* Cbank Governor Gono says Mugabe empowerment law "madness"
* Move to take over foreign companies scaring investors
* Foreign banks should be protected
* Gono is Mugabe ally, opposition want him out
By Cris Chinaka
HARARE, March 18 (Reuters) - Zimbabwe"s central bankgovernor on Thursday attacked as "reckless" a drive by PresidentRobert Mugabe"s party to force foreign-owned companies to cedemajority shareholdings to local black businessmen.
Gideon Gono, a close ally of Mugabe whose position at thecentral bank is opposed by the president"s rival Prime MinisterMorgan Tsvangirai, said in a newspaper interview the move wasscaring off investment badly needed to revive a battered economytrying to recover from a decades-long crisis.
In an unusually fierce attack on policy strongly backed byhis benefactor, Gono told privately-owned weekly FinancialGazette newspaper that the black empowerment drive smacked ofracism, and would hurt efforts by a power-sharing governmentformed by Mugabe and Tsvangirai a year ago to fix the economy.
"The last six months have seen a flood of interest in theeconomy from both friends and foes and we must not disturb themomentum by being reckless, inconsistent and self-contradictorywith our pronouncements or with what we say or do," he said.
"You don"t shoot yourself in the foot during a time ofscarce capital availability and neither do you start any newwars before concluding battles of yesteryear," he said inreference to Mugabe"s controversial seizures of white-ownedcommercial farms which critics say triggered Zimbabwe"s economiccollapse.
"While national calendars and sovereign debates must neverbe dictated by outsiders, it is an act of madness for a familyto engage in domestic quarrels at a time when the whole villageis up and about its business," he added.
Gono -- whose money-printing policies at the Reserve Bank ofZimbabwe between 2003 and 2008 is blamed for the world"s worsthyper-inflationary crisis in the last 20 years -- said theempowerment drive had attracted unnecessary media attention of apeople "trying to dispossess one another of this and that".
The central bank governor called for protection forforeign-owned banks like Barclays BAC.L, Standard Chartered(STAN.L), Central African Building Society owned by Old Mutual(OMLJ.J), and MBCA owned by South Africa"s Nedbank (NEDJ.J),which he said were targets of "vulture-style" seizures by somecartels of black businessmen.
"The firm policy position of the Reserve Bank is that allexisting foreign-owned banks must be left under the currentparentage ownership to optimise on the capacity of domesticeconomy to penetrate international financial markets," he said.
"Our political leaders must take the lead in openlycondemning what we see as self-centred approaches that areevolving under the guise of indigenisation and empowermentdrive."
Gono said the central bank was ready to award new licencesto blacks to run their own banks, and suggested Zimbabwe couldpursue a programme of empowering historically disadvantagedblacks by giving them preference in government contracts whileallowing some joint ventures with foreigners on awilling-seller-willing buyer basis.
Tsvangirai"s Movement for Democratic Change (MDC) says it istrying to persuade Mugabe"s ZANU-PF party to shelve theempowerment law, and Gono said he hoped current publicconsultations on the programme would also help the government onhow to tackle the issue.
Asked whether investors were justified in their fears ofZimbabwe"s black empowerment drive, he said: "Absolutely, thosefears are justified in the sense that most of those to beaffected came in as a result of the country calling on them tocome in and invest in our landscape."
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