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US$4bn lost a year to illicit flows



FORMER Finance minister Tendai Biti (pictured) says Zimbabwe could be losing up to US$4 billion a year through illicit financial flows, part of which involve major mining companies such as Zimplats and Unki.


Speaking in Parliament this week, Biti said Zimbabwe is losing more than US$1bn to gold smuggling, US$1bn to tobacco smuggling and possibly US$2bn through lithium leakages.

 “We are losing a billion US$1bn from tobacco smuggling, US$1bn from gold smuggling on its own and we are now losing possibly US$2 billion on lithium alone,” Biti said.

 He said the estimated loss is more than earnings the country has been getting through remittances. “Madam Speaker I am concerned about the issue of illicit financial flows in Zimbabwe. We are losing over US$2 billion annually in illicit financial flows. What we are losing in terms of illicit financial flows is actually more than what we are getting in terms of diaspora remittances US$1 billion, what we are getting in terms of foreign aid or overseas development assistance and what we are getting in terms of foreign investment which is around US$200 million.

“The major culprits are the mining houses — organisations such as the ZimPlats of this world, the Unkies of this world who are guilty of transfer pricing, thin capitalisation, under-invoicing and over-invoicing,” he said.

Biti said while there has been mining activity by major companies, there has been little to show for it, with the extractive sector continually bleeding. He said the majority of Zimbabweans are living in poverty despite the country’s vast mineral endowment. “It (mining sector) is accounting for US$6/7 billion a year, yet billions are getting out of our country. We have got 65 minerals but they are not benefiting our country.

 “Most of the mining model in Zimbabwe is extractive. You come in, you loot and you get out leaving total destruction, unemployment and so forth. Look at the status of Mhangura in Mashonaland West province, it is a ghost town.

 “Go to Renco in Masvingo, the road there looks like a road that was built in 1492 but they have been getting gold from our country. So I urge that the minister of Finance and minister of Industry and Commerce should come up with legislation that deals with illicit financial flows from this country,” he said. Biti also said the country has been losing more money through the smuggling of tobacco and possibly US$2 billion on lithium alone.

“As I am talking to you right now, the price of lithium is US$80 000 a tonne. That is the new black gold and we have nothing to show for it. So I urge that the authorities come up with legislation on illicit financial flow and push the UN to come up with an international convention that deals with illicit financial flows,” he said.

His remarks come at a time Qatari news channel, Al Jazeera has released an expose revealing how politically-connected acolytes are involved in underworld gold smuggling activities. In the hard-hitting documentar, close associates of President Emmerson Mnangagwa say how they can launder dirty money — using what they call their laundromat — gold and the central bank.

The Zimbabwean government is on record as admitting that the country loses at least US$100 million per month in gold leakages, which translates to over US$1.2 billion.

 Earlier this month, a sub-committee of the National Anti-Corruption Strategy (NACS), which comprises law enforcement agencies responsible for financial investigations, reported an increase in cases of high-profile illicit financial flows in the country.

 In a report tabled at the NACS’ latest meeting held in Harare on 2 March, the committee reported that there were a total of 71 high-profile illicit financial flow cases received by the country’s law enforcement agencies (LEAs) in the first quarter of this year.

In  January alone, the RBZ’s Financial intelligence unit recorded 28 cases of illicit financial flows, up from only two recorded in December last year, according to the report.

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