Ecocash a Ponzi scheme says RBZ, has agents overdraft of ZW$39m

Fails to provide KYC documents for top 100 agents Accused of playing a role in devaluing local currency

May 8, 2020

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HARARE – Ecocash, a subsidiary of ZSE-listed Cassava Smartech, is engaging in shadow banking and is a Ponzi scheme that is creating fictitious money and balances in the system, FinX can report.

According to the Reserve Bank of Zimbabwe, Ecocash has agents who have an overdraft on their Ecocash accounts in excess of ZW$39 million, funds the central bank believes are then used to buy foreign currency and inflate the exchange rate.

In its notice of opposition in respect of the urgent application for a final interdict made by Ecocash, the RBZ governor John Mangudya said that the effect of the rapidly devaluing exchange rate on the Ecocash Platform is what is not only destroying the livelihood of the Ecocash users but also the economy of Zimbabwe.

RBZ is being represented by Kantor and Immerman while the case is is filed under HC30007 of 2020.

Ecocash wanted the High Court to stop the RBZ from suspending mobile money agents from conducting financial transactions and restore full functionality to those affected. RBZ froze all agents accounts that transacted for more than $100 000 per month with the exceptions of select categories. However the payment platform argued that this had crippled its business and said that the measures were not the solutions to the problems that the country was trying to solve.

The Financial Intelligence Unit had also directed that Ecocash undertakes the re-licencing and KYC enhancement exercise as it had shown it did not have in its custody all the required KYC documentation and information for all its agents. In a statement released today, Ecocash said it was not consulted on this directive which will impact its 11 million customers as well as to affect the services the platform offers.

According to the opposition affidavit, it has been discovered that unlike other electronic e-money platforms, Ecocash does not engage in immediate settlement of payments. This means that, on the Ecocash Platform, payments can remain outstanding for periods of between three to seven days, which Mangudya said unduly prejudices the same population that the platform purports to protect.

“What the general public does not know is what happens in the interim. عدد اوراق لعبة اونو The funds that have not been credited to the vendor or the recipient are then available for trading on the Ecocash Platform in the foreign currency market. In effect, the delays allow a certain person, who was the subject matter of an investigation, to buy and sell foreign currency in the intervening period.”

Mangudya said investigations have established that there are some Ecocash agents who have an overdraft on their Ecocash accounts in excess of $39 million. This begs the question: “How can an entity or individual have an overdraft on an electronic payment platform such as Ecocash?”

A schedule attached by the RBZ confirms that the agents are over drawn in excess of $39 million dollars. “Applicant has failed to proffer an explanation and is challenged to do so under oath.”

Mangudya said on this basis, Ecocash had breached the law thereby negating any rights that it has. “The applicant can only operate the payment systems in a lawful way. Operating the payment systems unlawfully through a Ponzi Scheme and shadow banking amounts to a violation of the law and does not give rise to any rights that the applicant can seek to enforce in the manner sought. محفظة بايير

The governor said that the threshold of $100,000-00 set by FIU eliminates the risk or the claim for irreparable harm that Ecocash is referring to. “It is telling that the applicant has not been candid with this Honourable Court by setting out in detail the so-called affected agents, their identity and their KYC documentation. العاب قمار للايفون This is because the applicant has not been complying with the law and is unable to produce this information. Without the information the applicant has not made out a case for an interdict.”

He added that Econet had also failed to disclose to the court the ratio of the top 100 agents in volume and monetary terms, to show that the concern of the Financial Intelligence Unit in respect of illicit money flow is well-founded. “The Applicant, through this application shows that it is abdicating its responsibility of ensuring that its system and its identified agents operate in terms of the law. This is a blatant display of arrogance, defiance and impunity.

Ecocash was set up in 2011 premised on the condition that it observes proper risk management practises and internal controls on an ongoing basis. – (FinX)