HARARE – Authorities in Hungary have opened a money-laundering investigation after a company that was two weeks old received a huge payment of US$2 million from Zimbabwe’s government.
When the payments were referred to Interpol, the company took flight and opened a new branch in Dubai, from where it sent Zimbabwe a new invoice of nearly US$1 million – to be paid into an account in the African tax haven of Mauritius.
A ZimLive investigation into the payments has led back to Zimbabwe’s President Emmerson Mnangagwa, whose government has been paying for Covid-19 personal protective equipment (PPE) and test kits at inflated prices to companies linked to his family, bleeding the impoverished Southern African country of 15 million people.
Two of those companies we investigated – Drax Consult SAGL, also sometimes known as Drax International, and Namibia-registered Jaji Investments – are not registered with the Procurement Regulatory Authority of Zimbabwe (PRAZ), a legal requirement for all companies supplying the government.
We have obtained documents from Interpol and Zimbabwean police which confirm that the transactions are being investigated as a possible “crime”.
At the centre of the apparent scheme to spirit millions of dollars out of Zimbabwe is Ilir Dedja, a 51-year-old who was born in Sefaraj, a village in Albania’s Western Lowlands region.
Dedja, who has travelled to Zimbabwe to meet with Mnangagwa and his Zimbabwe partner, Delish Nguwaya, spent years as a meat trader in Italy, acquiring citizenship. According to Interpol, he owned several companies which later shut shop.
“These companies may be linked to other companies that have been subjects of a criminal investigation,” Interpol’s Budapest office wrote in an April 29 letter to the Zimbabwe Republic Police (ZRP), seeking more information on the US$2 million payment.
We have found evidence that Dedja is the only shareholder in two Swiss companies – Drax Consult SAGL and 3-DD Swiss Trading. He registered Drax Consult SAGL in the Italian-speaking town of Lugano on March 2017, but the company has done little trading within Switzerland.
Official documents show that Dedja opened two bank accounts for Drax Consult SAGL with MagNet Bank in Budapest on December 6, 2019. One was a United States dollar account, and a second is in the local currency.
He registered the Hungary branch for Drax Consult SAGL on February 20, 2020, stating in official documents that the company carries out activities including “business consulting, marketing, advertising and business management consulting for foreign companies trading in medical and cosmetic products.”
Just two weeks later, on March 5, the new company’s bank account was credited with US$2 million, made as deposits of US$1 million each. The payments were a 10 percent deposit on a consignment of drugs and medical supplies on a contract worth US$20-million. The state-owned drugs firm, the National Pharmaceutical Company (NatPharm), would through the country’s Treasury pay the remaining US$18 million in subsequent deposits of US$1.5 million every month, according to a document signed by finance ministry permanent secretary, George Guvamatanga.
The huge deposits were the first transactions performed on the bank account, and officials immediately flagged them as suspicious before calling in Interpol. The international police organisation was not satisfied with the justification for the payments provided by Dedja, and has now launched a money laundering enquiry in conjunction with authorities in Hungary and Zimbabwe.
“Based on the huge amount of the transferred money, and that the money was sent from Zimbabwe to a Hungarian branch of a Swiss company, furthermore that there was no other transfer (to the account), it seems there is a well-founded suspicion that the money comes from a crime,” Interpol wrote to the ZRP.
The source of the money, Interpol wrote, was Zimbabwe’s ‘Ministry of Finance and Economic Development’ using the reference: ‘PYT for Medicines and Medical Supplies, Invoice 26.”
The ZRP, which has a poor record of investigating high-level corruption, has in turn written to Zimbabwe’s Treasury, demanding a full account, including “a statement commenting on how the ministry identified Drax Consult SAGL to be the supplier of medicines and medical sundries.”
In a letter bearing a May 14 date stamp to Guvamatanga, a Superintendent Nyachega of the ZRP wrote that they were investigating a “suspected case of money laundering against Drax Consult SAGL.”
Guvamatanga was also asked to include information on the “directorship/ownership of Drax Consul SAGL” as well as “comment on transactions done between the ministry and Drax Consult SAGL.”
“The above information will assist our office in responding to Interpol Budapest,” Nyachega, of the ZRP’s Criminal Investigations Department (Commercial Crimes Division) wrote.
