ZIMBABWEAN President Robert Mugabe has promised the government will deal firmly with corrupt financial institutions involved in an upsurge of fraud, the official Herald newspaper said yesterday. ?We will not allow lawbreakers and corrupt characters to get away with their illegal activities. We will deal with them,? the paper quoted Mugabe as saying after donating computers to a school in the central town of Kadoma.

Zimbabwe is mired in an economic crisis blamed on mismanagement by Mugabe?s government. Analysts say he may crack down on corruption to boost his ZANU-PF party?s chances in a parliamentary election next year. A Harare magistrate was due to rule on Wednesday on a bail application by a businessman and senior ZANU-PF member arrested on Saturday on charges of interfering with a major fraud probe.

Laywers for Philip Chiyangwa, a ZANU-PF legislator and provincial chairman, said his arrest had been engineered by political opponents amid feuding over who should succeed Mugabe if he stands down. Local media have reported splits within ZANU-PF as debate intensifies over Mugabe?s successor. He turns 80 in February and has hinted he might retire.

Police suspect Chiyangwa of withholding vehicles key to investigations into allegations that two directors of the asset management firm ENG Capital cheated investors of billions of dollars. State prosecutors say the directors used the money to source foreign currency from the black market to import personal vehicles. Chiyangwa has denied any wrongdoing saying he intervened in the ENG matter merely to ensure a political and legal settlement that did not harm the programme.