MPs probe Kuvmiba, Zamco shadowy shareholding setup

The Ministry of Finance and Economic Development is failing to furnish parliament with a detailed structure of government-owned Kuvmiba Mining House and the Zimbabwe Asset Management Corporation (ZAMCO) despite several calls, raising concerns about authorities’ commitment to transparency and accountability.

The shadowy Kuvimba, which has been linked to President Emmerson Mnangagwa’s advisor and businessman Kuda Tagwirei, has been acquiring vast public assets resulting in a growing demand for government to reveal its beneficial owners.

Treasury has stubbornly refused to give detailed information on the two organisations among others, in defiance of the Public Finance Management Act.

Harare North legislator, Rusty Markham, has been filing several written questions on the Order Paper the Minister of Finance and Economic Development Mthuli Ncube to provide detailed information about various subjects, but the request has fallen on deaf ears.

This month, Markham made multiple inquiries about Kuvimba Mining House – its establishment, structure, place of registration, shareholders apart from the Government, its current asset value, its subsidiary companies, and why no reports and results have been submitted in accordance with the Public Finance Management Act, according to legal think tank, Veritas.

“I am waiting for the answer. They were supposed to answer last week on Wednesday, but the deputy minister asked for another week.

“However, having engaged those people after having set up Kuvimba, and the Sovereign Wealth Fund – not now, but years ago, they should have all that information,” Markham told The NewsHawks this week.

Kuvimba Mining House has been linked to business tycoon Kuda Tagwirei, who was placed on the United States sanctions list in 2021, and on further additional measures, by the office of the Office of Foreign assets Control (OFAC) last year, together with wife Sandra Mpunga, Nobile Magwizi, Fossil Agro, Fossil Contracting, and Obey Chimuka.

In 2020, the OFAC designated Tagwirei for having materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, the Government of Zimbabwe; and Sakunda for being owned or controlled by Tagwirei.

“Tagwirei has utilised his relationships with high-level Zimbabwean officials to gain state contracts and receive favored access to hard currency, including U.S. dollars. In turn, Tagwirei has provided high priced items, such as expensive cars, to senior-level Zimbabwean government officials.

“Since former Zimbabwe President Robert Mugabe’s 2017 departure, Tagwirei used a combination of opaque business dealings and his ongoing relationship with President Mnangagwa to grow his business empire dramatically and rake in millions of U.S. dollars,” according to the OFAC report.

However, government has countlessly refused links to Tagwirei.

Tagwirei links to Kuvimba

An investigation by The Sentry has revealed Tagwirei links to Kuvimba Mining House through Sotic International, an offshore company based in Mauritius.

According to the investigation, Sotic’s strategy was to use Tagwirei’s wealth to buy local Zimbabwean companies that earned hard currency through mining exports and then use those dollars to import fuel and other commodities into Zimbabwe.

Between 2018 and 2020, Sotic entered into an arrangement to buy 85% of ZimAlloys, a ferro-chrome producer based in Gweru, 75% of Bindura Nickel, owner of Trojan Nickel Mine, 85% of Great Dyke Investments, 100% of Shamva, Mazowe, and Redwing, among other Zimbabwean mines.

After Tagwirei was sanctioned in August 2020, he appeard to have moved his mining assets away from Sotic to a then-little-known Zimbabwean firm, Kuvimba Mining House, through a newly established company, Ziwa Investments, which is the only private shareholder in the Kuvmiba partnership.

Finance Minister Mthuli Ncube and Kuvimba’s [late] Chief Executive David Brown*, have claimed that the government of Zimbabwe owned 65% of Kuvimba’s shares, while the remaining 35% were held by Ziwa Investments.

Both men denied the involvement of Tagwirei in the new structure.

Kuvimba’s records are not available in Zimbabwe’s company registry, and Ziwa Investments appears not to exist. However, a company called Ziwa Resources was registered by lawyers at Tagwirei’s law firm.
Almas Global Opportunity Fund, formerly used by Tagwirei to invest in Sotic International via the Cayman Islands, owns 65% of Ziwa Resources. The other 35% is owned by Zimbabwe-registered Pfimbi Resources, whose directors are Tagwirei and his wife.

Kuvmiba owns many of the same mines once owned by Sotic.

According to a December 10, 2021 Zimbabwe stock market announcement, “Sotic and its associates” – likely Tagwirei, given his effective control of the firm – nominated an unknown Zimbabwean company, Kuvimba Mining House, to own some of the assets previously bought by Sotic, such as Bindura Mining Corporation, hence fears of illicit financial and mineral flows.

In 2021, findings by The Sentry showed how Tagwirei used complex corporate structures to build and hide his wealth, potentially benefiting from preferential government treatment along the way – by analysing hundreds of company documents, court filings and communications.

The investigation showed that Tagwirei had invested in gold, nickel, platinum, and chrome mines by hiding behind South African business people 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.

Documents uncovered by The Sentry also show how Tagwirei has used similar networks to hide his financial interests in the public-private partnership mining company, Kuvimba Mining House, with Zimbabwe’s Finance Ministry reportedly collaborating to deflect public scrutiny from these arrangements.

Sovereign Wealth Fund

On Zamco, Markham has been questioning the ministry’s failure to share with Parliament a list of the “end beneficiaries”, i.e. the borrowers, both individuals and companies, whose non-performing loans (NPLs) were acquired, how they were selected etc, and other information relating to the operations of Zamco.

A non-performing loan (NPL) is a sum of borrowed money whose scheduled payments have not been made by the debtor for a period of time – usually 90 or 180 days.

In 2021, Zamco mopped up NPLs from the market using a US$1.2 billion facility borrowed from government, reducing the ratio from 20,45% against the internationally acceptable threshold of 5%.

Zamco was set up in 2014 by the Reserve Bank of Zimbabwe (RBZ) to resolve the problem of excess non-performing loans (NPLs) of banking institutions in Zimbabwe through acquiring, restructuring and disposal of NPLs.

Banks are required by law to report their ratio of non-performing loans to total loans as a measure of determining credit risk and quality of outstanding loans. However, the company has been failing to provide names of beneficiaries for transparency.

The Finance Ministry (?) has also failed to provide information on the Sovereign Wealth Fund’s performance since its inception in 2015.

Hence, parliamentarians have been calling for the information pertaining to its current board, “its reports and why there is such a dearth of information available to Parliament and the public about the Fund seven years after the Act was passed”.

Sovereign Wealth Fund is a State-owned facility that is established from the balance of payment surpluses, official foreign currency operations, the proceeds of privatisation, government transfer payment, a fiscal surplus and resource earnings.

Last year, an equivalent of US$100 million was set aside in the 2020 National Budget to operationalise the Fund, which is established from balance of payment surpluses, official currency operations, privatisation proceeds, government transfer payment, fiscal surplus and resource earnings.

Nathan Guma

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