit which for the purposes of the determination of this matter is absolutely not key but however, for the purposes of placing on record my innocence and bona fides, and for the purposes of clearing my own mind, it is important that I respond to the new allegations placed by the applicant before this honourable court.
1.9 Indeed, I reiterate, that the Applicant has raised new material in his answering affidavit which the court should expunge and throw out. I am verily advised that a case stands or falls by the founding affidavit. I therefore pray that the application for expunging will be regarded favourably by this honourable court.
2.1 The new paragraphs covering new materials are many and include various generous malicious and abusive adjectives directed at me and others. The following are the key ones. That is to say:-
(a) Alleged missing fertilizers.
Paragraph “11.39 to 11.47
(b) US$20 million fertilizer contract with Intshona
Paragraphs 12.68 to 12.72
(c) Fresh Audit Reports.
Paragraph 2.16, 17, 13 to 17.21
(d) Allegations to deal with travel expenses
Paragraph 12:30 to 12.34
(e) Payments to Trade Access for generators.
Paragraph 12.39 to 12.41
(f) Government assumption of national debt
Paragraph 12.43 to 12.46
(g) Allegations to do with SMM Holdings
Paragraphs 12.47 to 12.56
(h) Allegations to do with US$3 718 023,42 debt to Afritrade International.
Paragraph 12.64 to 12.67
(i) US$6 706 015.57 paid to Salt-Lakes
Paragraphs 12.73 to 12.75
(j) Alleged missing IMF funds
Paragraph 12.76 to 12.89
(k) Allegations to do with missing shares of NDH, Dairiboard, and AICO.
Paragraphs 12.57 to 12.6
Paragraph 24.12 to 24.15
(l) US$1 500 000,00 allegedly stolen through Prime Minister Morgan Tsvangirai.
Paragraph 12.90 to 12.93
(m) Theft of Number 23 Broadlands Property belonging to Rock Foundation Family Trust.
Paragraph 12.94 to 12.95
(n) Theft of US$100 000.00 from RMC Hospital.
Paragraph 12.96 to 12.97
2.2 As indicated above, it is my contention that the above paragraphs should be expunged. However, and for reasons stated above, I shall deal, with what I consider the most offensive of these fresh allegations in this affidavit. I have had to restrain myself from dealing with every allegation conscious of the fact that this is an additional affidavit.
3 Alleged missing fertilizer
Ad Paragraph 11.39 to 11.49
3.1.1 Without belabouring the point, the Reserve Bank of Zimbabwe purchased fertilizer, in various amounts from local fertilizer companies. They were unable to supply the fertilizer in question with the result that their liability was converted into a loan. Contrary to the applicant’s averments, that loan was correctly captured in the Reserve Bank’s books of accounts. I attach hereto marked Annexure ‘A1’, ‘A2’, ‘A3’ the Reserve Banks Directors Report for the year ending 31st December 2010, 31st December 2011 and 31st December 2012 wherein, the fertilizer in question is reflected under loans and advances made by the Bank. I also need to indicate that even in the 2013 Reserve Bank of Zimbabwe books of accounts, this entry is also recorded.
4 US$20 Million Fertilizer with Intshona
Ad Paragraph 12.68 to 12.72
4.1.1 The allegation made in this matter is that fertilizer was purchased, which was never supplied to the prejudice of the State. Nothing can be further from the truth.
4.1.2 The truth of the matter is that fertilizer from Intshona was indeed supplied and provided to government. The issues pertaining to Intshona was the quality of the fertilizer. However, the government did in fact carry out tests for this fertilizer and accepted that its quality was adequate for the purposes of Zimbabwe. I attach hereto marked Annexure ‘B1’ a self explanatory copy of the contract that the Reserve Bank executed with Intshona dated the 26th of June 2006, Annexure ‘B2’ is an analytical report in respect of the quality of Intshana’s fertilizer made by the Ministry of Agriculture dated the 26th of July 2006. ‘B3’, is the relevant communication between the Minister of Agriculture and the Reserve Bank with regards to the importation of such fertilizer and Annexure ‘B4’ is a self-explanatory document from Intshona Agricultural product explaining quality issues and Annexure ‘B5’ is the letter from the Ministry of Agriculture dated the 14th of November 2006 once again expressing and acknowledging receipt of part of the fertilizer as well as dealing with the quality issues of the same.