Guvamatanga declined to answer our questions about the payments. He also would not say if he had responded to the ZRP.
A central question facing Zimbabwean officials is how Drax Consult SAGL was roped in as a medical supplier, when it is not on the PRAZ’s register of “suppliers of goods”. Our investigations show that Drax was on that register until December 31, 2019, where it was recorded as a Swiss company. The company is not on the schedule of suppliers for 2020, published in a government gazette in February.
Fadzayi Mahere, the spokesperson for the opposition Movement for Democratic Change (MDC), said corruption was at the heart of the transactions, and warned that this would damage Zimbabwe’s capacity to raise international funds for its Covid-19 fight.
“It doesn’t bode well for development partners who would want to assist Zimbabweans through the government, but cannot trust that the much-needed assistance will reach intended beneficiaries owing to the chronic corruption,” she said.
“This egregious scandal is further confirmation that official corruption is at the root of Zimbabwe’s economic crisis. The national fiscus has been bled dry by the political elite, including those at the very top and their children.”
Zimbabwe is currently trapped in an economic crisis which has prompted the finance minister to write to the World Bank and IMF seeking urgent funding, warning the country faces a “health and economic catastrophe”.
United States Senator Jim Risch, chairman of the Senate Foreign Relations Committee, sent a letter to World Bank President David Malpass on June 4 calling for strict accountability and transparency measures for the announced $7 million grant to support the Covid-19 response in Zimbabwe.
“I urge the World Bank to impose very strict benchmarks and transparency and accountability measures on the $7 million grant and any future programmes for Zimbabwe to ensure that procurement processes are fair and transparent; that contracts for goods and services are not awarded to Zimbabwean companies under U.S. sanctions or known to engage in corrupt practices… that distribution of assistance is not discriminatory or manipulated for political gain or to bolster the security sector; and that projects are completed in a timely fashion as planned,” wrote Risch.
Mnangagwa came to power through a military coup in November 2017, promising to get tough on corruption. But his rivals say corruption has been worse under him than the 37 years under Robert Mugabe, the man he ousted.
Lucrative government contracts have been concentrated in a circle of the president’s associates, and donors to his Zanu PF party.
No-one knows how many children Mnangagwa has, although some say they could be in the dozens. But for his three sons with his current wife, Auxillia, their father’s presidency has provided an opportunity for wealth accumulation.
The boys, who include a set of twins, Collins and Shaun, have been snapping up prime real estate in the capital, Harare. Their driveways are so full with luxury cars, one source said, their mother often drives away in frustration when failing to park inside.
Their mother, a 57-year-old media-courting former intelligence officer, has forced her way into Mnangagwa’s government after getting the health minister Obadiah Moyo to appoint her a “health ambassador” for the country.
No-one quite knows what the role entails, but she has used it to muscle her way into the ministry of health. Not just the ministry, say insiders, but an important department in the ministry: NatPharm, the state-owned drugs firm in charge of all health-related procurement.
She arrived unannounced at NatPharm’s warehouse in Harare in May 2019 and demanded a distribution list of where NatPharm was sending drugs. She was angry following a visit to a remote hospital, which she found had no medicines. She threatened managers they could lose their jobs.
“That was the day she took over NatPharm, and big contracts don’t get given without her knowledge,” a former manager said, asking not to be named for fear of reprisals.
The coronavirus outbreak, and the rapid spread of the virus, had many governments scrambling for ventilators, PPEs and test kits. In the panic, some saw an opportunity to profit.
Dedja’s Zimbabwean partner, Nguwaya, a career criminal with pending cases for drug possession, extortion and impersonating a police officer, had gotten incredibly close to the Mnangagwa family, particularly one of the twins, Collins.
Known as The Chief to his friends, Nguwaya was shown on state television and newspapers standing next to Mnangagwa and Finance Minister Mthuli Ncube in April this year. His company, Drax International, had donated some test kits to the government, but there was more.
“In a show of commitment to the national cause, a US$60 million drug supply deal was announced by a company called Drax International,” the state news agency, New Ziana, announced.
An investigation by ZimLive into the company soon turned up a treasure trove of leaked information, including evidence that the government broke its own procurement rules to give the company the contract.
In leaked government letters, Guvamatanga wrote to the health ministry on April 28 directing them to terminate supplier contracts under force majeure, a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties occurs.
