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‘Looting at industrial scale’

Home Affairs Minister, Kazembe Kazembe said last year that US$100 million worth of gold was being salted away monthly, through IFFs.

RESOURCE campaigners this week revealed statistics exposing a far worse mineral revenue bloodbath from illicit financial flows (IFFs), as they blamed ‘an unfit for purpose’ anti-graft watchdog and Zimbabwe’s judiciary for propping up ‘industrial scale’ plunder.

Mineral revenue write — downs out of IFFs could be as high as US$15 billion annually, according to Farai Muguwu, executive director at the Mutare based Centre for Natural Resource Governance (CNRG).

He said precision in tracking IFFs had improved through new investigations, such as Al Jazeera’s ‘Gold Mafia’ documentary, which stunned millions when it was released in March.

Before the investigations, the annual cost of IFFs to Zimbabwe was estimated at between US$2,7 billion and US$5,7 billion.

US$15 billion is higher than government’s aspirations to bolster mineral revenues to US$12 billion annually from December this year.

If achieved, this value will represent a 344% surge in mineral earnings from US$2,7 billion in 2017, the year President Emmerson Mnangagwa took power in a dramatic military backed coup.

United States-based investigative unit, the Sentry is among campaigners who have exposed complex mining deals, which are at the vortex of Zimbabwe’s elite’s attempts to stash billions offshore.

“It is looting at an industrial scale, IFFs are on the rise,” said Muguwu, as he slammed several state agencies mandated to fight smuggling for ‘making a complete mockery of our judiciary system’.

Farai Muguwu

The CNRG boss demanded the disbandment of Zimbabwe Anti-Corruption Commission (Zacc) for failing to combat the spiralling scourge.

Muguwu was responding to questions by the Zimbabwe Independent on the effectiveness of the country’s legal framework to tackle IFFs.

The country has a web of laws and institutions mandated to fight IFFs, but worries over their effectiveness have risen since Home Affairs Minister, Kazembe Kazembe said last year that US$100 million worth of gold was being salted away monthly, through IFFs.

This translates to about US$1 billion the value of losses annually.

However, campaigners like International Crisis Group had indicated that the estimation was far higher, placing it at US$1,5 billion.

“We have long surpassed the US$12 billion mining economy,” Maguwu said.

“It’s just that what is trickling into Treasury is insignificant compared to what is being smuggled.

“If you recall (the late former president Robert) Mugabe’s US$15 billion confession, read together with the gold mafia exposé, the Sentry report and various others produced by local CSOs, one is convinced Zimbabwe is losing in excess of US$15 billion in potential revenue annually. The country is well able to finance its own development agenda. The economic possibilities of Zimbabwe are limitless if IFFs are plugged,” Maguwu told the Independent.

Mugabe said in 2014 Zimbabwe had lost US$14 billion through IFFs within a decade.

His figure has been disputed, but many say it was based on intelligence advice.

“A big challenge that remains is enforceability of the anti-corruption laws. Zacc needs to be disbanded as it is not fit for purpose,” Muguwu said.

“Their inaction over the gold mafia (scandal) exposes them as a toothless and seriously compromised institution. While the ZRP and airport security have been doing their job professionally at times, the judiciary and the National Prosecuting Authority (NPA) have been a big letdown. Someone caught smoking marijuana will get a much stiffer penalty than a person caught smuggling minerals. It’s very hard to understand how certain smugglers were acquitted, making a complete mockery of our justice system,” Muguwu told the Independent.

“In 2012 Shmuel Kainan Klein, an Israeli pilot was caught red handed trying to smuggle more than 1 200 pieces of diamonds at Robert Gabriel Mugabe International Airport (RGMIA). According to the Kimberley Process (KP) Certification Scheme, of which Zimbabwe is a founding member, no diamond parcel can cross a border without an accompanying KP certificate from the exporting country. He didn’t have. Nevertheless, our courts and prosecutors connived to clear him. Henrietta Rushwaya is another case in point,” Maguwu said.

Zacc spokesperson, Thandiwe Mlobane said winning the war against IFFs required the combined efforts of everyone.

“The fight against corruption cannot be won by a single agency working as a “lone ranger” but requires collaboration and cooperation,” Mlobane said.

“In 2022, the commission received a total of 684 complaints of suspected corruption as compared to 1 501 received in 2021. The commission submitted to the NPA 134 dockets for prosecution. Thirty-nine of those dockets were on allegations of fraud, while 57 were on criminal abuse of duty. Twenty-nine cases were high profile. There were 23 convictions and nine acquittals.