4.1.3 I also need to mention that, in November 2006, the government launched the 99-year lease agreement programme at the Harare International Conference Centre. During the sidelines of this meeting, a special meeting of Cabinet was convened in which the Central Bank, was asked to provide and did provide full details of the fertilizer that was imported and received from Intshona. The applicant attended this special meeting of Cabinet, when the issue was brought to closure.
5 Fresh Audit Report
Ad Paragraph 2.16; 17.13 & 17.21
5.1.1 It will be useful to describe to this Honourable Court the Reserve Bank’s Audit process in order to illustrate fully how Applicant is misleading this honourable court.
5.1.2 At first instance, junior staff and trainee auditors from external audit firms look at all transactions as sampled by the Reserve Bank. Thereinafter the said junior staffs satisfy themselves and interact with the junior staff in the accounts departments seeking clarification on those areas that they are not satisfied with.
5.1.3 If any issue remains unexplained at this level, it is escalated to the next level until an appropriate level is found with answers to all the queries. At each stage these queries are documented.
5.1.4 When all queries are cleared or if a query remains unsatisfactorily cleared, it is escalated, to the Governor who in most cases may be holding documentation or information relating to the issue under query.
5.1.5 After clearing all queries with the Reserve Bank’s chairperson, usually at senior partner level, then a final report is prepared by the audit firm concerned wrapping up the audit for the year concerned.
5.1.6 I need to state that after the final meeting with the Governor, the external auditors appear before the Board Audit and Oversight Committee constituted in terms of Section 29A of the Reserve Bank of Zimbabwe Act [Chapter 22:15]. The Governor of the Reserve Bank is not a member of this committee and therefore does not attend these meetings.
5.1.7 The Board Audit and Oversight Committee receives a presentation from the external auditors on how they carried out the audit for the year concerned and the Board Committee interrogates the auditors on any area of their choice. Equally the External Auditors do raise any queries and report on any area of their concern, including, if any, any documents that have not been furnished by management.
5.1.8 After addressing all issues to mutual satisfaction a final report is produced by the external auditors and on the basis of that, the actual accounts of the year are prepared, cleared by auditors and presented to the full board by the Bank’s Audit and Compliance Committee and on the basis of that submission, the Board accepts the accounts and passes a resolution authorising the Governor, Chairman of the Audit and Compliance Committee, Deputy Governor and Bank’s Company Secretary to sign the documents.
5.1.9 After signing, the Bank’s Company Secretary submits the auditor’s results to the Minister of Finance whose duty is to table the same to Parliament.
5.2.1 What the applicant has done in this matter, is to produce altered and forged extracts of reports or at most, interim extracts of drafts or working papers produced at the early stages of the audit processes that I have described above. Using this approach an incomplete, wrong, false and malicious picture is then presented to this honourable court. Thus, the applicant has been selective and eclectic. This is dishonesty. My only explanation for this is the malice that I have already stated before this honourable court and the attempt to mislead this honourable court and the public at large all in attempt to maliciously tarnish my image.
5.2.2 In paragraphs 17.15; 17.17 and 17.19, applicant purports to refer to the 2008 external audit by KPMG. I attach hereto marked Annexure ‘C1’ the final copy of the audit report for that particular year and I draw this court’s attention to page 12 and page 13 of this report, page 13 in particular dismisses the kind of allegations that are being made by the Applicant with respect to the sum of US37 535 300,00 (thirty seven million and three hundred thousand dollars).
5.2.3 I also draw the court’s attention, the deliberate misrepresentation of page 12 of Annexure ‘C1’ I have provided here.
5.2.3.1 I need to also place it on record that in the dealings between the Auditors and the Reserve Bank of Zimbabwe, the point person, at all material times was the Applicant himself. Thus virtually everything that is written in the statements and recorded as management comments, were emanated from the applicant himself. I attach hereto marked Annexure ‘C1(A)’, a letter that was written to the applicant by KPMG dated the 1st of September 2009 together with an interim management report by KPMG attached thereto. The honourable court will see that there are virtually handwritten notes by the applicant himself on Annexure ‘C1(A)’. These were in fact the notes that were then typed and became the management comments.
