Some businesses have put in more than 50 bids from a single firm to access foreign currency at the Reserve Bank of Zimbabwe auctions using different names and banks, RBZ Governor Dr John Mangudya told a Parliamentary committee yesterday.
He described the conduct as greed and indiscipline in that it created unnecessary backlog in clearing the queue for those who followed the rules and were in need of the hard currency.
Giving oral evidence before Parliament’s portfolio committee on Industry and Commerce about the objective of SI 127, Dr Mangudya said: “We have said those accessing foreign currency auction, let us play by the rules like one bid per entity.
“We have seen some entities, who, because of their size, sponsor more than 30 or 50 bids as shadow bidders. That is indiscipline. This is what was happening and we did not have a legal instrument to deal with that. That is greed and it will increase the backlog.”
While it was the responsibility of banks to pick up the anomaly before they submit the bids to the central bank, the firms sometimes used several banks to evade detection.
“Sometimes the banks might not know because some of these firms are multi-banked,” said Dr Mangudya.
Bankers Association of Zimbabwe representative Mr Fanwell Mutogo told the committee that banks supported SI127.
“The SI primarily targets those participating in the foreign currency auction system so that they do not abuse the system,” he said.
The Confederation of Zimbabwe Industry and the Zimbabwe National Chamber of Commerce representatives said the legal instrument was not business friendly.
ZNCC chief executive Mr Chris Mugaga, said there was no need for a legal instrument, but a conducive business environment.