Fronts, Fakes, and Façades - South African and Mauritian Enablers Move Millions From Zimbabwe to Britain

A politically-connected oil tycoon moved suspect funds from the Reserve Bank of Zimbabwe (RBZ) to the City of London using fronts, false invoices, and offshore financial façades, documents reveal.

In 2019, Zimbabwean presidential advisor Kudakwashe Tagwirei used Sotic International, a Mauritian company that documents reveal acted as his front to disguise his involvement, to buy two Zimbabwean mines—Bindura Nickel and Freda Rebecca Gold Mine—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).

At the time of the purchase, accusations of corruption and cronyism had already been swirling around Tagwirei for years.

South African directors, Mauritian company agents, and offshore financiers—all of whom deny that their work for Sotic involved wrongdoing—created structures that had the effect of disguising where the money came from.

At least one member of the Duff & Phelps team had reason to know there was a link between Sotic and Tagwirei’s oil company, Sakunda Holdings, emails show.

The payments by Sotic to purchase Bindura Nickel and Freda Rebecca Gold Mine took place in three stages: a deposit made in July 2019 and two payments in October 2019.

Each stage involved behaviour that raises questions and may carry policy implications when it comes to deterring powerful and connected individuals from exploiting the system:

The favour.

• During the period when Sotic was getting the funds together to pay the £2.3 million deposit, Sotic’s Zimbabwean subsidiary, Landela Investments, obtained hard currency from the RBZ at a favourable exchange rate when cashing in a $60 million portion of a large Treasury Bill given to Sakunda, telling the RBZ that some of the funds were needed to buy Bindura Nickel. Tagwirei and the RBZ deny that the rate was favourable.

The fake.

• To get money into Mauritius from Zimbabwe for Sotic’s second £12 million payment, South African directors created invoices for exports that could not be found in Zimbabwe’s official customs records, raising questions as to whether trade misinvoicing, a technique commonly used in trade-based money laundering, had occurred. The directors discussed these invoices openly in internal emails, describing a $3.5 million payment as being ‘in the guise of cooking oil. Don’t worry. The money is for ASA’.2 The directors declined to supply documents showing the invoiced deliveries had been made, citing confidentiality, but deny any wrongdoing.

The façade.

• 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, according to internal messages and financial records. Those involved state that the transaction was legitimate and dispute that Sotic was a front company for Tagwirei.
• A mystery remains regarding whether Tagwirei was the only person behind Sotic. In confidential messages reviewed in connection with this report, Tagwirei claimed that the government of Zimbabwe owned 65 per cent of Sotic, while he held the remainder.
• Emails show that Zimbabwean government officials, including ‘HE’—likely His Excellency President Emmerson Mnangagwa—and the permanent secretary at the finance ministry, took a close interest in Sotic’s affairs. For example, in a separate transaction that also took place in mid-2019, Foreign Minister SB Moyo forwarded Sotic’s $1.2 billion pre-financing proposal to the state-owned National Oil Infrastructure Company (NOIC), proposing an upfront loan in return for discounted access to Zimbabwe’s only oil pipeline.
• NOIC’s board noted that as the RBZ governor had already signed the term sheet of Sotic’s loan proposal, the decision to accept the proposal had already been made.3
• After Tagwirei was sanctioned for corruption by the US government in 2020, control of Bindura Nickel and Freda Rebecca Gold Mine shifted from Sotic to Kuvimba Mining, which is 65 per cent owned by the Zimbabwean state and 35 per cent owned by companies and trusts linked to Tagwirei.

Read the full report > https://thesentry.org/wp-content/uploads/2023/07/FrontsFakesFacades_TheSentry_OpenSecrets_July2023.pdf

Response Letter/Response to The Sentry from a representative for Mr. Kundomal and Capital Horizons https://thesentry.org/wp-content/uploads/2023/07/CHL-response-on-the-record.pdf

https://thesentry.org/reports/fronts-fakes-and-facades/