5.2.3.2 Indeed I need to say that I have in my possession further interim audit statements with his handwritten notes to show the point that the applicant himself was at the centre of the Bank’s responses. Thus, on the issue with regards to the US$37 000 000,00 (thirty seven million dollars) the applicant writes at page 12 of Annexure ‘C1(A)’ the following:-
“Management has already explained to auditors the following:-
a) That all the disbursements were duly authorised internally and there is evidence to this effect.
b) That the amounts were triggered through …………..ect.
c) The amounts were not loans and this is …”
5.2.3.3 When one turns to Annexure ‘C1’ these were in fact the management comments that were sent to the auditors.
5.2.3.4 Thus, the applicant now turns around, to argue with himself. He in fact attacks what was his work. The applicant at all material times, was the defender of the Bank and the point of interaction on behalf of the Bank. Surely, there is nothing that can be more malicious.
5.2.3.5 Put it differently, the applicant as an employee of the Bank at the time acknowledged the legality of the transactions that were carried out by the Bank. He personally was involved in the explanations to the Auditors. His handwritten notes in Annexure ‘C1(A)’ in other similar audit statements that I have not provided places him at the centre, of the defence of the allegations he now makes in the present matter. This is strange and shocking.
5.2.4 For the sake of completeness, I also wish to attach hereto marked Annexure ‘C2’, the full detailed final management report produced by BDO Kudenga Zimbabwe Chartered Accountants, dated the 31st of December 2008.
5.2.5 The applicant makes reference to this report in paragraph 12.39 which is associated with Annexure 13 and in paragraph 12.59 which is associated with Annexure 17. Both Annexure 13 and Annexure 17 appear to be extracts of an interim management report and not the final management report that I have provided herein. The applicant therefore, who on his own protestations, is fully well-versed with these matters, intents to deliberately mislead this court, by providing, incorrect documents produced in the process of an audit cycle and not final audit itself.
5.2.6 I need to mention that, pursuant to the publicity that followed the applicant’s answering affidavit, both KPMG and BDO Kudenga have had to provide to the Reserve Bank of Zimbabwe certified copies of the final management reports for 2007; 2008 and 2009 management reports. The documents I produced hereto are thus certified copies of those reports.
6 Allegations to do with travel expenses
Ad Paragraph 12.30 to 12.34
6.1.1 The applicant has once again, tried to mislead the court. The reports he produces as Annexure 9 in his answering affidavit was again, a working draft produced during the audit process. This point, is illustrated fully by the comments I made in long hand, at page 1; 2 and 3 of the said document. Pursuant to this document, discussions will then have been raised, and a final report produced. Indeed a final report was produced which dealt with the issues that the auditors were raising.
6.1.2 Again out of an abundance of caution I attach hereto marked Annexure ‘C3’, a certified copy of the final report that was produced by KPMG dated the 31st of December 2009.
7 Payments made to Trade Access for Generators
Ad Paragraphs 12.39 to 12.41
7.1.1 Once again, a serious problem is reflected by the applicant. An interim management report is produced from BDO Kudenga & Company a copy of which has been attached as Annexure ‘13’ to the applicant’s answering affidavit. I have produced in this matter a certified copy of the detailed management report for the year ending 31st December 2008 as Annexure ‘C2’. This matter does not arise in the same report for the simple and good reason that the same was cleared and certified as a legitimate authentic transaction.
7.1.2 For the record, the transaction in question involved, the purchase of generators that were used in the March 2008 harmonised election. This, the applicant is fully aware of and yet proceeds to make the allegations that he has made in this matter.
8 Allegation to do with US$3 718 023.42 (three million seven hundred and eighteen thousand twenty three dollars and forty two cents) debt to Afritrade International
Ad Paragraphs 12.64 to 12.67
8.1.1 Once again, the applicant relies on an extract from an interim management report provided by BDO Kudenga. I have already provided the final detailed management report for that year by BDO Kudenga marked Annexure ‘C2’ herein, and it is self evident the difference between the document, Annexure ‘18’ produced by the applicant and Annexure ‘C2’.
