Tuesday, March 26, 2013

Gideon Gono: Mining sector corruption "out of this world"

Gideon Gono
S E C R E T SECTION 01 OF 04 HARARE 000178 
E.O. 12958: DECL: 12/31/2011 
REF: (A) HARARE 127 (B) HARARE 98 
Classified By: Ambassador Christopher Dell under Section 1.4 b/d 
1.  (S) In a February 10 meeting with the Ambassador, 
Reserve Bank Governor Gideon Gono bemoaned the GOZ's 
unwillingness to address deepening corruption, fiscal 
indiscipline and parastatal inefficiencies.  Depicting 
himself as under seige politically, he said the leadership 
had talked him into withdrawing the resignation he 
submitted earlier in the week.  He conceded that the 
country was essentially at a tipping point economically, 
and implied that his contradictory GOZ economic policies 
were propelling the country toward the precipice -- a 
precursor to real change.  The Governor confided that 
Mugabe appeared to be deteriorating mentally and losing his 
capacity to balance factional interests.  Stressing his 
interest in playing a central role in Zimbabwe's future, 
Gono emphasized his independence from ruling party factions 
and committed to keep in touch with us as developments 
unfolded.  End summary. 
Under Seige for Telling Truths 
2.  (C) In his spacious 22nd floor office atop the 
glistening Reserve Bank building, Gono portrayed himself as 
a man under attack from all sides for the honesty of his 
policy prescriptions.  The ruling elite all "accuse me of 
carrying the water of the IMF, the white farmers, the 
Americans; only the man in the street embraces me," he 
3.  (C) Gono said his principal offense was to boldly 
attack corruption at the highest levels publicly and 
privately.  He cast mining sector corruption as "out of 
this world" and showed the Ambassador a confidential report 
on gold that implicated senior officials (unnamed) in 
siphoning off production sufficient to reduce official 
output from 22 tons in 2004 to 12 tons in 2005.  He said he 
had delivered several seizures of senior officials' illegal 
gold - the largest at 65 lbs. - to Minister for 
Anti-Corruption (and for State Security and for Lands) 
Mutasa, who had taken no action.  He estimated that 
corruption in gold alone was costing at least USD 250 
million a year - enough to feed, fuel and medicate the 
nation for months. 
4.  (C) Gono complained that ag sector corruption continued 
unabated despite his high-profile advocacy against it; the 
nation's largest coffee-grower (with 30 percent of national 
output) was the latest to be invaded, he reported.  The 
elite who took farms assumed no liability or risk, each of 
which was essentially transferred to the fiscus on the 
backs of taxpayers.  In sum, corruption was a fundamental 
"unfairness" and principal impediment to economic recovery. 
5.  (C) According to Gono, his "Operation Tell the Truth" 
was meant to underscore to the party leadership that 
high-level corruption was glaringly obvious to the public 
and severely damaged the party leadership's credibility 
across the board.  He went over a long list of ministers, 
governors, senior police/military officials, NGOs, and 
private sector players with whom he had consulted and 
sought support.  Many expressed support and yet key 
policies were never carried out. 
Economics Defeated by Politics 
6.  (C) Further on the economic front, Gono quickly went 
down a list of issues, essentially echoing points 
elaborated in his recent monetary policy statement (ref 
B).  The Governor acknowledged the need for moving the 
Bank's quasi-fiscal activities transparently to the budget 
as prescribed by the IMF.  Political realities, however, 
dictated for now that the Bank rush from one patch-up job 
to another as the economy continued its downward spiral. 
Parastatals represented a fundamental conundrum between 
irreconcileable economic and political imperatives.  He 
reiterated his commitment to refurbish Zimbabwe's relations 
with the IFIs and the international community but conceded 
the leadership's insufficient political will to support his 
commitment.  Gono concluded that Zimbabwe's economic 
problems were 85 percent political. 
Inflation Tipping Point 
7.  (C) Regarding inflation - "still public enemy number 
one" - Gono said he advised the cabinet not to worry about 
how high it would go; they should instead realize that they 
would have no country left to rule if the current situation 
continued.  Referring to Malcolm Gladwell's book, The 
Tipping Point, Gono said his duty was to advise the 
leadership that growing hysteria about hyperinflation and 
the economy's irrecoverability could prove to be a tipping 
point.  (Later, in private, he admitted to the Ambassador 
that inflation was actually well above 1000 percent and he 
was purposefully suppressing the numbers to "avoid creating 
Resignation Rejected 
8.  (C) Gono disclosed that his frustrations led him to 
submit his resignation February 6.  He had spent much of 
the week meeting with Mugabe, the presidium, Mutasa and 
