British bank accused of circumventing Zim targeted sanctions

By Alex Bell
13 December 2010

A British banking group has once again been implicated in circumventing the targeted sanctions still in place against the Robert Mugabe regime, by allegedly giving loans to his allies.

Standard Chartered Bank is accused of giving the loans through syndicated facilities offered by non-European Union (EU) banks, as a way of getting around the targeted EU measures. According to Africa Confidential, the British financial institution has been directing loans through banks in Zimbabwe and through the African Export Import Bank (Afreximbank) and the Eastern and Southern African Development Bank (PTA Bank).

“As Harare steps up pressure for the European Union to abandon its
sanctions on Zimbabwe, it has emerged that a British-based bank has found a legal way to circumvent the ban on loans to President Robert Mugabe’s allies,” Africa Confidential said last month.

Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono revealed in July
that Standard Chartered, Afreximbank, PTA Bank and a Chinese tobacco trader, Tian Li, were responsible for more US$400 million in lines of credit, which had gone to 23 Zimbabwean companies in 2010 with the RBZ’s approval.

Gono, who is also listed in the EU’s targeted sanctions, wrote: “Due to sanctions, Standard Chartered Bank London mainly lends through syndicated facilities through Afreximbank (affiliated to the African Development Bank) and the PTA Bank.”

Standard Chartered has previously said all its loans conform to EU policy on sanctions, as they were done through its subsidiary Standard Chartered Zimbabwe. And while the banking small print is above board, there is widespread concern that the bank’s actions are indirectly propping up the Mugabe regime.

For example, Afreximbank says Standard Chartered had a US$50 million revolving credit facility, which it lent to the Zimbabwe cotton company AICO. Sylvester Nguni, Minister of State to Vice President Joice Mujuru, is an AICO shareholder along with the RBZ Governor Gono and Mujuru’s husband Solomon. All are on the sanctions list. According to Africa Confidential, Mujuru’s partners are hotel and banking tycoon Farai Rwodzi and ZANU PF Mashonaland East chairman and former provincial governor Ray Kaukonde.

This is not the first time that Standard Chartered has been criticised because of its involvement in Zimbabwe, and in 2008 the bank was at the centre of a sanctions inquiry by the British Foreign Office. The bank was accused of breaching the EU policy on sanctions by being one of three British-based groups that provided an estimated US$1 billion in direct and indirect funding to Mugabe’s administration. Together with Barclays Bank and the insurance firm Old Mutual, the bank was accused of continuing to provide an economic lifeline to the regime.

In 2005 Standard Chartered was also criticised for allegedly helping to keep Mugabe and his allies financially afloat. At the time a spokesman was quoted by the UK’s Sunday Times as saying that: “This is a complex and difficult situation, especially for our staff in Zimbabwe.”
“One of the bank’s main considerations is to take care of the people who work for us. We continue to provide the same service for our customers and care for our staff as we always have,” the spokesman was quoted as saying.

SW Radio Africa has asked Standard Chartered for their response to the latest claims, but there was no response by Monday evening.