Africa

Tag Archives

French trial reveals vast wealth of Equatorial Guinean president’s son

Teodorin Obiang, accused of plundering $115m, owns luxury properties, yachts, cars and Michael Jacksons crystal glove

The days of the Bugattis, the chateau Ptrus and the fine Parisian restaurants may be over for Teodorin Obiang at least in western Europe.

The son of Equatorial Guineas leader is due to go on trial for corruption and money laundering in a landmark case in France.

Obiang, the 47-year-old vice-president of the oil-rich but impoverished African country, faces an array of legal cases across Europe as authorities on the continent investigate the sources of his vast wealth and uncover new and even more extravagant ways that he spent some of it.

US officials have already forced Obiang to forfeit property after accusing him of shamelessly looting his country. In a settlement, Obiang agreed to hand over more than $30m (24.5m) worth of properties, including a vast villa in Malibu, California, and a dozen luxury cars.

Obiang, however, managed to keep his $38m private jet and collection of Michael Jackson memorabilia, which includes a crystal-studded glove.

Two
Two Ferraris belonging to Teodorin Obiang are towed off the freight zone by police at Geneva airport. Photograph: Laurent Gillieron/AP

In Europe, Dutch, Swiss and French authorities have seized property including Obiangs 76-metre yacht, the Ebony Shine, and a mansion in Paris estimated to be worth $200m.

The mansion includes a cinema, spa, hair salon and sports room. Bathroom taps were covered in gold leaf while original paintings by Degas and Renoir hung on the walls.

Cars seized in Geneva included a Swedish-manufactured vehicle worth $2.8m and a $2m Bugatti Veyron.

French prosecutors allege that Obiang plundered nearly $115m between 2004-11 when he was agriculture minister for his father, Teodoro Obiang Nguema Mbasogo, who has been in power since 1979.

The post gave Obiang control over the lucrative timber industry. Proceeds from a so-called revolutionary tax imposed on wood sales was transferred to his personal accounts, prosecutors allege.

In court on Monday, one of Obiangs lawyers asked for the trial be suspended on the grounds that his client had not been given enough time to properly prepare his defence, having been summoned to trial just three weeks ago.
Were not talking about a moped theft charge, Emmanuel Marsigny told Reuters.

The trial marks a major shift for France, which has long turned a blind eye to corrupt African dictators buying Parisian real estate, enjoying spending sprees in the capital or on the Cote dAzur, or simply fleeing to the country when in difficulty.

The policy was seen as part of a wider attempt by France to maintain influence in former colonies, but also in Africa. Equatorial Guinea is a former Spanish colony.

A
A crystal glove worn by Michael Jackson at the 1983 Grammy awards. Photograph: EPA

The change is in part due to evolving popular and political values, greater media scrutiny at home and abroad, and nearly a decade of lobbying by anti-corruption campaigners.

In the beginning, there was simply no political will in France to listen to us, wrote one of the campaigners, William Bourdon from the Sherpa group, in September.

The move by Swiss authorities also indicates a tougher stance, observers say.

Obiang is expected to plead not guilty in the Paris court to charges of laundering the proceeds of corruption, embezzlement and misuse of public funds.

He has always said he earned the money legally in his country, Marsigny told Agence France-Presse news agency.

The defendant, who has failed with previous legal efforts to stop the trial, is not expected to attend or serve any sentence if he is convicted.

Campaigners say the case will set an important precedent and has cost Obiangs father diplomatic capital in the region.

Now the longest-serving African ruler, Teodoro Obiang Nguema Mbasogo made his son vice-president in June just after being re-elected with his usual score of more than 90% of votes cast.

Born in 1969, Obiang was 10 when his father overthrew his bloodthirsty uncle, the dictator Francisco Macas Nguema. He has denied all wrongdoing and, during one of his appeals against the French trial, a lawyer acting for the French government said his client had a compulsive need to buy.

Obiang is known to have bought a crystal-covered glove worn by Michael Jackson during his Bad tour, which is worth hundreds of thousands of euros. Its whereabouts are unclear.

The US justice department said he embarked on a corruption-fuelled spending spree in the United States after racking up $300m through embezzlement, extortion and money laundering.

