Tycoon may have shifted assets to Zimbabwe after US sanctions
Zimbabwe’s government is pressing ahead with a plan to
combine its mining assets under a massive private-public enterprise, even as
evidence mounts that the project could be linked to a tycoon sanctioned by the
US and UK
Previously unreported documents, including correspondence
among executives and shareholders, show that weeks after Kudakwashe Tagwirei
was sanctioned by the US, his Mauritius-based Sotic International began
planning to shift its assets to a newly created Zimbabwean holding company --
Ziwa Resources. Ziwa is the only private shareholder in the partnership, called
Kuvimba Mining House.
Zimbabwe government officials have repeatedly denied that
Tagwirei has any connection to Kuvimba. But Bloomberg in May reported that
Kuvimba holds assets that were until at least late last year part-owned by
Tagwirei, citing company documents, emails and transcripts of Whatsapp
conversations between executives. The government has as recently as last month
declined to say how Kuvimba came to possess the assets, which include choice
mineral deposits and mines that it says are worth $2-billion.
Tagwirei, an adviser to Zimbabwe’s President Emmerson
Mnangagwa, was sanctioned by the US on Aug. 5 last year on allegations that he
used political influence to gain access to scarce foreign currency and win
lucrative deals. The US linked him to the disappearance of $3-billion from a
farm-subsidy program, and the UK sanctioned him last month for similar reasons.
Under the US sanctions, Tagwirei is effectively cut off from
international financial markets. The ruling prohibits US citizens from doing
business with him, and his assets in the US are frozen and must be reported to
the US Treasury.
Tagwirei didn’t answer calls made to his mobile phone for
this story.
Known locally as “Queen Bee,” Tagwirei’s influence over the
Zimbabwean economy is so deep that US and UK officials have said payments made
to him helped trigger a collapse in Zimbabwe’s currency and contributed to
runaway inflation, including drastic increases in the price of food. Zimbabwe
last year called the US sanctions racist and intended to undermine the
government.
PAYING DIVIDENDS
In June, Finance Minister Mthuli Ncube announced that
Kuvimba had paid a dividend of $5.2-million toSstate agencies, including one
charged with compensating White farmers for land seized two decades ago. Two
weeks later, on July 6, the government again denied in a statement that
Tagwirei was part of Kuvimba. That was in response to an investigative report
by The Sentry, a private anti-corruption organization backed by the actor and
director George Clooney.
Kuvimba is 65% held by the state and 35% by Ziwa. The
private company was registered in Zimbabwe in September with an identical
stakeholder structure to Mauritius-based Sotic: Almas Global Opportunity Fund
SPC with 65% and Pfimbi with 35%. Almas told Bloomberg earlier this year it had
decided to exit its Zimbabwean assets. The company didn’t respond to a new
request for comment.
Pfimbi’s sole shareholders are Tagwirei and his wife,
according to separate documents reviewed by The Sentry. Bloomberg in May
reported that Tagwirei controls the company via agreements with nominee
shareholders, citing company documents.
‘NEGATIVE PRESS’
One month before Ziwa was founded, David Brown, CEO of both
Sotic and Kuvimba, wrote Sotic’s shareholders to say that Mauritius was
increasingly being seen as a tax haven and that moving the company’s assets to
a Zimbabwean subsidiary would encourage “local co-investment” in mines that
needed “significant capital investment,” according to documents seen by
Bloomberg.
Brown told them restructuring the company was necessary to
address “the negative press the company has been subjected to over the past
weeks.” He said that Mauritius had been included in the G7 countries’ Financial
Action Task Force’s grey list, which forces strict monitoring to combat money
laundering, and had also been blacklisted by the European Union.
“Management is proposing to the shareholders that they
create a subsidiary in Zimbabwe, and proceed with a restructure of the
ownership of the company’s assets such that the Zimbabwean assets are held by a
Zimbabwean holding company,” Brown said. This will “give confidence to local
Zimbabwean entities who would wish to invest in the mining group,” he said.
Brown said in June that he would be stepping down as CEO of
Kuvimba, without giving a departure date.
In conversations with Bloomberg last month, Brown said he’s
also a director of Ziwa, but doesn’t know who its shareholders are. He also
confirmed that assets held by Mauritius-based Sotic are now part of Kuvimba. He
declined to comment further.
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