8.1.2 It is also evident from the Annexure ‘18’ that the applicant has produced an interim audit report. This is why on the same page there is the following comment recorded as a management comment:-
“The observation is noted. The bank however was in a process of finalising the contract. We have a copy of the draft contract which we were about to conclude.
“In future we promise to quicken the process, it may however be important to note that this project had not been concluded as it was still on going.”
Fraud
8.1.3 The payments in question, related to a programme that the Reserve Bank ran called BACOSSI which stood for the Basic Commodity Supply Side Initiative. This programme entailed the Reserve Bank’s intervention in providing basic assistance to Zimbabweans.
8.1.4 BACOSSI was fully audited, and has its stand alone details a fact which is known to the Applicant.
9 Allegations to do with US$6 706 015.57 (six million seven hundred and six thousand and fifteen dollars and fifty seven cents) paid to Salt-Lakes
Ad Paragraph 12.73 to 12.75
9.1.1 Once again, the applicant relies on an extract, from an audit report prepared by BDO Kudenga. The Applicant’s malice is most captured in this issue. Once again, the applicant has attached as Annexure ‘22’, a copy of an extract of interim management report prepared by DBO Kudenga of the 31st of December 2009.
9.1.2 However, in the annexure, that is to say Annexure ‘22’ which applicant has provided before this honourable court, he deliberately deletes and excludes management comments which would offer an innocent explanation to the transactions that he refers to.
9.1.3 Out of an abundance of caution, I attach hereto marked Annexure ‘C4’, the full page of Annexure 22, with the detailed management comments that the applicant has regrettably and maliciously left out. Those management comments are to the effect that:-
“(i) the Reserve Bank has formally submitted claims to the Banks and negotiations are progressing for the resolution of the claims.
(ii) the main stumbling block has been the fact that the Reserve Bank of Zimbabwe owes bank’s significant amounts under statutory reserves FCAs and other historical balances that form part of what will be cleared under the overall debt resolution framework.
(iii) On Zitac itself currently under liquidation, the Bank has submitted its legitimate claim to liquidator.
(iv) Consistent with the principle of prudence, management recommends full provision of these balances.
(v) there will be written back once the current efforts to recover bear fruits.”
9.1.4 Again out of an abundance of caution, I wish to state that as the Reserve Bank of Zimbabwe we had advanced a facility through CBZ to tobacco merchants. The facility was granted in Zimbabwean dollars with the agreement that the bank would recover the same in US$ once the tobacco merchants had sold their tobacco. There were thus nothing unprocedural or below board with regards to these transactions.
9.1.5 The only issue the applicant fails to mention is that the tobacco in question was rain damaged and stolen. The ZRP and Interpol are ceased with this matter.
10 Alleged missing IMF Funds
Ad Paragraph 12.76 to 12.89
10.1.1.1 The applicant again maliciously proceeds to defame myself and other persons not involved in his dispute with myself.
10.1.1.2 It is common cause that the country was granted SDRs to the equivalent of US$503 000 000,00 (five hundred and three million) in 2009. The Government of Zimbabwe withdrew US$150 000 000,00 (one hundred and fifty million dollars) from the same. I attach hereto marked Annexure ‘D’, a self-explanatory document, forwarded to me by the Bank’s Finance and Administration dated the 25th of August, explaining the transactions.
10.1.1.3 I also need to place it on record that all the amounts that were drawn down were used by the Government of Zimbabwe in various projects including infrastructure and agricultural projects. I attach hereto marked Annexure ‘D2’, a public statement by the government to that effect.
10.1.1.4 I also wish to state that, in terms of the Public Finance Management Act, a person appointed as a Minister of Finance is not a signatory to any government account and does not have the capacity of making any withdrawal. The Public Finance Management Act makes it clear that the Permanent Secretary of the Ministry of Finance is the Pay Master General responsible for directing payments whilst the actual withdrawals are governed by the Accountant General.
10.1.1.5 Moreover and in addition, the books of accounts of government have been audited since 2009 and the allegations that the amounts in questions are missing is totally absurd under the circumstances.
10.1.1.6 In any event government Public Accounts are matters of public record and can be provided to this honourable court.