Read more: https://www.theguardian.com/world/2017/jan/02/french-trial-teodorin-obiang-wealth-equatorial-guinea


Inside Orania, South Africa’s whites-only town

(CNN)Orania is not prime real estate by any stretch of the imagination.

The settlement west of the Orange River in Northern Cape, South Africa lies on arid and weather-beaten land; baked by the harsh summer sun and frigid through the dry winter. It’s farmable, but not easy, requiring strong backs and calloused hands.
Rising above the scrub the town’s symbol flutters atop a flagpole, a young boy rolling up his sleeves, preparing to knuckle down and transform this landscape. It’s a romanticized image for a romanticized notion: a place where Afrikaners can be Afrikaners. Tough, resourceful and making do; descendants of Dutch settlers and proud of it.
A remote farming town of approximately 1,300, Orania by this description is unremarkable. Except it is not. Instead, the community has gained a notoriety beyond its modest means as a parochial enclave within the Rainbow Nation, where the dream of an Afrikaner state is alive and well.
Orania, you might have guessed, is Afrikaner-only. And by extension, whites-only.
It’s also growing.

Culture, Inc.

Beginning life in 1990 during the last gasps of apartheid, the Afrikaner town was the brainchild of Carel Boshoff III. The son-in-law of H.F. Verwoerd, the architect of apartheid, he and a number of families purchased an abandoned workers’ village with lofty ambitions that one day hundreds of thousands of Afrikaners might call it home.

'The

“There is only one truly Afrikaans-speaking university remaining of the 22 institutes for higher learning that there used to be,” Hermann Giliomee, extraordinary professor of history at the University of Stellenbosch, tells Norman. The BBC also reported in 2015 that the university faced calls to drop Afrikaans.
In its embattled state, Afrikaner history becomes hagiography. The efforts of the pioneering Voortrekkers, who traveled inland fleeing the British and fought against Zulus in the Battle of Blood River, are lionized by some present day Afrikaners, who identify with their struggle.
“We are the white tribe of Africa and I want my people to understand that we have as much right to be here,” the Reverend Schalk Albertyn, once an anti-apartheid activist, tells Norman.

Gideon de Kock, curator of the Orania Museum, circa 2013.

A minority ruler, in the space of three decades, has reverted to a minority movement. And “a minority,” writes Norman, “can always become a majority through isolation.”
    For some, Orania is a solution, for others a symptom of the failings of post-apartheid South Africa. Its residents are largely conservative and Christian. Between them they’re disillusioned and disenfranchised, wary of the government, its political structures, policies and leaders. The system, they say, is not working for them.
    The safety net of social welfare for Afrikaners, including jobs and houses, which maintained the image of the “good white,” is no more. Affirmative action has shaped a more diverse workforce, proportional with the racial breakdown of South Africa. However some white people with Afrikaans as their first language, who make up about 5% of the population according to the 2011 census, say they feel squeezed out (despite unemployment data suggesting relative stability).

    (NB: The South African government defines “African” as black, “Colored” as mixed race, and “Indian/Asian” as of South Asian or Asian extraction.)
    Today there are as many as 400 white informal settlements in South Africa, according to charity Helping Hand, something once unthinkable. But that doesn’t give the complete picture. Fact-checking website Africa Check analyzed the 2011 census and found that while 7,754 white households lived in informal settlements, 1,868,325 black African families lived in similar circumstances.

    Kobus Gouws and Caspar Muller, step-brothers interviewed by Norman and residents of Sunshine Corner, a township outside of Pretoria.

    But empathy is lacking, suggests Norman.
    “Many Afrikaners … still have a feeling of entitlement,” she argues. “They may realize that things are just as bad for the majority of the black population, but they’re used to being in a place where that couldn’t happen to a white person. That’s what they’re comparing it to: comparing themselves to the past, rather than their poor contemporaries.”
    “Many poor and uneducated Afrikaners I spoke to claimed they would prefer to starve rather than become the maid or gardener of a black middle-class family,” Norman writes.

