Mandelson, Mugabe and Zimbabwe’s £1.1bn bail-out plan
LORD MANDELSON met Robert Mugabe’s finance minister in Zimbabwe five months before the investment bank where the Labour peer works sought to help the regime borrow $1.1billion, The
Sunday Telegraph can disclose. Lord Mandelson, who chairs Lazard International, a division of the investment bank Lazard, visited Zimbabwe in February when he met Mr Mugabe’s finance minister, Patrick Chinamasa.
On July 6, Mr Chinamasa held what he called “marathon meetings” with Lazard and another bank in London on a $1.1 billion loan.
Lord Mandelson has denied his visit was in any way linked to Lazard’s proposed bail-out. However, the timing of his meeting is likely to raise questions as within Zimbabwe the deal is highly controversial.
A spokesman for Lord Mandelson said he was “not playing nor has he played any role in advising the Zimbabwean government either through Lazard or any other interest”.
The spokesman described the purpose of Lord Mandelson’s trip to Zimbabwe as being instead to meet “representatives of the business community and civil society to encourage them to continue the process of reform”.
The Foreign Office “encouraged and supported” Lord Mandelson’s visit. Catriona Laing, the British ambassador in Zimbabwe, arranged his appointment with Mr Chinamasa and accompanied Lord Mandelson to see the minister. Sources said this meeting did not take place on behalf of Lazard, nor did it lead to any introductions.
A source said that no introductions were made and nothing followed from his appointment with Mr Chinamasa so far as Lazard was concerned.
Mr Mugabe’s regime is unable to pay civil servants or run its own ministries and is desperately trying to raise $1.1 billion to settle its arrears with the World Bank. This would, in turn, open the door to a bail-out from the International Monetary Fund.
Lazard is understood to be working with Afreximbank, a Cairo-based bank, to raise the loan.
IN the streets outside Zimbabwe’s finance ministry, Robert Mugabe’s despairing subjects hold regular strikes and protests against the crisis overwhelming their country’s economy.
Lord Mandelson, the former Labour cabinet minister turned investment bank adviser, probably did not see evidence of unrest when he arrived at this nondescript office block in the capital, Harare, accompanied by Catriona Laing, the British Ambassador to Zimbabwe.
Lord Mandelson may also have been unaware that the man he was going to meet – Patrick Chinamasa, the Zimbabwean finance minister – ranks among Mr Mugabe’s most loyal and shameless accomplices.
When the president went head-tohead against Zimbabwe’s judiciary, Mr Chinamasa, then justice minister, was given the job of hounding independent judges into resignation. He led a sweeping purge of the Supreme Court, focusing on the judges who had ruled against the mass seizure of white-owned farms.
Mr Chinamasa singled out Anthony Gubbay, then chief justice, for personal vilification, eventually leading the judge to resign in 2001. The minister had chosen to denounce Mr Gubbay as “disgraceful and despicable”.
After helping to dispatch the chief justice, Mr Chinamasa visited two more Supreme Court judges to advise them to go, telling one that the “president would not like anything to happen to you”. They took the hint and went.
Lord Mandelson may also be unaware that his old colleague, Lord Goldsmith, the former Labour attorney general, went to Harare with the International Bar Association to investigate this assault on the rule of law. The report which Lord Goldsmith helped to author provided chapter and verse on Mr Chinamasa’s part in harassing the country’s judges: for good measure, it also accused the minister of making “untrue” statements.
Later, one Zimbabwean judge was foolhardy enough to sentence Mr Chinamasa to three months in prison for contempt of court. The judge who made this ruling, Fergus Blackie, was himself arrested and clapped in handcuffs, before being paraded through the streets of Harare in the back of a po- lice Land Rover. Another judge later overturned Mr Chinamasa’s criminal conviction.
After serving Mr Mugabe so faithfully, Mr Chinamasa duly benefited from the land grab, receiving one farm for himself and another for his wife, Monica.
So Lord Mandelson was not meeting an ordinary finance minister when he arrived in Harare in February. On the contrary, Mr Chinamasa has been a central figure in Zimbabwe’s tragedy.
What Lord Mandelson discussed in the meeting – which was arranged by Ms Laing during a visit supported by the Foreign Office – has not been disclosed.
After meeting the finance minister, Lord Mandelson dined with representatives of what remains of Zimbabwe’s embattled business community. A spokesman said this was the real purpose the visit: Lord Mandelson wanted to “encourage them to continue the process of reform in Zimbabwe”.
Since leaving government in 2010, the former cabinet minister has acquired an array of business and advisory roles.
Lord Mandelson’s meetings in Harare were unrelated to his position as chairman of Lazard International, a division of the investment bank Lazard, a source told The Sunday Telegraph. No introductions were made and nothing followed from his appointment with Mr Chinamasa so far as Lazard was concerned, the source said.
Lord Mandelson’s spokesman said that he was “not playing, nor has he played, any role in advising the Zimbabwean government either through Lazard or any other interest”.
However, the timing of his meeting is likely to raise questions, as within Zimbabwe the deal is highly controversial.
These days, the Zimbabwean government needs all the help it can get. Mr Mugabe’s regime is so short of money that it cannot pay civil servants or teachers. The situation is so serious that the president struggles even to provide salaries for the structures of repression – the brutal police and army – which keep him in power.
In the days when Mr Chinamasa was hounding judges, the regime had a simple solution to the problem of running out of money: Mr Mugabe would order the Reserve Bank to print more banknotes. But this reckless approach eventually landed Zimbabwe with the worst dose of hyperinflation in history, hitting a remarkable 500 billion per cent.
The result was that Zimbabwe abandoned its national currency in 2009 and adopted the US dollar instead. Even Mr Mugabe cannot print US dollars at will, so there is no way out of the current crisis, unless the country gets an international rescue package.
Mr Chinamasa’s task is to borrow $1.1 billion (£800 million) to repay Zimbabwe’s arrears to the World Bank. If that particular account can be settled, then the country could be in line for an IMF bailout when that organisation’s board meets in September.
And this is where Lazard comes in. Last month, Mr Chinamasa held “marathon meetings” in London with Lazard and Afreximbank, a Cairo-based bank, to work out how to raise the $1.1 billion.
Afterwards, John Mangudya, the governor of the Reserve Bank, gave an upbeat account of this meeting to the official press. “What is now happening is that Lazard and Afreximbank will mobilise the funds from the international financial markets for Zimbabwe. The plan is that we should have raised the money to clear our arrears to the World Bank by September,” he said.
The problem is that Zimbabwe has plenty of ways of squandering its own wealth. In the country’s eastern highlands lie the Marange diamond fields, some of the richest deposits in the world. Yet a festival of looting and corruption has robbed Zimbabwe blind.
In March, Mr Mugabe revealed that the regime had received only $2 billion of the $15 billion of diamond revenues that should have been due. The remaining $13 billion – enough to pay off Zimbabwe’s debts to every international institution more than six times over – had simply been stolen. The regime which has looted the country’s resources on an epic scale is now proffering a begging bowl. Nor does it help that last year, Mr Mugabe spent $33.8 million on his own domestic and global travel – and precisely nothing on “fixed capital assets” for primary and secondary schools. Rescuing a regime with this sense of priorities may be a task beyond the financial ingenuity even of Lazard.