Zimbabwe banks investigated over trading irregularities

Six auditing firms have been hired by the Reserve Bank of Zimbabwe to
investigate abuse of the liberalised foreign currency trading system by the
country’s banks.

Similar audits last week revealed foreign currency trading irregularities at
Genesis Investment Bank.

The firms – Camelsa Chartered Accountants, BDO Kudenga & Company, PwC,
Deloitte, KPMG and BCA Consulting – have begun investigations to verify all
foreign currency transactions since the beginning of the willing-buyer
willing-seller matching policy last month.

RBZ Governor Dr Gideon Gono said the central bank would descend heavily upon
any bank and other authorised dealers abusing the ‘well-intended’ system.

He said Genesis was only saved from closure by the timing.

‘They have elections to thank lest we would have been misconstrued
politically. We also did not want to inconvenience depositors, but we will
certainly keep a perpetual radar on the bank,’ Dr Gono told

Genesis had its foreign currency trading licence revoked on Friday while its
top management were fired.

‘It has taken us almost 12 years to get to the foreign exchange trading
freedoms that the market enjoys today and in less than two months after the RBZ
ushered these momentous freedoms, some market players have seen it fit to cut
corners, hide and misrepresent the truth from the RBZ as the regulator, he said.

Last Thursday, Dr Gono said those authorised dealers operating outside
laid-out exchange control regulations would face ‘severe corrective measures’,
including the cancellation of the concerned institution’s trading licence.

Investigations into the new foreign currency trading system were launched
following reports that authorised dealers were not reporting the actual exchange
rate at which transactions were conducted. Some were also splitting transa
ctions, thereby fuelling parallel market dealings.

The audit firms are, therefore, expected to check if all foreign exchange
transactions were recorded and to certify that authorised dealers did not split

The six firms have also been directed to inspect all corporate, embassies,
NGOs, international organisations and individual foreign currency accounts
transactions from May 2 and to certify that the ‘ins’ and ‘outs’ were in full
compliance with exchange control parameters.

The auditors’ brief also includes certifying that settlements through the
Zimbabwe Electronic Transfer Settlement System by corporates were not in support
of illegal parallel market activities.

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