    Small happiness

    Some Afrikaners come to Orania out of desperation, Norman told CNN. Much of her time was spent in Kleingeluk (“Small Happiness”), a block of residences for single male workers brought in from the fringes of society.
    “[Orania takes] on people who struggle with drug abuse, alcohol abuse, former felons, or just the unemployed and uneducated,” says Norman. Put to work largely farming and building, there’s zero tolerance of substance abuse for these men who had been “total ‘come-aparts’.”
    “This is a last resort for them; a place where they can find work, pick themselves up. Some only stay to sober up. They work, save a few rand, then move on. Others come because they feel they have no opportunities in South Africa,” the author told CNN.

    Riaan, one of the residents of Kleingeluk, small apartments for single male workers in Orania.

    “For some it’s been a good thing, and it’s definitely better than the alternative — although that’s not to say it’s ideal,” she adds, describing their living conditions on the edge of Orania as “pretty deplorable.”
    Describing the whole community, Norman says she doesn’t think they’re the most racist Afrikaners in South Africa: “There’s more racist areas, and certainly more racist people than these guys in particular.
    “But that doesn’t mean they’re role models in any way.”

    Crime and punishment

    Norman’s interviewees frequently cite violent crime as a concern. The numbers, on the whole, are chastening. Murders nationwide increased 4.9% between April 2015 and March 2016 to 18,673, the equivalent of 33.9 per 100,000 of the population — a rate nearly seven times higher than the United States in 2015.
    There have been claims of high levels of black-on-white murder in post-apartheid years. However Africa Check looked into these claims in 2013, using figures dating back to April 1994. Among its conclusions, it said “the fact is that whites are less likely to be murdered than any other race in South Africa.” Further, “the current murder rate of white South Africans is also equivalent to, or lower than, murder rates for whites recorded between 1979 and 1991.”

    Stubble burning on one of Orania’s farms, circa 2003.

    Breaking down victim-perpetrator relationships, only 2.3% of total murders were committed by “unknown people from outside” and 12.6% by “unknown community members” in the Statistics South Africa Victims of Crime Survey 2013-2014 (the last year for which this breakdown is available).
    The latter told CNN that “if close co-operation can be reached and a common interest in [a] bigger self-determining region be cultivated, [a land] corridor can become part of the project.”
    “It may be possible for a strong and successful Orania to play a leading role in such a future coalition between communities with related cultural backgrounds,” writes Boshoff, although concedes “it seems quite far off at the moment.”
    Far off, perhaps, but if the events of 2016 have emboldened anyone, it’s been fringe movements.
    “In the beginning […] we were regarded as mad,” Boshoff tells Norman. “Now that has changed dramatically.”

    Read more: http://www.cnn.com/2016/12/20/africa/orania-south-africa-afrikaners/index.html


    George Clooney-backed report: South Sudan president profits from civil war

    The simple fact is theyre stealing the money to fund their militias to attack and kill one another, Clooney told a press conference in Washington

    The president of South Sudan is directly profiting from the countrys civil war and even his 12-year-old son has a stake in a business venture, according to a two-year investigation commissioned by the actor and activist George Clooney.

    Salva Kiir, his former deputy Riek Machar and associates of both men have looted the country in accumulating wealth that includes multimillion-dollar mansions, top-of-the-range cars and stakes in a number of overseas businesses, a report by the US-based watchdog The Sentry claims.

    Some of the family members and close associates have posted photos of themselves on social media on planes, in five-star hotels and in luxury vehicles even as South Sudan descends into a violent kleptocracy that has claimed tens of thousands of lives and forced 2.5 million people from their homes.

    South Sudan gained independence from Sudan in 2011, when Hillary Clinton was secretary of state, but plunged into conflict soon after Kiir fired Machar as vice-president in 2013. Both sides are accused of orchestrating mass rapes, child soldier recruitment and massacres of civilians. A peace deal reached a year ago under international pressure has been violated repeatedly by fighting, and Machar fled the country last month.

    The simple fact is theyre stealing the money to fund their militias to attack and kill one another, Clooney told a press conference in Washington yesterday before a meeting with Barack Obama.

    The evidence is thorough, it is detailed and it is irrefutable. It involves arms dealers, international lawyers, international banks, international real estate and it is because of these international actors that we are also able to provide solutions to help end this criminal behaviour to protect innocent civilians, he said.

