Kuda Tagwirei and Zimbabwe's President Emmerson Mnangagwa. Mnangagwa has previously equated Tagwirei to the Biblical Peter.

The US has put him under sanctions but Zimbabwe’s Kuda Tagwirei is busting them: Here is how

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As the ruthless, army-backed successor to Robert Mugabe, Zimbabwe’s President Emmerson Mnangagwa is known as the crocodile.

And yet the best symbol of how hopes for a better Zimbabwe have faded since the 2017 coup against Mugabe is, in many ways, a bee.

After he took power, Mnangagwa promised to make Zimbabwe “open for business” and to end systematic corruption that obliterated the economy under the late dictator.

But for many ordinary Zimbabweans, his regime has become associated instead with a ‘Queen Bee’ – Kudakwashe Tagwirei, a business magnate in the southern African nation who has gained the moniker because of his perceived element of control over Mnangagwa’s government and ruling Zanu-PF that allegedly benefits his commercial interests.

Tagwirei owns Sakunda, a fuel importer that until last year had a joint venture with Trafigura, the global trader. He has maintained a public silence on the claims against him and the true extent of these alleged interests has been a mystery. Until now.

Tagwirei secretly controlled an offshore empire that bought up a major share of the southern African nation’s mineral wealth and funnelled millions of dollars through shell companies, according to documents including a court filing seen by FT Alphaville.

Tagwirei, according to the documents, directed Sotic International, a Mauritius-based commodity trader that went on a mine-buying spree in Zimbabwe in the last two years, and a web of related companies across three countries. Tagwirei did not respond to requests for comment.

On Thursday, the Sentry, the US investigative anti-corruption NGO, also released a report on Tagwirei’s business activities. Last year the US imposed sanctions on Tagwirei and accused him in a statement of using “a combination of opaque business dealings and his ongoing relationship with President Mnangagwa to grow his business empire dramatically.” 

The sanctions also targeted Sakunda as the company most closely tied to Tagwirei. But documents seen by AV indicate that Tagwirei’s corporate reach goes much further.

A complex web Sotic and South African, Mauritian and Zimbabwean companies were “fully integrated” parts of Sakunda, according to an application to a South African court that Tagwirei authorised last year just before the US sanctions.

Tagwirei also oversaw a group of South African executives who managed the companies day by day, while directing their financing behind the scenes, according to emails and records. Tagwirei did not respond to requests for comment.

Meanwhile, Tagwirei also acquired shares in a Cayman Islands-registered investment fund, Almas Global Opportunities, that later acquired a two-thirds stake in Sotic, according to his signed subscription to the shares dated October 2019.

Almas denies that he is currently a shareholder but declined to comment on whether he previously held shares. A Sotic corporate plan seen by Alphaville that indicates the investment links between Tagwirei – or ‘KT’, Almas Global Opportunity Fund, and the company as it made a Zimbabwean mining deal.

The team of executives owned the other third of Sotic through Pfimbi, a Mauritian company, while managing companies that were paid by Sotic, according to records.

Christopher Fourie, the founder of Sotic and its former sole shareholder, told the Financial Times that Tagwirei was not personally a shareholder in Sotic to avoid ‘know your customer’ alarms at banks that would have stopped Sotic operating.

“It was my personal and professional opinion that Kuda would not pass the compliance/KYC checks… I therefore did everything within my power not to have him as a shareholder or director,” Fourie said. Tagwirei did not respond to a request for comment.

Fourie, a former M&A manager at Puma Energy, Trafigura’s fuel business, has been estranged from the companies since last year but he still owns shares in Pfimbi. The lawsuit last year sought an order to prevent Fourie disparaging Sotic and other companies. The case is yet to be resolved.

“When I became aware of the conflicts of interests, financial mismanagement and lack of basic corporate governance, I indicated that I was duty bound to report matters” to the authorities, Fourie said. The lawsuit “was an attempt to gag me,” he said.

Jozef Behr, Ronelle Sinclair and Christian Weber, other executives, said that “none of us nor any of the entities with which we are associated, have had any business relationship with Sotic International or Christopher Fourie since June 2020.”

