How Zimbabwe uses gold smuggling to evade sanctions choke

The Zimbabwean government uses smuggling gangs to sell gold worth hundreds of millions of dollars. The research unit of Al Jazeera (I-Unit) can reveal.

The smuggling leads to a massive money laundering operation, all facilitated by Fidelity Gold Refinery, a subsidiary of the Zimbabwean central bank, and in some cases facilitated directly by senior government officials and relatives of the country’s president, Emmerson Mnangagwa.

The government of Zimbabwe needs US dollars because the local currency has no value in international trade due to continued hyperinflation over many years. Gold – the country’s largest export – is a good way to earn dollars.

But while the gold trade itself is not banned, the additional control sanctions imposed by Zimbabwean officials hamper the government’s ability to transact directly in the international financial system, especially in dollars, said Karen Greenaway, a former U.S. Federal Bureau of Investigation agent. of Investigation (FBI) that traces illegal money flows.

“So you have to think of other ways to do that,” she told Al Jazeera.

Meanwhile, international money launderers have undeclared cash at their disposal that they need to convert into legitimate money. Gold smugglers provide a way around these complications, both for money launderers and the Zimbabwean government.

Smugglers, who do not face the sanctions imposed by government officials, take the gold from Zimbabwe to Dubai, where it is then sold in exchange for clean money. This money is transferred through the smugglers to the bank accounts of the money launderers, who transfer an equivalent amount of their dollars to the Zimbabwean government through the smugglers.

“Moving the money abroad and laundering it and then bringing it back. It’s a common money laundering technique,” money laundering expert Paul Holden told Al Jazeera. “What I haven’t seen is the use of gold, which I think is quite interesting.”

This revelation is part of The Gold Mafia, a four-part series revealing how rival gangs have taken over the gold trade in southern Africa and laundered hundreds of millions of dollars.

The Al Jazeera reporters posed as Chinese criminals looking for a way to launder more than $100 million. Several gangs with high-ranking connections in the Zimbabwean government all offered ways to launder the money using smuggled gold.

The smugglers

Al Jazeera’s I-Unit infiltrated several smuggling gangs during the investigation. Most prominent among them was Ewan Macmillan, who served time in prison; Kamlesh Pattni, a smuggler accused of nearly bankrupting Kenya’s economy in the 1990s; and Simon Rudland, a millionaire cigarette entrepreneur.

Under Zimbabwean law, only the country’s central bank can buy gold from miners. But it often doesn’t have enough money to pay the country’s miners, so it contracts smuggling gangs to buy gold on its behalf.

“If someone comes to sell me gold, I don’t have to write his name down, I don’t have to do anything,” Macmillan said, offering his services to Al Jazeera reporters. ‘I’ll just take his gold, pay him, he’ll leave. I supply to the government. The government does not ask me any questions.”

Pattni has a similar deal with the Reserve Bank of Zimbabwe, according to documents Al Jazeera has access to.

The central bank, in turn, has issued licenses to these smugglers to smuggle millions of dollars worth of gold out of the country, the documents show.

“This country has sanctions. So the country cannot sell the gold. So an individual can sell it, because he has no sanctions,” Macmillan said.

Cleaning gold and money

Using a group of couriers, the gold is then smuggled in hand luggage and suitcases to Dubai, where it is refined and marked with a Dubai stamp, removing any trace of its problematic origins and making it easier to sell in international markets.

“It’s smuggling, that’s it,” Macmillan acknowledged with a smile.

Documents show that Pattni and Macmillan were then authorized to bring cash allegedly from the sale of the gold back to Zimbabwe. For example, one document shows that a Pattni company can transport $3 million a week in cash to Zimbabwe.

“We have our own license, which is cleared at Dubai airport. We have permission from the Central Bank of Dubai. We have permission from the Reserve Bank [of Zimbabwe]Pattni told Al Jazeera undercover reporters.

This process also allows these smugglers to clean up black money – for others and for themselves.

Rudland, an acquaintance of Macmillan, owns Gold Leaf Tobacco, one of the largest cigarette manufacturers in Southern Africa. The South African tax authorities have accused Rudland of tax evasion by selling cigarettes on the black market.

The Al Jazeera investigation uncovered a complex web of front companies and fake identities that helps Rudland move hundreds of millions of dollars in cash across borders for nonexistent imports. Some of these companies help him export Zimbabwean gold, while others buy that same gold from Rudland’s couriers in Dubai.

The President’s “diplomat.”

The Al Jazeera team also discovered another, more direct route used by senior representatives of President Mnangagwa to raise black money in exchange for the country’s gold.

Uebert Angel, one of Zimbabwe’s top diplomats, was personally appointed by Mnangagwa in 2021 as Ambassador General and Presidential Envoy, tasked with attracting foreign investment.

Angel, who is also a pastor at his Good News Church, told Al Jazeera that he could use his diplomatic status to smuggle gold for cash with the help of Henrietta Rushwaya, a niece of Mnangagwa and the president of the Zimbabwe Mining Association.

During a phone call, Rushwaya explained the plan: money launderers park $10 million in black money in the government’s gold refinery, Fidelity. Of that, $5 million would be held in reserve by Fidelity for the duration of the scam, with the rest used each week to buy gold – which can then be sold in Dubai in exchange for clean cash.

“You want gold, gold, we can do it now, we can call now and it’s done,” Angel told Al Jazeera reporters. “It will land in Zimbabwe. Zimbabwe can’t touch it either until I get to my house. So there may be a diplomatic plan.”

At the meetings, Angel and his deputy, British pastor and musician Rikki Doolan, repeatedly said that everything they did had “number one” approval, referring to Mnangagwa.

Asked for comment on Al Jazeera’s investigation, Simon Rudland, the cigarette entrepreneur, told us that all allegations against him were false and part of a smear campaign against him by an unidentified third party. He described himself as “a strong businessman … competing with the greedy and jealous”. He denied any involvement in the sale of illegal cigarettes, gold or other smuggling and circumvention of sanctions.

Gold Leaf Tobacco, his company, emphatically denies any past or present involvement in money laundering, illegal gold trading or related matters.

The Reserve Bank of Zimbabwe has informed us that it takes money laundering and illicit trafficking very seriously and will not participate, directly or indirectly, in such activities.

Fidelity, its subsidiary, denied having any business relationship with Simon Rudland or giving gold export licenses or incentives to those we identified. It also denied any involvement in money laundering, smuggling and lifting sanctions.

Fidelity denied having any business relationship with Simon Rudland or giving gold export licenses or incentives to those we identified. It also denied any involvement in money laundering, smuggling and lifting sanctions

Kamlesh Pattni, the smuggler, said there was no basis for criminal misconduct charges against him in Kenya. He denied involvement in any form of money laundering or sanctions lifting, as well as employing anyone to smuggle cash or offer to deal with money he knew came from illegal sources.

President Mnangagwa, Angel, Doolan, Macmillan and Rushwaya did not respond to Al Jazeera’s request to comment on the investigation’s findings.