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Hefty financing for organised gold smuggling



MAJOR foreign buyers, often from South Africa, India and Dubai, are reportedly partnering with licensed Zimbabwean dealers, providing pre-financing of up to US$1 million to buy large quantities of gold on the illicit market, a new report has revealed.

In its latest report titled “Illicit Gold Markets in East and Southern Africa”, the Global Initiative Against Transnational Organised Crime (Global Initiative) said large quantities of gold were slipping out of the country through the network.

“They sponsor gold buyers in Harare, providing pre-financing of up to US$1 million for gold purchases. Zimbabwean nationals provide a front for the operations, hiding their involvement,” the report reads in part.
The report says gold mined in Zimbabwe is moved to the trading hubs of Harare and Bulawayo before it is smuggled or exported out of the country.

While Bulawayo’s reach is limited to gold mined in areas close to the city, the report says Harare attracts gold from across the country.

“Bulawayo buyers are generally less well-resourced and lack the US dollar buying power of their Harare competitors. Miners or buyers may also take gold directly to South Africa, especially from Matabeleland province in the south. Nearly 40% of gold mined in Matabeleland is believed to be smuggled directly to South Africa,” it said.

The report says involvement of foreign buyers has increased official gold deliveries but is also believed to be fuelling illicit trade.

It said if 17.5 tonnes, the official small-scale gold production figure in 2019, only accounted for this small share of actual artisanal and small-scale gold mining (ASGM) production, it means that “billions  of dollars’ worth of gold” is being lost to the illicit market annually.

When there is a strong foundation of trust, Global Initiative said buyers will advance funds for gold purchases.
For example, foreign buyers will advance funds to major buyers in Harare or Bulawayo to buy gold, and those buyers will advance cash to local buyers from small towns.

Conversely, if a trusted small buyer is unable to immediately pay, miners may give that person gold to sell further downstream.

Leaders of large Pentecostal churches, often referred to as prophets, can also be important sponsors for locals in the ASGM sector and a number of them have been involved in the gold trade, preaching the gospel of prosperity, the report says.

“Most gold is thought to be smuggled to South Africa by road with buyers active on both sides of the border. Johannesburg is the primary destination for gold, with the border town of Musina sometimes used as a trade point. While there are informal border crossings, the official Beitbridge border post remains a preferred route for gold smugglers, given its weak controls,” it said.

In 2015, the Reserve Bank of Zimbabwe (RBZ) reported that the border was responsible for most of the country’s gold leakages.

“The ease in which it can be moved over the border makes it difficult to catch smugglers. It is reported that a smuggler will only be caught if the police have received a tip-off but they can easily pay a bribe to allow them to continue across the border,” it said.

In other instances, gold is moved to South Africa through Botswana to avoid the heavily congested Beitbridge crossing. South Africa’s strict lockdowns in response to Covid-19 have forced smugglers from Zimbabwe to increase their use of the Botswana route to come into South Africa.

A significant and growing amount of gold is also believed to be flown out of Harare airport to international transit and destination hubs, particularly the United Arab Emirates, China and India and, to a lesser extent, Russia.

This route is suspected to be used by more powerful gold dealers and political elites.

For example, in December 2019, President Emmerson Mnangagwa reported that a syndicate of businessmen had smuggled gold worth US$60 million to Dubai.

In October 2020, Henrietta Rushwaya, the head of the Zimbabwe Miners’ Federation and a relative of Mnangagwa was arrested at Robert Mugabe International Airport with six kilogrammes of gold in her handbag.

Just recently, Rushwaya’s ex-aide Tashinga Masinire was arrested at Johannesburg’s OR Tambo International Airport while trying to smuggle gold worth an estimated US$782 000 to South Africa.

He has since been released on R100 000 bail.

The report says Indian buyers are the most likely to smuggle gold in this manner.
There are also small gold flows between Zimbabwe and Mozambique across the border regions, but the direction of the flows is unclear, it said.

As part of the recommendations, the report says the transnational nature of illicit gold markets requires cooperation between law enforcement, customs services and other relevant bodies to combat criminality.

In both source and destination countries, competent authorities need to be adequately staffed, funded and trained. Communication strategies between government bodies at the national level are also needed to close any coordination gaps, it said.

“Enforcement should also focus on transit and trade hubs, particularly the strengthening of enforcement controls at airports. Land borders are difficult to police, while the geographically remote and dispersed nature of ASGM makes it a challenge to regulate mine sites,” the report says.

“This means enforcement efforts must look further downstream to transit and trade hubs for solutions. This could include assistance to airlines to better enable them to detect smuggled gold, possibly in partnership with international trade organisations.”


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