Suspicious financial flows passed through Zimbabwe, South Africa, and Mauritius on their way to the United Kingdom.
Kudakwashe Tagwirei, a business tycoon and adviser to the president of Zimbabwe who has been accused of numerous acts of corruption, was able to transfer questionable funds from the Reserve Bank of Zimbabwe to the City of London using a combination of fronts, allegedly false invoices, and offshore financial façades, according to a joint investigative report by The Sentry and Open Secrets.
The report, “Fronts, Fakes, and Façades: How South African and Mauritian Enablers Helped Move Millions from Zimbabwe to Britain,” focuses on three payments that secured Tagwirei’s purchase of two Zimbabwean mines—Bindura Nickel and Freda Rebecca Gold Mine.
Tagwirei, already surrounded by corruption allegations at the time of the deal, sought to create an offshore empire built on Zimbabwean mining.
Tagwirei’s deal may not have been possible without enablers—South African company directors, a Mauritian management company agent, a Cayman Islands investment fund, banks in numerous jurisdictions, and the company administrators in the United Kingdom—that, wittingly or unwittingly, facilitated Tagwirei’s purchase of the two mines.
Many of these actors knew that Tagwirei was behind the deal. Some designed structures that had the effect of obscuring his involvement.
Others should have suspected him of being involved and questioned him based on the facts they had.
“By the time of these transactions, Tagwirei had been linked to two alleged corruption scandals in Zimbabwe,” said Nick Donovan, Senior Investigator at The Sentry. It takes experts asking the appropriate questions to stop possibly unlawful cash flows. Many don’t, as evidenced by this report.
“The role of professionals around the world in facilitating dubious money flows, whether knowingly or unknowingly, is a key contributor to the outflow of resources from poor countries like Zimbabwe to rich ones like the United Kingdom,” said Michael Marchant, Head of Investigations at Open Secrets. It is crucial that regulators move quickly and forcefully to hold these facilitators accountable.
Estimates suggest that Zimbabwe loses between US$500 million and US$1 billion every year to illicit cross-border transactions. The documents reviewed in connection with this investigation suggest that the transactions to buy the mines are a textbook example of how money moves from some of the poorest countries on earth into some of the richest via enablers and a lax legal framework in the offshore world.
The investigative report reveals how Tagwirei used Sotic International, a Mauritian company that documents suggest was his front, to buy the mines for $29.5 million (R431 million, £23 million) from ASA Resource Group (ASA), a bankrupt firm that was being run by British company administrators Duff & Phelps (now known as Kroll). These purchases were made in three payments with each stage involving behaviour that raises questions.
Sotic’s Zimbabwean subsidiary, Landela Investments, obtained hard currency at a favourable exchange rate from the Reserve Bank of Zimbabwe (RBZ) when cashing in a $60 million portion of a large Treasury Bill given to Tagwirei’s company, Sakunda Holdings, with Landela informing the RBZ that some of the funds were required to purchase Bindura Nickel.
South African directors created invoices for exports that could not be found in Zimbabwe’s official customs records to get money into Mauritius for Sotic’s second £12 million payment, raising questions about whether trade misinvoicing, a technique commonly used in trade-based money laundering, had occurred.
For the final £8.7 million payment, Tagwirei moved his money into Sotic via a complex offshore façade that had the effect of disguising the source of funds.
After Tagwirei was sanctioned and accused of corruption by the US government in 2020, control of the two mines shifted from Sotic to Kuvimba Mining, which in 2021 was 65 percent owned by the Zimbabwean state and 35 percent owned by companies and trusts linked to Tagwirei.
The illicit activities revealed in this report have grave consequences for people in Zimbabwe, one of the poorest countries in the world. In 2022, the World Bank estimated that the proportion of people in Zimbabwe living on less than $1.80 per day rose from 23 percent in 2011 to around 50 percent in 2019.
Michael Marchant, Head of Investigations at Open Secrets, said: “As corruption has deepened in Zimbabwe and illicit financial outflows have gathered pace, extreme poverty and hunger has grown. In a story like this one of complicated and opaque money flows, we must not lose sight of the real human cost of these activities. Challenging the networks that enable the status quo is vital for social justice in Zimbabwe.”
Dr. Charles Cater, Director of Investigations at The Sentry, said: “This investigation points a bright spotlight on the role of legal and financial professionals who enable illicit financial flows. Policy action, such as establishing beneficial ownership registries and targeting enablers with anti-money laundering legislation, is urgently needed in countries both rich and poor.”
This report relies heavily on financial records and correspondence, provided by Christopher Fourie, an active participant in the ASA deal. Fourie later became a whistleblower and handed information over to authorities in 2021. The Sentry and Open Secrets reviewed almost 2,000 emails and documents and obtained further information from interviews, public records, and other sources.
Open Secrets is a non-profit organisation which exposes and builds accountability for economic crimes through investigative research, advocacy, and the law. The Sentry is an investigative organisation that tracks corruption.
Source | ZimLive | Additional Reporting By Kells ZiMetro News