    George
    George Clooney: The evidence is thorough, it is detailed and it is irrefutable. Photograph: Molly Riley/AFP/Getty Images

    The report, entitled War Crimes Shouldnt Pay, says Kiir earns about $60,000 per year but alleges he has spent a fortune on properties outside the country including a two-storey, 460-square-metre villa in the gated community of Lavington, a comfortable area of Nairobi. Machar reportedly has a home in the same neighbourhood.

    The document says: The key catalyst of South Sudans civil war has been competition for the grand prize, control over state assets and the countrys abundant natural resources between rival kleptocratic networks led by President Kiir and (former) Vice-President Machar.

    The leaders of South Sudans warring parties manipulate and exploit ethnic divisions in order to drum up support for a conflict that serves the interests only of the top leaders of these two kleptocratic networks and, ultimately, the international facilitators whose services the networks utilize and on which they rely.

    Kiirs 12-year-old son held a 25% stake in a holding company formed in February this year. Overall, there was evidence that at least seven of Kiirs children, as well as his wife, have held stakes in various business ventures, the report said. Journalists were shown several passports for individuals who gave their occupation as presidents son.

    Clooneys fellow actor and campaigner Don Cheadle said: The Sentry has found evidence that these top officials responsible for mass atrocities in South Sudan have managed to accumulate fortunes and have been involved in illegal transactions, insider deals and outright fraud.

    Immediate family members of President Kiir and his wife have held interests in almost two dozen companies operating in oil, mining, construction, gambling, banking, telecommunications, aviation and government and military procurement.

    The Sentry said its undercover investigators pored over thousands of pages of legal records, corporate filings, financial statements and other official correspondence, tracked suspects on social media and used satellite imagery to gather and analyse data. The researchers travelled to locations including Melbourne, Adelaide, Kampala, Juba, Cairo and Nairobi to gather evidence and interview hundreds of experts and eyewitnesses.

    The investigation focused on top officials with command authority over those responsible for mass atrocities, he added. They have accumulated personal fortunes despite modest salaries. Gen Paul Malong, the chief of military staff, owns two villas in Uganda in addition to a $2m mansion in a gated community in Nairobi, according to the report, which cites his annual salary as roughly $45,000.

    Among Kiirs associates, Lawrence Lual Malong Jr, 28, describes himself as Young Tycoon and Smart Boy for Life, according to the report, which includes social media photos of him wearing gaudy blue, purple and yellow suits in the first class section of various planes.

    Veteran activist John Prendergast said: This is not a study of a few corrupt officials in Africa What it is is an attempt to get at the nexus of what drives violent conflict and mass atrocities in South Sudan: the connection between endemic corruption and deadly violence and about how these networks benefit from a system thats built on corruption and uses extreme violence to keep in place.

    The report claimed individuals and major firms outside South Sudan had facilitated the deadly corruption. It said there was hard evidence of foreign companies making direct payments to the bank accounts of high-ranking South Sudanese generals. The banks that process the transactions also play a role, it said. Cheadle added: These companies and banks can no longer say they didnt know.

    Clooney and his colleagues said they would present the findings to Obama and urge the international community, including South Sudans neighbours, to crack down on banks that fail to stop dubious transactions, and impose asset freezes on those responsible for human rights violations.

    Contacted by the Guardian, Ateny Wek Ateny, a spokesperson for Kiir, said he was reading the report. We will be able to respond tomorrow. Not now.

    Read more: https://www.theguardian.com/world/2016/sep/12/george-clooney-report-south-sudan-president-civil-war


    ExxonMobil under investigation over lucrative Nigerian oil deal

    Exclusive: documents obtained by the Guardian show Nigerian agency looking into 2009 lease agreement for countrys Crown Jewels oil fields

    ExxonMobils deal to secure the Crown Jewels of Nigerian oil reserves is under investigation by the west African countrys economic and financial crimes commission, according to documents obtained by the Guardian.

    Exxon, the worlds largest oil company, secured the lucrative oil rights in 2009 by beating out Chinas fourth-largest oil producer for access, despite apparently underbidding its rival bid by $2.25bn.

