gtag('config', 'UA-12595121-1'); Transaction Between Mutapa Fund and Kuvimba Mining Needs Investigation, Says The Sentry – The Zimbabwe Mail

Transaction Between Mutapa Fund and Kuvimba Mining Needs Investigation, Says The Sentry

Kuvimba acting chief executive Trevor Barnard
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Harare, Zimbabwe – A call for a thorough investigation has been made regarding a US$1.6 billion transaction between the Mutapa Investment Fund (MIF), formerly known as the Sovereign Wealth Fund, and Kuvimba Mining House Ltd.

The Sentry, a United States-based investigative organization, has flagged this deal as potentially the most significant financial scandal in modern Zimbabwean history.

Building upon investigative work by The NewsHawks, The Sentry, which examines multinational predatory networks benefiting from violent conflict, repression, and kleptocracy, highlighted the dubious nature of the transaction. The organization emphasized that the deal involves public institutions and funds, necessitating an urgent probe.

In its latest report, The Sentry disclosed, “Zimbabwe’s new sovereign wealth fund reportedly paid US$1.6 billion — 5% of GDP — for shares in a mining conglomerate with recent links to Kudakwashe Tagwirei, a presidential advisor and ruling party donor accused of corruption.”

The investigation revealed alarming financial repercussions for Zimbabwe. The country’s debt has reportedly surged by US$3 billion, climbing from US$18 billion to US$21 billion within a few months. This spike is attributed to the issuance of Treasury Bills worth almost 10% of GDP since November 2023. Of the new debt, US$1.9 billion was designated for the recapitalization of the Mutapa Investment Fund, while US$900 million was allocated to the Reserve Bank of Zimbabwe.

“If this figure is accurate,” The Sentry added, “then about four-fifths of the US$1.9 billion debt incurred to allow Mutapa to revive failing state-owned enterprises has been used to pay a few private individuals. A US$1.6 billion price tag for a 35% stake would value Kuvimba at US$4.6 billion overall — triple the US$1.5 billion valuation given to Kuvimba by the government in 2022.”

Mutapa, named after an ancient Shona kingdom, has controversially taken over more than 20 state-owned enterprises under President Emmerson Mnangagwa’s administration. The acquisition of Kuvimba Mining House, which owns around a dozen gold, lithium, nickel, and platinum mines, stands out as the jewel in Mutapa’s crown. In April, The NewsHawks reported that MIF paid US$1.6 billion through Treasury Bills to acquire a 35% stake in Kuvimba from a management consortium.

The Sentry insists that the opaque transaction needs thorough scrutiny. “Zimbabwe’s independent Auditor-General has the remit to audit public expenditure, including by state-owned entities such as the Mutapa Investment Fund,” it stated. The report called for the parliamentary Public Accounts Committee (PAC) to urgently initiate public inquiries into Mutapa’s acquisition of Kuvimba shares.

The Sentry outlined five critical questions that should underpin any inquiry:

  1. What was the purchase price?
  2. How was the valuation carried out?
  3. What was the full ownership structure of Kuvimba at the time of payment?
  4. Who got paid?
  5. What happened to the Treasury Bill after it was issued?

The Sentry further recommended that if any wrongdoing is uncovered, the matter should be referred to the police and the Zimbabwe Anti-Corruption Commission. The report urged banks and financial institutions to conduct enhanced due diligence on any entity seeking to sell the Treasury Bill.

The Sentry drew parallels to a previous incident involving Sakunda, a company controlled by Tagwirei, which received a US$366 million Treasury Bill for its role in an agricultural program. Sakunda sold parts of the debt instrument to banks at a discount to access hard currency, with banks holding the Treasury Bill until maturity to redeem it for its face value plus interest.

The Sentry suggested that issues arising from the new debt issuance should be discussed in African Development Bank (AfDB)-led dialogues on debt clearance, including those with civil society representatives. It urged the Zimbabwean government to publish a list of entities and financial institutions holding the domestic debt, including this specific Treasury Bill.

Until recently, the state-owned 65% of Kuvimba, with private investors holding the remaining 35%. However, The NewsHawks revealed that in April 2024, Mutapa bought out the private investors for US$1.6 billion using a Treasury Bill. In 2021, The Sentry exposed that Kuvimba’s private investors included Pfimbi Resources, a company controlled by Tagwirei.

Pfimbi Resources, a shareholder in Ziwa Resources, which in turn held shares in Kuvimba, was controlled by two trusts: the Kudakwashe Tagwirei Trust and the Eagles Trust. The beneficiaries of the Eagles Trust remain unknown. Corporate documents listed a lawyer frequently used by Tagwirei as the point of contact for both trusts.

Despite Tagwirei’s denial of any link to Kuvimba, sources indicate that he was making key decisions at the firm as recently as September 2023, shortly before Mutapa’s acquisition of Kuvimba shares. Mutapa presented the US$1.6 billion buyout as a move to end speculation about Kuvimba’s ownership. However, a more transparent approach would have been to publish the records for Kuvimba, Ziwa, and the Eagles Trust, which are conspicuously absent from official registries.

Nick Donovan, Senior Investigator at The Sentry, commented, “Mutapa has serious questions to answer: Who got paid? How much did they get? If it is true that these unknown shareholders got paid US$1.6 billion, this could be the biggest scandal in Zimbabwe’s history.”

The Sentry’s call for an investigation into the massive transaction between Mutapa Investment Fund and Kuvimba Mining House underscores the urgent need for transparency and accountability in Zimbabwe’s financial dealings. As the nation grapples with the ramifications of this deal, the spotlight remains on the authorities to ensure justice and integrity prevail.

Source: The News Hawk