The Treasury, Guvamombe said, wanted to “mitigate against escalation in the amount of debt to the said suppliers which Treasury is clearly now not going to be able to meet.”
But in a spectacular U-turn, Guvamatanga again wrote to the health ministry on May 8 “exceptionally authorising” the ministry to take delivery of a Drax International consignment, citing what he described as an “urgent need for test kits… in the ongoing fight against the Covid-19 pandemic.”
That consignment was worth US$987,720, and the items to be delivered included 5,040 N95 masks at a cost of US$28 per unit, 15,000 Covid-19 test kits at US$34 each and 3,740 coveralls for US$90 each. Prevailing market prices suggested Drax’s invoice was hugely inflated by at least US$500,000.
An invoice for that transaction, seen by ZimLive, carried the name of Drax International with an address in Dubai, in the United Arab Emirates. The account provided is, however, in the name of a company called Paymaster LLC – and it is held with Bank One Limited in Mauritius. Paymaster LLC is a shelf company registered in Switzerland.
Under public pressure, the finance ministry announced on May 27 that it was no longer going to pay Drax’s full invoice for US$987,720, and had demanded a reduction of the quoted price by Drax. Health minister Obadiah Moyo, on the same day, announced that ministry officials had met Nguwaya and agreed to “reduce the prices.”
“There was a marked reduction of prices, from the original invoice we got that down to US$600,392,” Moyo told a news conference.
Nguwaya has issued a statement to deny that he has business dealings with the Mnangagwa family. Collins Mnangagwa himself issued a statement insisting he had no relationship with Nguwaya – before pictures of the two shopping for luxury cars in China on a trip with the first lady. More pictures emerged showing the two attending Mnangagwa’s inauguration together.
Parliament summoned finance minister Ncube and Guvamatanga on June 3 to answer questions about the questionable procurement processes, and the ministry’s role in the controversial payments.
“All the processes, the due diligence, the checking… is done at the parent ministry (health). When it comes to Treasury, our role is to check for our ability and capacity to pay,” Guvamatanga insisted, throwing the blame at the health ministry, where Mnangagwa’s wife holds sway.
Our investigation also revealed how Jaji Investments, also not appearing on the procuring company register, found itself with a contract to supply PPEs and test kits. The company issued two invoices of US$66,375 each for 4,500 test kits.
Jaji’s director, Garikai Prince Mushininga, has met Mnangagwa at least twice from pictures seen by ZimLive. The company’s Zimbabwe representative, Valdano Brown, is Mnangagwa’s nephew and bodyguard.
One consignment of the test kits was picked up from DHL and delivered to NatPharm by Qubekani Muswere, a nephew of Information Technology Minister Jenfan Muswere, our investigation shows. Qubekani was first hired by Mnangagwa’s son, Emmerson Junior, to do media work for the Zimbabwean leader, including running his social media accounts, before he got on the employ of the Public Service Commission in the same role.
When we searched for Jaji Investment’s office in Namibia as appears on their invoices, we could not find it. The road where the company says it is located, the 131-meter Guinas Street, in the capital Windhoek, has no business premises save for gated residential apartments either side.
With 343 coronavirus cases including four deaths and 51 recoveries as of Saturday, Zimbabwe has so far averted the worst of the coronavirus outbreak. Health experts however warn that the winter season, just beginning, could stretch the country’s health facilities which are creaking after years of neglect. Doctors are regularly on strike, and hospitals lack basic medicines.
“It’s extremely disheartening, to say the least,” Norman Matara of the Zimbabwe Association of Doctors for Human Rights said when we shared the findings of our investigation.
“In a time of crisis of this magnitude, it’s vitally important to promptly get equipment where it’s needed by frontline doctors and nurses. At one hospital, Mpilo in Bulawayo, 200 staff members were sent home to self-isolate after an outbreak because PPEs have been in short supply. You just have to wonder how much more could have been done through an honest and transparent procurement process.”
Mnangagwa’s rivals in the MDC say he has corrupted independent institutions which should be investigating the corruption, including the police. The Zimbabwe Anti-Corruption Commission, the main graft watchdog, is headed by Loice Matanda-Moyo, the wife of Mnangagwa’s foreign minister, Sibusiso Moyo. – Source: ZimLive