other cabinet officials, finally being persuaded just the 
morning of his meeting with the Ambassador to stay on. 
Lurching Toward a Post-Mugabe Zimbabwe 
9.  (S) In a subsequent 30-minute "four-eyes" exchange 
apart from note-takers, the Ambassador observed that Gono's 
often contradictory, even counter-productive, policies and 
public blasts against the elite's misbehavior could be 
interpreted as a deliberate attempt to undermine the 
leadership's credibility and hasten economic collapse. 
Jumping out of his seat, Gono grabbed the Ambassador's hand 
and exclaimed "This proves you are not na e!"  Gono agreed 
that ongoing economic and political developments all served 
as foundation for a post-Mugabe dispensation that had yet 
to be worked out.  He observed that economic distress 
impelled a perceived need for change but factional 
infighting was delaying the succession for which all were 
posturing.  He said that Mugabe's wife had confided to him 
that the President was "out of it" about 75 percent of the 
time and she wanted him to step down. 
10.  (S) What was to follow Mugabe remained murky, Gono 
maintained.  Mugabe had personally disclosed to Gono his 
doubts about Vice-President Joyce Mujuru's capacity to hold 
the country together.  Gono confided further that Joyce 
herself had recently exploded to Mugabe, complaining about 
perceived slights and asserting her independence from her 
husband, ex-army  chief Solomon "Rex" Mujuru. Full of fear 
and loathing, the inner circle was increasingly beyond 
Mugabe's capacity to control: wild-card Mutasa was at odds 
with ambitious Emmerson Mnangagwa, who was countering 
kingmaker Solomon Mujuru, who didn't get along with Defense 
Forces Chief Chiwenga, etc.  Gono cautioned against 
assuming anything about individual loyalties in the ruling 
party's opaque factional battles since ethnicity, clan, 
totem, personal ambition and old rivalries created a very 
complex and crosscutting web of ties.  Musing aloud, Gono 
said the best solution might be a "junta" that attempted to 
balance all these interests in a collective leadership. 
11.  (S) Responding to the Ambassador's inquiry about 
pivotal pragmatic players in a post-Mugabe ZANU-PF, Gono, 
speaking sotto voce, mentioned politburo member and 
ex-Finance Minister Simba Makoni and Party Chairman John 
Nkomo.  On a scrap of paper he wrote down "Didymus Mutasa" 
and "(Minister of Agriculture) Made" as two players whom he 
understood could be allowed no place in a post-Mugabe 
government.  Gono said he himself remained independent from 
party factions - "equally distrusted by all," he joked - 
but communicated with leaders from all factions in both 
parties.  He emphasized that in any event he wanted to play 
a central role in the nation's social, economic and 
political future.  At the same time, he stressed that, as a 
rags-to-riches self-made man, he had the confidence to 
"walk away from it all" if necessary. 
12.  (S) In closing, the Ambassador underscored that 
Zimbabwe was without outside help and beyond the point of 
being able to engineer its own recovery - a tipping point 
in itself.  We all knew the only places from which such 
support would be forthcoming, but such help would be 
predicated on a firm comitment to political and economic 
reform.  For its part, the USG did not desire Zimbabwe's 
further implosion and stood ready to work with the GOZ, 
including a ZANU-PF government, on national recovery - but 
only once it was irrevocably on a path to real political 
and economic reform.  The choice was the ruling party's: 
continue on its self-destructive path and be further 
squeezed by the international community, or redirect itself 
constructively and receive international support.  The 
country needed Gono and other pragmatists, despite 
political difficulties, to be advocates for and ultimately 
deliver meaningful change, the Ambassador concluded.  Gono 
pexpressed relief at this approach and promised to stay in 
13.  (S) "Tipping points" (Gono's unprompted comments 
echoed his remarks to the IMF, ref A) are fast becoming the 
fulcrum for political analysis outside and inside the 
ruling party in Zimbabwe.  Just how close Zimbabwe is to a 
tipping point remains unclear but it is undeniably edging 
ever closer to the brink.  Such discussions helpfully 
reinforce the perceived need for change and the imminence 
of succession - thus fueling what may become a 
self-fulfilling prophecy.  Gono himself may well have 
concluded that, in view of Mugabe's refusal to consider 
desperately needed change, the shortest path to recovery 
(and power for Gideon Gono, of course) is through 
collapse.  Although this may be a touch conspiratorial, it 
does help explain some of Gono's seemingly "irrational" 
policies of the last six months, including the expenditure 
of foreign exchange badly needed for critical imports on 
repayment of Zimbabwe's IMF arrears. 

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