A Chinese company has made a US$3 billion bid for a controlling stake in the state-controlled Zimbabwe Iron and Steel Company, or ZISCO, already the focus of a major corruption scandal, and critics said the deal raises major issues of governance.
The proposed investment comes just a few weeks after President Robert Mugabe traveled to Beijing for a Sino-African summit and reconfirmed Zimbabwe's relationship with China as one of its foremost client states on the continent. Mr. Mugabe, cut off from Western economic assistance, has enunciated a "Look East" policy.
Public and nongovernmental observers said Harare has not presented China’s offer to the national Tender Board for review. Sources on the tender board and the board of the perennially troubled steelmaker itself said they have not been consulted in the deal, announced Monday in the pages of the state-run Herald newspaper.
The Metallurgical Corporation of China is the second Chinese firm to seek a stake in the steel firm. Shougang International Trade and Engineering Corporation built a blast furnace at ZISCO before withdrawing in 2005 over Harare’s alleged failure to make good on promises regarding the plant's supply chain for coal and iron ore.
Shougang's relationship with ZISCO dated to the 1990s. At one point it announced its intention to invest US$200 million into the steel making company.
Earlier this year, the Indian firm Global Steel pulled out of a proposed US$400 million joint venture with Harare, reportedly because of official pressure for kickbacks.
This prompted investigation by the National Economic Conduct Inspectorate and in turn a parliamentary probe into alleged top-level financial abuses. A confidential report subsequent to a separate investigation by the parliamentary committee on foreign affairs revealed that ZISCO owes creditors more than US$200 million.
Economic consultant Peter Robinson told reporter Blessing Zulu of VOA’s Studio 7 for Zimbabwe that it is unfortunate ZISCO has been so poorly managed, as in the current market for steel the parastatal could have generated revenues for the state.
Members of the parliamentary committee on trade looking into alleged corruption at ZISCO, declining to be named, were also critical of the latest Chinese bid, complaining that it by-passed the Tender Board and therefore lacks transparency.
Anti-corruption minister Paul Mangwana declined to comment.
For a legal perspective, reporter Zulu turned to lawyer Jacob Mafume, coordinator of the Crisis in Zimbabwe Coalition, who said the general lack of transparency around parastatal enterprises has led to the looting of state assets by top officials.