    A letter provided to the Guardian addressed to an Exxon subsidiary from Nigerias federal ministry of petroleum resources shows the accepting of a 2009 bid of $1.5bn for a 20-year lease on the Oso, Ekpe, Edop and Ubit oil fields, which produce about 580,000 barrels a day between them close to a third of Nigerias crude oil production of about 1.8bn barrels a day, according to Opec.

    Local Exxon rival Sunrise Power & Transmission, at the time a consortium of Nigerian and Chinese interests that included the Chinese National Offshore Oil Corporation (CNOOC), bid $3.75bn for the same rights, according to a letter from Sunrise to the Nigerian president.

    The deal was reported to the Nigerian authorities by Lanre Suraju, a Nigerian anti-corruption activist and chairman of the Civil Society Network Against Corruption. Suraju said he was passed documents related to the deal by a concerned citizen after his June 2015 petition to investigate the bid was made public. Suraju was the recipient of a letter dated 17 August 2015 in which the authorities confirm they are investigating the deal.

    lanre suraju letter
    The letter to activist Lanre Suraju confirming the investigation of Exxons deal.

    The documents were given to the Guardian by international watchdog group Global Witness, which said it had confirmed the investigation with the Economic and Financial Crimes Commission (EFCC). The EFCC told the Guardian it could not comment on the existence of an investigation, though Suraju said that as of last week the EFCC has progressed impressively on the matter.

    Revelations about the investigation come at a sensitive moment for the oil industry: the US Securities and Exchange Commission (SEC) is currently considering a rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act that would require energy companies to disclose the specific payments, down to the level of the individual project, that the firms make to foreign governments in order to secure lucrative mining and drilling rights.

    Dominic Eagleton of Global Witness said his organization wants to support greater transparency in international oil deals and hopes the SEC rule passes as proposed. Its vital that the US introduces strong transparency rules to bring these deals into public view, enabling citizens in Nigeria and other oil-rich nations to hold their governments and companies to account for how the money is used, he said.

    Exxon has argued to the SEC that the new rule disregards a court ruling against the regulator and the many comments, concerns, and good-faith proposals for alternative approaches put forward by industry.

    An internal memo signed by executives of the nations state-run oil firm, the Nigerian National Petroleum Corporation (NNPC), shows Exxons local subsidiary Mobil Producing Nigeria (MPN) originally tried to acquire a 25-year license to receive billions of dollars of oil for just $75m, saying they had expected the price for the lease renewal to be millions not billions.

    The three oil-mining leases, or OMLs, renewed in 2009 at the end of a 40-year lease, are for shallow-water offshore lots of oil-rich real estate labeled blocks 67, 68 and 70. Production at the properties is very high, according to reports. Assuming the leased properties generate that many barrels every day of the year at an average of $50 a barrel, the gross revenue from ExxonMobils 40% stake in the wells would come to $4.2bn annually. The properties also produce natural gas.

    Mobil Producing Nigeria takes strong exception to these allegations, Lauren Kerr, the operations media relations manager for ExxonMobil, told the Guardian. Mobil Producing Nigeria fully complied with the requirements outlined by Nigerian law for the renewal of oil mining licenses 67, 68 and 70. Nigerian law, as prescribed under the Petroleum Act, outlines the processes and procedures for an oil mining license renewal in the country. Within this framework an agreement between the Nigerian government and MPN was reached and legally executed.

    We have noted the same to Global Witness.

    The company adheres to the highest standards of business conduct, and to imply so without evidence is grossly irresponsible.

    Mobil Producing Nigeria memo

    CNOOC said it would not comment on the specifics of the deal, though spokeswoman Irene Gao said the company had learned from the experience: In the future, the Company will attach more importance to the organic development of overseas assets and further optimize its overseas portfolio, Gao told the Guardian.

    For the year ending 2015, ExxonMobil reported realizing $12.2bn from all of its Nigerian assets in sales and other operating revenue.

    Just two months before the renewal, the Financial Times reported that Tanimu Yakubu, economic adviser to Nigerias former president Umaru YarAdua, had said that Chinese bidders are really offering multiples of what existing producers are pledging [for licences] we love to see this kind of competition.

    But the leases stayed with Exxon to the consternation of Leno Adesanya, at the time the chairman of Sunrise Power & Transmission, a consortium of local and Chinese interests that included CNOOC.

