Mystery of Sanctioned Tycoon’s Assets in Zimbabwe Revival Plan

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Mystery of sanctioned tycoon’s assets in Zimbabwe revival plan. In December, the Zimbabwean government announced a multibillion-dollar project named Kuvimba Mining House Ltd., which would hold some of the country’s most lucrative gold, platinum, chrome, and nickel mines, with the proceeds going to support the country’s stagnant economy.

 

Finance Minister Mthuli Ncube said in a January interview that the company would be 65 percent owned by the government and 35 percent by private investors and that it would be “highly profitable” within two years. According to the state-controlled Herald newspaper, President Emmerson Mnangagwa said in December that the venture would assist in “unlocking the inherent richness and value of our country’s mineral resources.”

 

Local journalists and some industry experts were skeptical of the announcement. Decades of graft and economic turmoil have left Zimbabwe, once prosperous, in ruins. The country has little formal employment, and the most recent inflation rate was 194%. The previous state works projects failed to improve things, not least because public funds had a habit of disappearing into private hands. Mnangagwa’s declaration that “Zimbabwe is open for business” and assurances of a new beginning since assuming power in late 2017 has failed to materialize.

The government has refused to reveal where it got the money to pay for the mines, smelters, and platinum concessions that the Kuvimba venture claims it now owns. Officials have given no proof of transactions proving Kuvimba owns the mines it claims to have purchased.

In two separate interviews with Bloomberg, Ncube refused to name the private partners, who stand to benefit billions of dollars from the project.

According to Ncube, government pension funds and Zimbabwe’s sovereign wealth fund own Kuvimba in a separate interview. The sovereign wealth fund isn’t operational, and the pension funds haven’t revealed what assets they manage.

Bloomberg has seen previously unreported documents, emails, and WhatsApp messages that help fill in some of the gaps.

They demonstrate how the mining properties that make up the center of Kuvimba’s holdings were previously owned by or linked to Kudakwashe Tagwirei, a politically connected businessman and presidential advisor sanctioned the U.S. last year for corruption.

Over the last month, Ncube has not responded to calls and emails requesting answers to questions about Kuvimba and Tagwirei’s involvement or messages that Zimbabwe’s Permanent Secretary of Finance George Guvamatanga, his deputy, and an outside communications advisor said they would send to him.

 

Sotic International Ltd. owned major Kuvimba companies, including Freda Rebecca Gold Mine, Bindura Nickel Corp., and a 50% stake in platinum company Great Dyke Investments, at least until late last year, according to the records, which span a timeframe from mid-2019 to late 2020.

It’s a Mauritius-based holding company that Tagwirei was a part-owner of during that period, thanks to a complex financial structure that obscures his involvement.

 

“The government, the party’s acolytes, and the business and professional services enablers thrive on lack of transparency,” said Tara O’Connor, executive director of London-based Africa Risk Consulting, which published a 46-page study in March on the ties between Zimbabwe’s most influential politicians and businessmen.

 

“Tagwirei’s DNA is present in all of the companies affiliated with this new venture, Kuvimba.” Tagwirei was a shareholder in Sotic, according to the Africa Risk report.

Tagwirei did not react to questions about whether he still has a stake in or leverage over any of the properties that are now under Kuvimba. The government has officially and consistently denied Tagwirei’s involvement in the Kuvimba company. The government’s plans to sell a stake in Kuvimba on a foreign stock exchange may be hampered by its links to an individual subject to U.S. sanctions. The U.S. sanctioned Tagwirei for using his political clout to “gain state contracts and obtain preferred access to hard currency,” as well as being related to the disappearance of $3 billion from a farm-subsidy scheme and was dubbed “notoriously corrupt” by the U.S.

President Mnangagwa needs the Kuvimba project to succeed because he has yet to deliver on the turnaround he promised after longtime ruler Robert Mugabe was deposed in a power struggle. He wants the money to pay for government programs, including retirement for civil servants and compensation for White farmers who were forced off their land two decades ago. The country has an external debt of more than $8 billion and is virtually cut off from multilateral lenders, including the World Bank and the International Monetary Fund.

Tagwirei is dubbed “Queen Bee” in the local media because of his powerful role in business and politics. “Tagwirei used a combination of opaque business deals and his continuing relationship with President Mnangagwa to expand his business empire rapidly and rake in millions of dollars,” the U.S. alleged in a statement placing sanctions on him after Mugabe stepped down.

Tagwirei did not answer four phone calls or respond to emails seeking comment. He has been silent about the sanctions.

According to documents obtained by Bloomberg, Tagwirei effectively controlled Sotic. This firm owned some of the largest properties now claimed by Kuvimba, including major platinum and gold mines, until late last year.

Sotic is funded in part by Almas Global Opportunity Fund SPC, a Cayman Islands-based investment group. Almas Capital Ltd. owns it, and it’s operated by a businessman named Amardeep Sharma, Almas said in answer to questions.