“In 2022, Zacc submitted to NPA for asset recovery and forfeiture of ill-gotten wealth or proceeds of corruption, 25 case files with a value of US$28,1million. The assets comprised of buildings and vehicles. For 2023, the commission set a target of US$1 billion worth of assets to be recovered from proceeds of corruption. The commission is on course to achieve this target.”

Muguwu’s concerns were shared by Mukasiri Sibanda, a leading expert on IFFs who is the coordinator of the Stop the Bleeding Consortium.

However, he said IFFs were being compounded by a tough economic environment in Zimbabwe, which was forcing multinationals to scout for illegal ways of preserving value.

Complexities around mining industry taxation were also working against Zimbabwe, he added.

In October 2020, Henrietta Rushwaya, the president of Zimbabwe Miners Federation, was arrested at RGMIA while allegedly trying to smuggle six kilogrammes of gold to Dubai in her handbag.

She was acquitted, but was featured in Al Jazeera’s crack investigation telling its undercover reporters on a phone call that smuggling 100kg of gold each week would be no problem.

The federation she heads represents 1,5 million artisanal miners that are producing half of the country’s annual gold output.

Usually outspoken, Rushwaya has avoided commenting on Al Jazeera’s documentary.

However, a statement issued by her alleged fellow co-conspirator, ambassador-at-large and a presidential envoy, Uebert Angel Mudzanire claimed the voice heard in the documentary was not Rushwaya’s, but that of a decoy.

Mudzanire was at the centre of the Al Jazeera investigation.

“It is these decoys who posed as Henrietta Rushwaya, the first lady and the first son,” Mudzanire claimed in the statement.

Mineral theft was not only limited to smuggling, with legally obtained gems also proving vulnerable to being stolen.

In April, the Zimbabwe Independent reported that authorities had launched a probe into the whereabouts of Kainan Klein’s US$4 million diamonds parcel, which had disappeared after having been kept in the Minerals Marketing Corporation of Zimbabwe (MMCZ) vaults for over a decade.

Jonathan Samukange, the lawyer who represented Kainan Klein, told the Independent then: “At one point we had an appointment with all authorities involved in the matter after the acquittal of my client and we had a green light from the courts to get our diamonds back.

“That was when we realised that the parcel had been tampered with because there were no more customs seals.  The MMCZ was given two parcels for safe keeping, but we were shocked to see that the parcel had been collapsed into one.

“We raised a complaint with the judiciary and they promised to investigate the matter. Up to now, there has been no feedback.”

In an interview with the Telegraph (London) after his acquittal in 2012, an Israeli pilot said to be part of the scheme said he had been “framed”.

"I was framed and I know who framed me but I can't talk about this now," he said.

"I was arrested in transit and was only on the ground for 15 minutes,” he added.

In 2013, AFRODAD said 98% of Zimbabwe’s IFFs came from minerals.

Experts say the legal framework for combating IFFs may be in place, but enforcement has been lacking.

In a report titled ‘Amnesty on Illegally Externalised Funds and Assets: An Assessment of Zimbabwe’s Administrative and Legal Efforts to Combat Illicit Financial Flows (IFFs), Open Society Initiative for Southern Africa (Osisa), in collaboration with Zela and the European Union, lists several laws and institutions established to fight IFFs, including Zacc, NPA and Financial Intelligence Unit (FIU).

“Lately Zacc has been referred to as a toothless bulldog and has not been able to follow through on most cases it investigated,” says the report.

“Despite (a) clause on political neutrality, there were reports of an NPA board member who participated in primary elections of a political party,” the report says.

“This raises questions on political neutrality of the NPA, if the member has not resigned before participating in politics. In terms of reporting to parliament, the constitution states that the Prosecutor-General must submit to Parliament, through the appropriate minister, an annual report on the operations and activities of the NPA, the report being submitted not later than six months after the beginning of the year following the year to which the report relates.” Unlike Zacc, the constitution is strong in terms of reporting by NPA to Parliament in that it compels NPA to report to Parliament and gives specific timelines,” it adds.

The Prevention of Corruption Act, Public Procurement and Disposal of Public Assets, Bank use Promotion and Suppression of Money Laundering Act and the Public Finance Management Act also deal with IFFs.

In another report titled: ‘Locating Artisanal Small-Scale Miners in the US$12 billion Mining Vision’, the Zimbabwe Coalition on Debt and Development says “the NPA must prosecute individuals and companies that are involved in mineral smuggling. This will make citizens have confidence in the judiciary system and redress the famous capture and release theory.”

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