‘Queen Bee’

Confidants describe Tagwirei as an intensely private Seventh Day Adventist businessman. Opposition politicians and dissidents accuse him of being a backroom operator who is able to commandeer access to state resources, including hard currency in a country wracked by recurrent shortages and monetary chaos.

The accusations echo those levelled against the Gupta family in South Africa’s ‘state capture’ saga over the last decade, but on a much grander scale relative to the size of Zimbabwe’s battered economy.  For a sense of that scale, in 2019 the FT revealed that the IMF raised the alarm over Zimbabwe’s central bank in effect printing money to fund over $360m of state payouts to Sakunda.

The payouts helped to further undermine Mnangagwa’s new Zimbabwe dollar, which was already failing to end severe shortages and a black-market trade in US dollars and led to triple-digit inflation rates.

“If ever there was state capture, it is Sakunda,” Tendai Biti, Zimbabwe’s former finance minister, has said. Sakunda has denied any wrongdoing. Tagwirei himself has been publicly silent on the matter – and did not respond to requests for comment on this story.

Yet even as Sakunda was steeped in scandal over Tagwirei’s alleged political connections, Sotic was buying up significant mining assets in Zimbabwe from 2019 to 2020 without being firmly linked to Tagwirei.

The acquisitions included Bindura Nickel, a miner, Zim Alloys, a chrome producer, gold mines, and a 50 per cent share in a major platinum deposit, untapped but claimed to be one of the world’s largest by the Russian investors who hold the other half. 

Sotic was paid fees from mines, according to records. As these mine deals were being made, David Brown, a South African mining veteran, was appointed as chief executive of Sotic last year.

Then at the end of 2020, this mining empire changed again when Zimbabwe’s government said that a new state-owned company, Kuvimba, was operating Sotic’s assets. Terms of the deal were not disclosed.  The government denies that Tagwirei was involved in the assets, as does Brown, who was appointed Kuvimba’s chief executive but is now leaving that position months later. Tagwirei is “absolutely not connected with us,” he told MiningMX this year.

In his former role as Sotic chief executive, Brown referred to discussing business matters with Tagwirei, and deferred to him on “shareholding arrangements/agreements,” according to emails.

Brown, a former chief executive of Impala Platinum and a board member for Vodacom and Northam Platinum, said that “Tagwirei does not give me directions and in fact [I] have seen him once in the last seven months.”

The Mauritius connection

Tagwirei appears to have used several front companies across Mauritius, Zimbabwe and South Africa to manage mining interests and a commodity trading operation, from which millions of dollars were extracted, according to records. 

In South Africa, companies with names such as Takutata, Suzako Investment, Redfox Management, and African Connection Logistics were run by the same executives, emails and records indicate.

Behr and Sinclair, two of these executives, referred to taking directions from Tagwirei, regularly involved him in corporate discussions, and relied on his resources and approval for financing the companies, according to emails.

Behr, a former Trafigura trader, and Sinclair declined to comment. The companies were all named as Sakunda affiliates in last year’s lawsuit, which was brought on behalf of Takutata by Brown, who was a briefly a director in the company alongside Tagwirei at the time as well as chief executive of Sotic.

“The Sakunda group of companies are fully integrated and each operates for the common benefit of all the companies who are affiliated under the broad umbrella of the group,” Brown said in the filing.

Brown told Alphaville that his description “was merely a strategy to sort an HR matter” against Fourie.

‘The group concept is not a ‘legal’ one and as such even though there might have been common directorships/relationships across various companies in the past it does not and never did imply that there was a common ownership structure in the conventional sense,” he added.

Since June last year, Sotic’s business dealings “have been governed by a strict set of rules to ensure that we are appropriately distanced from Takutata and Sakunda,” Brown said.

International links 

Tagwirei managed cash from across the various companies that was held in Sotic, according to emails.

These emails also reflect Sotic’s international trading links, at least before the US sanctions on Tagwirei and Sakunda.  This included Sotic buying fuel from Trafigura and Glencore to supply to Zimbabwe, according to invoices dated early 2019.

“We sell fuel to a large number of different parties within the Zimbabwe market, all on a fully arms’ length basis and with all counter-parties subject to Trafigura’s robust KYC procedures which include the strictest adherence to applicable sanctions,” Trafigura said.