“In the first quarter of 2020, Almas became a shareholder of Sotic,” the firm said, without specifying the amount it billed. According to corporate records, Almas, Sotic, and Tagwirei reached an arrangement in which Sotic sold 9,000 debentures to Almas, at a face value of $1000, totaling $9 million. Tagwirei was then given ownership of the shares by Almas, thereby strengthening his grip on Sotic. The details of repayment were not disclosed in the contract.

 

Almas refused to elaborate on its association with Tagwirei in its response to Bloomberg.

“As per the legal obligations which the fund has to abide, it cannot comment on any of its relationships in any manner whatsoever,” Almas added.

“We can confirm that the fund is committed to being responsible in all its legal and compliance obligations as a financial entity and adheres to all local and international laws.”

 

Tagwirei was referred to as “the boss” or by the initials K.T. in conversations regarding Sotic between business executives last year. He made choices and was copied on a lot of the email traffic that Bloomberg saw. According to records seen by Bloomberg and authenticated by Almas, Pfimbi Ltd., a holding corporation, controls the majority of Sotic.

Pfimbi Ltd. holds the remaining 35% of Sotic, according to Almas. “Sotic has a variety of mining properties in Zimbabwe, some of which are partly operated, such as Great Dyke investments, and others which are fully owned, such as the Freda Rebecca Gold Mine.”

According to the papers, Pfimbi is also headquartered in Mauritius and is owned by Tagwirei via nominee agreements with six shareholders. According to a provision in the deal, those six candidate owners agreed to keep their securities “for the sole gain and on behalf of the owner” — Tagwirei.

 

Former traders from Puma Energy Ltd., a subsidiary of commodities giant Trafigura Holdings Pte. that ended a fuel relationship with Sakunda Holdings, were among the shareholders. Sakunda is a Tagwirei-led investment firm engaged in a fuel import and distribution partnership with Trafigura until February of last year. None of the owners replied to emails or returned phone calls. Pfimbi was unavailable for comment.

 

Kuvimba claims possession of the properties, but the government had shown little proof of such transactions or transfers of ownership and has declined to elaborate about how or when they were purchased.

Complicating it even more: David Brown, the veteran mining executive appointed by Zimbabwe’s government as Kuvimba’s CEO, is also the CEO of Sotic.

Brown said he wasn’t sure of Tagwirei’s involvement in Sotic and that Tagwirei hadn’t recruited him to manage Sotic and now Kuvimba in an emailed response to queries. Brown refused to list Kuvimba’s private owners but said Tagwirei does not control any of them.

 

“To the best of my knowledge,” he wrote in the email, “there was a restructure that ended in Kuvimba becoming the mining assets holding company.”

Brown refused to include information or documentation of the reorganization or state how much Sotic was paid for its mines.

In answer to queries, Christopher Fourie, a former Sotic executive, said Tagwirei hired him to create Sotic and lead the acquisition of mines, including the ones Kuvimba now claims. Fourie is identified as group executive for investment and business growth of Tagwirei’s Sakunda Holdings, which followed Sotic and is now listed as one of Sotic’s subsidiaries; his contract, dated 2018 and filed in a July 2020 South African court case. Tagwirei, in his capacity as Sakunda’s CEO, signed the deal. The U.S. placed penalties on Sakunda as well.

Fourie claims he was forced out of Sotic by Pfimbi’s owners, and he is suing the firm. According to an email obtained by Bloomberg, Brown requested Fourie to leave on May 22, 2020, because they were unable to settle on a position for him at the firm. According to court records, Brown filed suit in the High Court of South Africa in July of that year, trying to avoid Fourie from proceeding with “a campaign of disparagement and criticism” of a Sakunda Group member on social media.

“He is not an ex-employee because he was not pushed as he says, but he is an employee suspended on full pay awaiting the outcome of an independent investigation into his conduct,” Brown said in answer to questions.

Bloomberg quoted Brown in the same month as filing the court case as stating that a Sotic unit had purchased two Zimbabwean gold mines and planned to acquire more. Bindura Nickel’s chairman informed Bloomberg in October 2019 that Sotic had purchased a 74 percent stake in the firm.

Almas said its opportunity fund has investors from the Persian Gulf, Latin America, and India to answer emailed queries. It refused to reveal their identities, claiming legal restrictions.

Because of the effects of the Covid-19 pandemic and the need for greater-than-expected expenditure in some of the properties, Almas said it is now in talks to “disinvest from Zimbabwe.” It stated that it was unable to reveal the identity of its interlocutor.

“Following a study of our activities, Almas Fund’s investment committee has expressed its intention to disinvest from Zimbabwe,” it said in a March 30 response, citing negative financial impacts from its investment in the region, the pandemic’s effects on mines, and the need for more debt and investment to complete the projects than previously expect “With this new company, they are just shifting deck chairs around on the Titanic” Je-A van der Linde, an analyst at NKC African Economics in Paarl, South Africa said. “I don’t think anything like this would help the economy.”

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