    In the case of ExxonMobils OML 67, 68 and 70, our consortium offered $3.75bn for 40% equity interest in oil reserves, Adesanya wrote to Nigerias current president, Muhammadu Buhari, last July according to one letter provided to the Guardian. The letter goes on to say that the company had offered $18.75bn for a 100% interest in the same properties under the original agreements, the wells are a joint venture in which 40% of the oil goes to Mobil Producing Nigeria, and the other 60% to Nigerias state oil company.

    A letter from 31 August 2009, little more than two months before the acceptance of the lower bid, details the $18bn bid from Sunrise and seems to assert the Chinese firms ability to handle the daunting logistics of changing ownership from Exxon, though it does not directly refer to its competitor: It is important to emphasize that Sunrise, CNOOC and the other constituent members of the Consortium are not only capable of funding petroleum operations in the respective OMLs, but have the technical know-how to undertake and carry out petroleum operations as required by international petroleum oilfield practices.

    Exxons current rights are based on a disputed November 2009 deal, the negotiation of which was the subject of an inquiry by Nigerias now former oil minister Diezani Alison-Madeuke, who said at the time she would recall the agreement since they had only been signed by a junior minister, Henry Odein Ajumogobia, and had never been countersigned by the senior oil minister, the late Rilwanu Lukman. A letter from Ajumogobia sets the price of the Exxon deal at $1.5bn, though it was widely reported as costing only $600m.

    Alison-Madeuke, later the president of Opec, was arrested in London last October by Britains National Crime Agency as part of a corruption investigation. She was released on bail and did not appear before a magistrate in October, citing health concerns.

    The documents appear to include pages one and three of an initial agreement from Ajumogobia confirming the renewal of the leases. Page two has been withheld; Suraju said he believes that it contains terms outlining the construction of a power plant, which the government presented as evidence that it had driven a hard bargain when pressed to investigate the deal for corruption.

    Sunrise Power letter

    Local news reports citing Nigerian officials value the power plant at $900m, which Suraju believes accounts for the difference between the $600m reported and the $1.5bn described in the letter to MPN from Ajumogobia.

    The design contract for the power plant was awarded in 2009. In 2010, the NNPC announced groundbreaking on the project. An article published Tuesday described progress on the power plant, located at ExxonMobils Qua Iboe terminal in Akwa Ibom state, as slow.

    One of the documents obtained by Suraju is a memo signed by officials of the national oil firm, the NNPC, describing the negotiations with Exxon. [T]hese blocks, particularly OMLs 67, 68 and 70 are the most prolific portfolio of hydrocarbon assets in offshore Niger-Delta, the governments representatives said. They are rightly referred to as the Crown Jewels.

    Exxons lease on the blocks was set to expire in November 2009, and renegotiating that agreement was of paramount importance to the west African nation. [T]hese blocks represent the last remaining shallow-water resources of this magnitude in the Nigerian continental shelf and therefore lease renewal represents a unique opportunity for value capture for the Government, the reports authors wrote. Assuming a long-term minimum oil price of $50 a barrel (Brent crude was trading for just over $50 a barrel on Thursday), the government asked for $2.55bn.

    Read more: https://www.theguardian.com/business/2016/jun/23/exxonmobil-nigeria-oil-fields-deal-investigation


    Zimbabwes trillion-dollar note: from worthless paper to hot investment

    The central bank of Zimbabwe issued $100,000,000,000,000 notes during the last days of hyperinflation in 2009, and they barely paid for a loaf of bread. But their value has shot up

    Whats been one of the best-performing investments of the past seven years? Shares in Facebook? London property? Bitcoin? Up there with the best, believe it or not, are Zimbabwean 100 trillion dollar notes.

    A trillion, by the way, is a million million. There are 12 zeros in a trillion. Add another two to reach the total on the Zimbabwean 100 trillion dollar bill, the note with the most zeroes of any legal tender in all recorded history. The bills circulated for a few months in 2009 at the zenith or, more precisely, the nadir of one of the most terrible instances of hyperinflation in history, before Harare finally abandoned the Zimbabwean dollar in favour of the South African rand, the US dollar and several other foreign currencies.

