THE unmasking of dodgy businessman Kudakwashe Tagwirei’s vast business empire outside the country consisting of 40 companies mostly operating outside the public eye, and how he has benefitted from preferential government treatment since the 2017 military coup has brought to the fore the reality of deep-seated state capture in Zimbabwe, analysts say.
It is apparent that Tagwirei’s vast wealth has grown since the coup which toppled the late former president Robert Mugabe with President Emmerson Mnangagwa’s government playing a major role in facilitating the expansion.
The investigative report, by The Sentry, an anti-corruption NGO, was released last week. It sparked outrage on social media, with Zimbabwean calling for urgent action to stop state capture.
Once again, Mnangagwa’s rhetoric of the fight against corruption rang hollow in the face of growing criticism of how the state has awarded Tagwirei’s Sakunda Holdings more than US$1.6 billion in contracts and procurement deals.
But the question is: Who is benefitting from the vast business interests?
Government officials’ unholy alliance with Tagwirei could mean the state is colluding with businessmen to milk the country’s resources while millions of citizens are wallowing in extreme poverty.
It is also worrying that the flirtatious relationship between the state and Tagwirei blossomed after the coup, making him one of the biggest beneficiaries of the military operation dubbed “restore legacy” which was undertaken ostensibly to fight criminality.
The late Foreign minister Sibusiso Moyo is on record as asserting: “We are only targeting criminals around him (Mugabe) who are committing crimes that are causing social and economic suffering in the country in order to bring them to justice. As soon as we have accomplished our mission, we expect that the situation will return to normalcy.”
According to Moyo’s address to the nation, after military tanks stormed the streets of Harare, the “new” dispensation’s main thrust was to deal with corruption and corrupt individuals in government.
But nearly four years after the coup, the regime is harbouring dodgy businessmen and lavishing them with major public tenders worth billions of dollars.
Such tycoons are not only fattening their pockets but also enjoying the protection of the state.
Tagwirei, a Zanu PF benefactor who has over the years bankrolled the party’s salaries, vehicles and day-to-day operations, has the state eating from his palm.
Other conspicuously well-timed government directives – about importing buses, buying gold, tax breaks, and purchasing water purification chemicals – may have disproportionately benefited Tagwirei’s companies and should be investigated for evidence of his influence on public decision-making.
Tagwirei has hogged the limelight-for the wrong reasons, amid a deafening silence from Mnangagwa, the opposition and civil society organisations – who should be speaking loudest.
The general silence from the opposition is worrying, considering the deep-seated corruption which costs the country more than US$1 billion annually.
The media, except a few outlets, have published The Sentry’s investigative report into Tagwirei’s vast wealth in a number of countries, including offshore havens.
By analysing hundreds of company documents, court filings, and communications, The Sentry’s investigation shows how Tagwirei used complex corporate structures to build and hide his wealth, potentially benefiting from preferential government treatment along the way.
Tagwirei has invested in gold, nickel, platinum and chrome mines by hiding behind South African businesspeople and offshore structures in Mauritius and the Cayman Islands and by using lawyers and financiers who are seemingly happy to turn a blind eye to accusations of cronyism and corruption.
The documents uncovered by The Sentry also show how Tagwirei has used similar networks to hide his financial interests in Zimbabwe’s new public-private partnership mining company, Kuvimba Mining House, with Zimbabwe’s Finance ministry reportedly collaborating to deflect public scrutiny from these arrangements.
In 2019, Tagwirei paid millions of dollars to a Zimbabwean military-owned company so that Landela Mining Ventures, a company he controlled, could purchase 50% of Great Dyke Investments (GDI), a platinum entity worth hundreds of millions and run as a joint venture with a Russian firm.
The payment raises fears about off-budget financing of Zimbabwe’s abusive and partisan military. An examination of Tagwirei’s business track record reveals a pattern of accusations of privileged access and special treatment, some of which may warrant further investigation by regulators and law enforcement.
On 27 January 2021, over a year after Landela Mining Ventures had bought half of the platinum entity, Zimbabwe granted GDI a five-year corporate income tax holiday and exempted its shareholders resident in Zimbabwe from resident shareholders’ taxes on GDI dividends—retroactively applied to January 1, 2020.
Auditors investigating corruption red flags in a 2016 US$630 million diesel-powered electricity generating plant contract found that the Office of the President had improperly interfered with the procurement process, ordering officials to evaluate Tagwirei’s sole bid outside the standard process.
Other decisions worthy of further investigation include allegations of preferential access to hard currency and the appointment of Tagwirei’s oil trading company, without a tendering process, to run a US$1 billion agriculture project.
In addition to alleged business dealings with the Zimbabwean military, Tagwirei appears to have the ability to contact senior civilian officials in Zimbabwe at short notice, particularly at the Reserve Bank of Zimbabwe.
Such high-level access, together with the pattern of previous decisions, raises the possibility of state capture, when the public realm — particularly regulatory, legal, and public policy decision-making — has been influenced to benefit private interests. Senior officials at Tagwirei’s companies have denied state capture.
The operations of Tagwirei’s network are emblematic of larger structural problems in Zimbabwe.
A select group of politicians, the military and businesspeople dominate government decision-making with little oversight or scrutiny. Key information about public finances remains shrouded in secrecy.
Political analyst Stephen Chan said the report revealed corporate capture of the state.
While it is nothing new in the international financial world, it is apparent that the state has become a vehicle for corruption by the corporates.
“The creation of a vast web of often legal, but sometimes borderline companies is almost always designed to cover something illegal or to launder money gained by corrupt means. It requires much international cooperation to do this – so it is the international relations of a twilight zone of lawyers and accountants in Western countries, including in the USA,” Chan said.
“But the Tagwirei ‘twilight empire’, while in fact nothing new in the international financial world, nevertheless is a clear indication of what some people would call corporate capture of the state. I think, in the case of Zimbabwe, it is the state becoming itself a corporation. A corrupt corporation. Such a state does not prioritise at all the welfare of the common people, but is a vehicle for the corrupt capture and monopoly of funds for selfish purposes,” he added.
Political analyst Ibbo Mandaza said the report, “speaks for itself on the level of government involvement.”
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