Glencore declined to comment although it is understood it moved to stop trading with Sotic in 2019. Weber, another key executive and Pfimbi shareholder, oversaw Suzako, a company that brokered commodity transactions between Sotic and Fossil, a Zimbabwean group of companies.

Fossil is owned by Obey Chimuka, an associate of Tagwirei who was also included in Sotic email discussions. Chimuka did not respond to a request for comment.

Fourie said that he was made to sign off invoices without being given full details of the trades, or he was told “that Kuda had already approved the payment.”  Fourie added that there seemed to him “no commercial rationale for Suzako to be in the middle other than to divert profits by way of transfer pricing,” a term for inter-company trades.

Chimuka and Tagwirei did not respond to requests for comment. Weber, a former Puma Energy trader, declined to comment.

Cape Town-based Suzako, which describes itself as an independent fuel provider, lists Sinclair, Behr, and Weber as executives on its website. Weber and Behr are shareholders in Suzako, according to records. Behr, Sinclair and Weber declined to comment.

Despite this multimillion-dollar commodity trading, Sotic appears never to have recorded a profit. Fourie said that he never received shareholder payments. Bank records show that Sotic did make millions of dollars in payments to other companies in the network. 

“Whenever there was cash in the [Sotic] bank account, invoices would be produced for payments to be made” to Redfox, Suzako and other companies, Fourie said.

“These entities would not have existed if it were not for the millions of dollars in payments [they] had received from Sotic and/or its underlying assets/companies,” he added.

Behr, Sinclair and Weber were shareholders in Pfimbi at the same time as these South African companies traded with and were paid by Sotic under their management, according to documents seen by FT Alphaville.

“When I raised this with them, I was told by them that everything is controlled and all decisions are made by Kuda,” Fourie said.

Suzako continued to be paid by Sotic after June last year, according to bank payment records. Behr, Weber, and Sinclair said that they currently have no business dealings with Sotic.

Tagwirei referred to Takutata as his personal company in the emails and was a director in the company, according to the South African court filing and the Orbis corporate database, published by Bureau van Dijk.

Tagwirei was also referred to as Takutata’s shareholder in emails. Brown said that he briefly joined Takutata last year and left because of the US sanctions on Tagwirei.

“Mining potential . . . ”

Documents also indicate that Tagwirei backed a fund that invested in Sotic as it was making a mining deal, and which ultimately acquired a majority stake in the company.

As Sotic was bidding to buy Bindura Nickel and Zimbabwean gold assets out of administration from Asa Resources, a UK company, in 2019, Tagwirei subscribed to $9m of shares in the Almas Global Opportunities Fund days before it was issued $8.2m in debentures by Sotic, according to agreements for the shares and the debentures.

Another document was drawn up for Almas to assign the debentures to Tagwirei’s control, but it is not clear that it was ultimately executed.

 “There is no relationship between the subscriber and the investee company” in fund investments and the fund cannot assign assets to individuals, Amardeep Sharma, the Almas fund’s manager, said. “To the best of my knowledge [Tagwirei] does not control Sotic,” he added.

The debentures helped to finance the approximately £20m acquisition, according to corporate plans. The administrator of Asa Resources at the time did not respond to a request for comment.

Last year Almas converted the debentures into shares that gave it 65 per cent of Sotic, according to the notice sent to Sotic by the fund, and share ownership records.

Almas is now seeking to quit its stake after concluding that the mining assets are too challenging, but still owns it, Sharma said.

Kuvimba, the company that is managing Sotic’s assets, said last week that it will pay over $5m in dividends to the government entities that hold 65 per cent of its shares. 

The dividend is “the results of a strategy which the government of Zimbabwe has taken to create an enabling environment for the reactivation of previously under-utilised economic assets,” Mthuli Ncube, the finance minister, said.

Like Almas, Pfimbi, Sotic’s minority shareholder, remains, according to records.

But there is trouble on the horizon. In June Capital Horizons, the Mauritian company agent for Pfimbi, withdrew its services due to a change in “internal policy and business strategy,” according to a letter to shareholders seen by Alphaville.

Capital Horizons did not respond to a request for comment.

This story was taken from FT.com. Read the original here