    At one stage a hundred trillion dollar note would not even cover a bus fare. You needed a bale of notes just to buy a few household essentials. However, its thought that only a few million of them were ever printed.

    I remember buying one on eBay. It is on the wall in my office. John Wolstencroft, a private investor, bought a batch of them to give away. I always found they were a good conversation starter, he says.

    In 2010-11, Wolstencroft was living in New Zealand where he joined an investment club, made up mostly of locals and US expats. At the time, the great central banking experiment of quantitative easing and a 0% interest rate policy was making a lot of people nervous. He brought a handful of the Zimbabwean notes along to his first meeting to give out as a way of saying thank you for letting him join the club, but there were more people there than he was expecting.

    I didnt have enough notes to go round, he says. People started offering me money for them. I tried to explain they were just a gift, but they just upped their offer. I realised then these notes were going to become a collectors item.

    John
    John (left) and Vishal Wolstencroft sell trillion dollar notes from the defunct Zimbabwean currency to collectors

    Wolstencroft went away and bought several hundred more notes. The price had already risen since his first purchase; they were 1.50 each. He gave some out to members of the club, as promised, and kept the rest. When he returned to Britain he gave some to a financial company he works with. One of the independent financial advisers used to give the notes out to prospective clients to show why they should invest away from cash in a diverse range of assets, such as real estate, gold, stocks and shares, he says. Over the long term, cash loses its value.

    Wolstencroft wasnt alone in seeing the potential of trillion dollar notes. The Wall Street Journal reported in 2011 that David Laties, owner of the Educational Coin Company in New York, had speculated about $150,000 (104,000) importing the notes from Zimbabwe, sensing they would become the best notes ever. Frank Templeton, a retired Wall Street equities trader, bought quintillions of Zimbabwe dollars (thats thousands of trillions) for between $1 and $2 each, via a broker from the Zimbabwe central bank. He would then sell them on for several times the price.

    Vishal Wolstencroft, Johns 12-year-old son, noticed late last year that these same 100 trillion dollar notes were now changing hands on eBay for as much as 40 each. He talked his father into a joint venture. Vishal is responsible for the listing, photographs, posting, packing and advertising, while father John supplies the goods. Their profits are shared 50:50. Business is good. According to Vishal, its quite a step up from his previous venture selling old toys at a local market stall. Most 100 trillion dollar notes fetch close to 20-25 on eBay, but set against the 1.50 paid by Wolstencroft in 2011 it is a striking return. In percentage terms, it is close to 1,500%, compared with the miserable 5% rise in the FTSE 100 over the same period.

    In an extraordinary irony, the 100trillion dollar note a symbol of financial mismanagement on a colossal scale has turned into one of the best-performing asset classes of recent years.

    The disappearing currency

    A
    A Zimbabwean lady with a basketful of cash Photograph: Tsvangirayi Mukwazhi/AP

    When the Zimbabwean dollar first came into existence in 1980 it had a similar value to the US dollar, writes Patrick Collinson. But by 2009, $1 was worth Z$2,621,984,228, 675,650,147,435,579,309,984,228. TheBank of England worries if inflation in the UK goes over 2% a year; in Zimbabwe it hit 79.6 billion per cent.

    The countrys central bank could not even afford the paper on which to print its worthless trillion-dollar notes. President Mugabe issued edicts to ban price rises, of comedic value were it not for the devastation that hyperinflation wrought upon the people. The miserably low savings and incomes of the impoverished population were wiped out; shopkeepers would frequently double prices between the morning and afternoon, leaving workers pay almost valueless by the end of the day.

    In 2009 the government scrapped the currency, leaving US dollars and South African rand as the main notes and coins in circulation. To this day, Zimbabwe still has no currency of its own, although the government last year offered to swap old deposit accounts into US dollars, giving savers $5 for each 175 quadrillion (175,000,000,000,000,000) Zimbabwean dollars.

    In an extraordinary irony, Zimbabwe now suffers among the worlds worst deflation, currently at -2.3%.

    Read more: https://www.theguardian.com/money/2016/may/14/zimbabwe-trillion-dollar-note-hyerinflation-investment


    Recent Tweets

    Call Now Button