Rushwaya Gold Smuggling: A case of rampant elite corruption?

Henrietta Rushwaya

THE ongoing trial of Henrietta Rushwaya over charges of attempting to smuggle gold bars weighing 6kg to Dubai, the United Arab Emirates, in a high-profile case that has sucked in President Emmerson Mnangagwa’s family, has brought into sharp focus the obstacles that Zimbabwe faces in its efforts to transform the country’s mining sector into a US$12-billion industry by 2023 and broad initiatives to revive the country’s fragile economy.

Rushwaya, who until the time of her arrest was the Zimbabwe Miners Federation (ZMF) president, was arrested at the Robert Gabriel Mugabe International Airport last week as she attempted to spirit away bullion worth over US$330 000, aided by state security agents who included a member of Mnangagwa’s close security unit.

To avoid arrest, Rushwaya identified Ali Mohammed — a ZMF partner — as the rightful owner of the contraband.

First Lady Auxilia and her son Collins were implicated in the messy saga.

As the matter plays out in court, debate has shifted to the exact quantum the country is being prejudiced of in potential revenue as a result of mineral leakages and illicit financial flows and the attendant impact of the vice on plans to transform the mining sector into a US$12-billion economy by 2023.

In the court of public opinion, the generality of Zimbabweans is convinced beyond doubt that Rushwaya’s case, and many other similar cases of massive mineral looting, constitute organised crime and remains unabated since it is fuelled by the political elite and its acolytes.

In 2017, former president Robert Mugabe made startling revelations that Zimbabwe could have been prejudiced of a staggering US$15 billion by diamond mining firms which were understating their earnings during the time of their operations in the resource-rich Chiadzwa area. Though the figure is exaggerated, such revelations by the then Head of State indicate just how serious the issue of smuggling is in the southern African country.

A recent report by Southern Africa Resource Watch (SARW) titled The Political Economy of Artisanal and Small-Scale Gold Mining (ASMG) in Zimbabwe underscores that the southern African country loses 60% of its annual gold output to smuggling, with the criminal enterprise being perpetuated by Zanu PF-aligned syndicates and members of the state security system. SARW advances the argument that illicit extraction of the precious mineral and smuggling have been fuelled by powerful cartels that have resisted efforts to regularise the trade.

The report, released in May reads: “Big people are benefitting. Formalisation can threaten their interests. Some government policies are also fuelling the black market. The history of the current president controlling the gold sector in Kwekwe and Midlands is also an issue. Informants further highlighted that formalisation could address high levels of illicit trade in gold, which is currently 60% of total output.”

Two years ago, the United Nations Industrial Development Organisation (Unido) had also made startling revelations that Zimbabwe, mired in rapid economic decline, loses a staggering US$1 billion annually as a result of the illicit trade in gold.

The Unido report, which also details how the yellow metal is smuggled by syndicates controlling the underworld enterprise is titled Follow the money — A Rapid Assessment of Gold Supply Chains and Financial Flows Linked to Artisanal and Small Gold Mining in Zimbabwe.

The Reserve Bank of Zimbabwe (RBZ) also paints a gloomy outlook of the gold mining sector, highlighting that the country which generates the bulk of its export earnings from the yellow metal loses 1 000kg of the mineral annually through smuggling.

Revealingly, SARW and Unido contend that the government’s monopoly as the official sole buyer of gold through Fidelity Printers and Refineries, among other policies, provides fertile ground for illegal gold mining and smuggling to thrive and the attendant violence characterising the opaque operations.

Both institutions underscore that the RBZ lax marketing system contributes to gold leakages.

SARW argues: “Some informants observed that current government policies were fuelling the illicit trade in gold due to the government’s monopoly as the sole buyer of all gold produced in the country. It was observed that a monopoly market is detrimental to fair prices. Other countries have liberalised the buying and marketing of gold. The issue of violence in the ASGM sector featured prominently in most interviews. According to people who were interviewed, ASGM-related violence is linked to the illicit trade in gold and the RBZ policy of buying gold on a no-questions-asked basis.”

Economist Tawanda Purazeni contends that the illicit financial flows in the mining sector is not only limited to smuggling cartels, but is wide and involves huge corporates whose interest spans the global economy.

“The recent arrest of Henrietta Rushwaya is just a tip of the iceberg. This has been transpiring in the sector for a long time. There are thriving syndicates and cartels smuggling precious minerals through our porous ports of entry. Smuggling also manifests itself even at well-established mining giants where processing is undertaken outside the country,” Purazeni said.

“Comprehensive exploration should be undertaken to see the net worth of our resources. Beneficiation of such minerals should be prioritised. Proper monitoring and evaluation should be applied in the extraction and marketing of minerals. It is only through that way that the vision of transforming the mining sector into a US$12-billion industry will be attained.”

SARW regional governance and research officer Veronica Zano argues that without a comprehensive security system, Zimbabwe’s endeavours to grow the mining sector into a US$12-billion industry would remain a pipe dream.

“Gold production by large-scale and ASM operations is fundamental towards the envisaged US$12 billion mining economy by 2023. Yet the sector is riddled by a number of challenges inhibiting it to reach optimum potential. The recent developments with the case of Henrietta Rushwaya is a clear depiction of the deeper problems affecting the gold sector,” Zano said.

“Enhanced tracking and monitoring on gold production and trade should be put in place by the Ministry of Finance and RBZ to combat illicit gold trade especially by political elites through a transparent, accountable and fair enabling gold trading framework.” – The Zimbabwe Independent