11 Allegations to do with missing shares of the National Discount House (NDH), Dairiboard, Cottco (AICO) and Gold Coins
Ad Paragraph12.57 to 12.63
Ad Paragraph 24.1.2 to 24.1.15
11.1.1.1 The applicant, basically makes the allegations that the Reserve Bank amounts were used to purchase shares totalling the sum of 53 529 675 shares were bought from NDH and converted to my use. He then proceeds to make references through Annexure 17 being extracts of an audit report. I have already made the point that the applicant continues to mislead this honourable court by referring to interim working Audit Reports.
11.1.1.2 The NDH shares that the applicant refers to, are in fact in the possession of the Reserve Bank. I attach hereto marked Annexure ‘E’, an extract from the Final Management Reports produced by DBO Kudenga dated the 31st of December 2008 in which it was acknowledged the bank’s shareholding in 53 580 984 shares of NDH. Annexure ‘E1’ & ‘E2’, are the relevant share certificates.11.1.1.3 To the extent that similar allegations have been made for Dairibord and AICO, I attach hereto marked Annexure ‘E3’, Cottco & AICO share certificates and Annexure ‘E4’ are the Dairibord Share Certificates. The Dairibord and Cottco/AICO share certificates were in the lawful custody of the Reserve Bank of Zimbabwe and were disposed by the Bank through the right channels of the bank and proceeds were received and accounted for properly.
11.1.1.4 Another matter, which has also been raised, is the allegation that I converted gold coins to my own use. This matter was raised in the initial interim audit statements of 2008.
11.1.1.5 There was a challenge in locating the box containing the coins when the bank moved from the old Bank Chambers to the new Vaults in the new building housing in the Reserve Bank. The situation was compound by fact that they were changes in the way the items in custody were arranged and filed within the Vaults as well with amounts of local currency in stock. This includes the gold coins and other documents from Pre Independence.
11.1.1.6 When the matter was brought to the attention of the Governor at the end of 2008 audit when the auditors wanted the coins to be written off, the Governor ordered staff to search for the coins in the Vaults and they were located in the Vaults and the applicant is aware of this.
11.1.1.7 External Audit Reports for the period 2009 through to 2011 have always confirmed the existence of the gold coins. I attach hereto marked Annexure ‘F1’ being a self explanatory letter from Ernst & Young dated 26th of March 2013 confirming this. Annexure ‘F2’, is a newspaper report by ‘New Zimbabwe.com’, recording a Press Conference that I carried out, wherein the above gold coins where displayed to members of the public.
12 US$1 500 000,00 (one million five hundred thousand dollars) alleged stolen through Prime Minister Morgan Tsvangirai
Ad Paragraphs 12.90 to 12.93
12.1.1.1 I deliberately did not comment on any allegations that were not contained in the founding affidavit for good reason. Now that this allegation has been put in the answering affidavit, I am duly bound to comment on the same in case it is not expunged.
12.1.1.2 Indeed the sum of US$1 500 000.00 (one million five hundred thousand dollars) was provided to the then Prime Minister of the country Morgan Tsvangirai. At the time he was a Principal of Government and a directive was made, by the Government principals, to provide such resources for the purchase of the Prime Minister’s residence. The applicant is well-aware that this was a transaction conducted and concluded between the two principals of government and myself in my capacity as the Governor of the Reserve Bank of Zimbabwe.
12.1.1.3 To suggest that I converted amounts in question to my own use or that I acted improperly is surely malicious.
13 Theft of Number 23 Broadlands Property belonging to Rock Foundation Family Trust.
Ad Paragraph 12.94 to 12.95
13.1.1.1 As the applicant knows this is a matter in respect of which, there has been litigation between the Applicant and myself in respect of which judgment has been handed down against the applicant. To then introduce this matter which applicant has clearly lost, is again malicious.
14 Theft of US$100 000.00 (one hundred thousand dollars) from RMC Hospital
Ad Paragraph 12.96 to 12.97
14.1.1.1 Once again this is a matter that is pending before the High Court of Zimbabwe in which the same is highly contested.
14.1.1.2 To include this matter in the instant matter is once again evidence of malice.
15 CONCLUSION
15.1.1 It is clear from the papers filed of record and the instant affidavit the malice being displayed by the Applicant against myself. However, in the event that the courts do not expunge the applicant’s answering affidavit, I pray for the incorporation of this affidavit in the present proceedings.