Wanted: Financial services adjudicator

Tapiwa Maswera Correspondent
The tragedy regarding 2008 is not that policyholders and pensioners lost their money. No one could have foreseen it.

No one really understood what was happening then, the loss could not have been prevented.

The tragedy is not even that when a Presidential commission of inquiry investigated and reported on the matter, we discovered that a great wrong had happened. We always suspected that something seriously wrong had happened.

The real tragedy is that we did not have the courage to retrospectively correct the great wrong that had been done.

In hindsight, we should have always known that correcting the wrongs of a money system are difficult. This is why we urgently need the services of a financial services adjudicator in Zimbabwe.

To make sure that the wrongs of the financial system are corrected immediately.

The power of money

Money should always be understood in terms of power. The financial services industry is a powerful player in politics. It has power over both the customer and Government.

By divorcing customers from their government, it can make people to expend their energies on fighting over questions of no importance. While the real question of what will happen now that we know who benefited from their assets remains unresolved.

A pound of flesh

The banking industry has its roots in the 16th century. Power in the 16th century was held by feudal lords and kings. And it was shifting to the banks. It is a scenario which Shakespeare captures eloquently in “The Merchant of Venice”.

And by a twist of fate, it was the Jews who owned banks. The Jews had been excluded from the power system. They were not allowed to own land. So they survived by lending money.

The danger to anyone who mortgaged their land to banks, was obvious. Today, it is trite that banks have broken the feudal monopoly on power.

Insurance, orphan assets and bank created money

The insurance industry only established itself in the 18th century. Antonio the merchant is not insured. Insurance started and flourished during the days of the gold standard. All units of currency were equal because they all represented a certain weight of gold.

This is no longer the case. In 1970, President Nixon of the United States dumped the gold standard. A unit of currency’s ability to purchase, depends on when it was printed. Money represents nothing, but a decorated piece of paper, with a number on it. The banking system can create unlimited amounts of money. This loophole has allowed insurance companies to accumulate large sums of money which they inappropriately call “orphan assets”.

They do this by simply swapping older valuable dollars for cheaper newer and crisp, but less valuable ones. It’s counter-intuitive.

The yellow slave, visible divinity

In “Timon of Athens”, Shakespeare, in the days when money was gold remarks that money will make black white, foul fair, wrong right, base noble, old young, cowards valiant. The yellow slave, as he calls it will knit and break religions, bless the cursed, put thieves in places of honour and give them title.

Money puts odds upon the rout of nations. Money possesses the property of buying everything or turning everything into its opposite, hence its visible divinity. Money, Shakespeare says, is the common prostitute — because it is the common procurer for people and nations. This is a very deep and fundamental understanding of money. We need to master how to make it. Not just how to use it.

Money for nothing and abuse of power

In our world today, our money system allows banks to create money out of nothing. It’s called fractional banking. Insurance companies too can make money without creating value for the policyholder.

They can do this by exchanging old valuable units of currency for new less valuable ones in an inflationary environment. Money is a source of immense power.

In a democracy, all power vests in the people. And its accessed when you create value for them. The free money that banks create imply power which is not accountable to the people. Ditto the “orphan assets” that insurance companies accumulate.

It allows these institutions to pervert democracy. They can take advantage of their customers with impunity.

Recourse to a court system is not very helpful. Among the millions who lost their entire life savings in 2009 are thousands of lawyers. Not one of them has seen fit to go to court to get justice.

Enter the beautiful Portia

In “The Merchant of Venice”, the conundrum is solved by the lovely Portia. As the vengeful Shylock moves in for the kill, she stops him dead in his tracks.

The contract between Shylock and Antonio did not talk about spilling blood. Yes, the contract allowed him to get his pound of flesh. But not to spill blood. No! Shylock is shocked. And stopped. The story ends happily with love restored.

Financial services adjudicator

There is no love lost between policyholders and pensioners who lost money in 2009 and the service providers who gorged on the assets that survived. Many died in abject poverty. Others eke out a miserable existence without the pensions they thought would make their retirement comfortable. The entire population of Zimbabwe has lost faith in our contractual savings industry and the financial system.

Is there a way out? I would like to believe the appointment of a financial services adjudicator is an important starting point.

It gives financial services customers a way to enforce their benefit rights. But more importantly, it levels the playing field. Institutions will think twice before selling predatory products.


Allowing our financial services customers to assert their rights freely is critical. It is an important pillar of a viable financial services industry. It indicates that we will be doing things differently in future. And the facility should be extended to former policyholders and pensioners. It’s an important step in dealing with the tragedy of 2009.

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