Report: Zimbabwe’s Tagwirei and His Companies Received Millions in Possibly Unlawful Payments Under Command Agriculture

New investigative report by The Sentry:

Zimbabwe Presidential Advisor, Tycoon Tagwirei Received Millions in Possibly Unlawful Payments From Central Bank

 

March 23, 2022 (Washington, DC) – Zimbabwe’s central bank paid an estimated $93 million in possibly unlawful payments to the companies of presidential advisor and high-profile tycoon Kudakwashe Tagwirei as part of a major government agriculture program meant to stave off malnutrition and hunger, according to a new investigative report by The Sentry.

The investigative report, “Legal Tender? The Role of Sakunda and the Reserve Bank of Zimbabwe in Command Agriculture,” provides evidence detailing the questioned payments which formed up to one-third of the $280 million Tagwirei’s firms received while running Zimbabwe’s Command Agriculture program. From 2016 to 2019, Tagwirei’s firm Sakunda Holdings ran Zimbabwe’s Command Agriculture program, which was intended to boost agricultural production through the provision of inputs such as seed and fertilizer to commercial farmers. Sakunda—an oil trading company—was appointed to run the billion-dollar project without an open tendering process.

Justyna Gudzowska, Director of Illicit Finance Policy at The Sentry, said: “The central bank’s granting of a seemingly favorable exchange rate to an oil tycoon to pay a Zimbabwean military company for a Zimbabwean-Russian platinum mine doesn’t pass the smell test. It’s time for the Zimbabwe Anti Corruption Commission and police to investigate properly.”

Nick Donovan, Senior Investigator for The Sentry and report author, said: “The IMF partly blames the Reserve Bank of Zimbabwe’s treatment of this Treasury Bill for bloating the money supply, crashing the currency, and fueling inflation. In effect, the publicly owned Reserve Bank was printing money for private companies to buy publicly owned assets.”

Oliver Windridge, Senior Advisor to The Sentry, said: “The $1 billion Command Agriculture program was the product of a behind-closed-doors culture. Part of the solution is to embrace open contracting—making all contracts and payments public.”

The Sentry’s investigation found that, over the course of the three-year program, Sakunda received $1.28 billion total—$230 million in hard currency and over $1 billion in Treasury Bills—while providing inputs worth $1 billion: an apparent surplus of $280 million.

One of the Treasury Bills was improperly redeemed at a favorable exchange rate by the Reserve Bank of Zimbabwe (RBZ) after a new law had reduced the US dollar value of such assets. While others saw the US dollar value of their Treasury Bills fall, the RBZ protected Tagwirei’s asset from this reduction in value when it was cashed in: the central bank sent more Zimbabwean dollars to his firms than it was obliged to by the new law. This decision was worth—in US dollars—at least $50 million, and perhaps up to $100 million, for the oil tycoon’s companies.

Sakunda, which denies any wrong-doing, testified in Zimbabwe’s Parliament that it received the favorable rate so that it could repay foreign suppliers—particularly of chemicals—in hard currency. However, it appears that the Treasury Bill was given a preferential exchange rate partly to allow one of Tagwirei’s firms to pay the government for some gold mines and a Zimbabwean military-controlled company for its share of a platinum mining joint venture with a Russian conglomerate. In effect, the publicly owned RBZ was printing money for private companies to buy publicly owned assets.

Command Agriculture was the product of a behind-closed-doors culture: the procurement process for this billion-dollar program, the preferential treatment of the Treasury Bill, and the selection of recipients of inputs were all hidden from public view. The Sentry’s recommendations therefore include procurement transparency measures that could allow Zimbabwean citizens to see how their money is spent.

Key recommendations from the report:

To the Government of Zimbabwe:

The Zimbabwe Anti Corruption Commission should investigate Command Agriculture, specifically:

• Who made the decision to convert Treasury Bills at a preferential rate to benefit a private entity, seemingly contrary to Statutory Instrument 33, 2019, and whether the decision was made in the knowledge that some of the money would appear to benefit a military-controlled company.
• What exactly happened to the January 2019 $366 million Treasury Bill and whether each portion of it was used for a proper purpose.

The government of Zimbabwe should upgrade existing procurement law by embracing open contracting standards. This would make all procurement subject to open, competitive tenders, with all documents available to the public by default. Tendering documents, values (including line items), information on bidders (including beneficial ownership details), draft and signed contracts (along with annexes and sub-contracting information), payments, extensions, and amendments should be published on one central portal. The government of Zimbabwe could follow the example of other states by making the contract invalid unless published, creating an incentive for companies and procuring entities to desire publication.
To multilateral bodies and donors:

Currently, while the International Monetary Fund (IMF) and World Bank do not offer their normal concessional loans and grants to Zimbabwe due to unsustainable debt and official external arrears, both bodies do offer technical assistance. Both the World Bank, which previously supported efforts to reform Zimbabwe’s procurement law, and the IMF should encourage and provide support to Zimbabwe to embrace open contracting standards.
To financial institutions:

Financial institutions should conduct enhanced customer due diligence on transactions involving natural resources in Zimbabwe—especially when transactions involve the Tagwirei network. Zimbabwe desperately needs foreign investment. To ensure the country isn’t supporting corrupt networks in the future, the private sector and financial institutions should conduct enhanced due diligence on individuals and entities both inside and outside Zimbabwe with ties to Tagwirei and his companies, as they may pose a higher risk for illicit financial activities. In particular, financial institutions should also take steps to investigate and identify accounts beneficially owned or controlled by Tagwirei and his companies. Zimbabwe has been severely de-risked by global financial institutions, and care must be taken to not disrupt or narrow services to the general population, which is already receiving limited services.

Resources for journalists:

So that reporters and Zimbabwean citizens can review and discuss procurement and public financial management issues, The Sentry also published key supporting materials (Note that some materials hosted on Google Suites and DocumentCloud use the email address [email protected]):

• A spreadsheet tallying the cash and Treasury Bills issued to Sakunda Holdings from 2016 to 2019, linked to the source documents for each payment. Access the spreadsheet.
• A spreadsheet with links to Treasury Bill issuance notes accounting for $3.35 billion expenditure from 2015 to 2018, for a wide range of purposes, not just agricultural support. Access the spreadsheet.
• A spreadsheet summarizing public expenditure in 2017 and 2018 by the RBZ and from the Consolidated Revenue Fund. Access the spreadsheet.
• A 1,000-word summary of the full report’s findings in English, Shona, and Ndebele, with a small file size (less than 200 kb), designed to be shared via WhatsApp or Signal and read on a mobile phone. Access the summary in English > Ndebele > Shona 

 

Read the full “Legal Tender?” report: https://thesentry.org/reports/zimbabwe-command-agriculture/

For media inquiries or interview requests, please contact: Greg Hittelman, Director of Communications, [email protected]

 

About The Sentry

The Sentry is an investigative and policy organization that seeks to disable multinational predatory networks that benefit from violent conflict, repression, and kleptocracy.

Pull back the curtain on wars, mass atrocities, and other human rights abuses, and you’ll find grand corruption and unchecked greed. These tragedies persist because the perpetrators rarely face meaningful consequences. The Sentry aims to alter the warped incentive structures that continually undermine peace and good governance. Our investigations follow the money as it is laundered from war zones to financial centers around the world. We provide evidence and strategies for governments, banks, and law enforcement to hold the perpetrators and enablers of violence and corruption to account. These efforts provide new leverage for human rights, peace, and anti-corruption efforts.

Co-founded by George Clooney and John Prendergast, The Sentry is a strategic partner of the Clooney Foundation for Justice. Learn more at www.TheSentry.org.