News / Local
Security forces deep in gold smuggling: Report
11 Jun 2021 at 01:38hrs | Views
MEMBERS of the security forces and Reserve Bank of Zimbabwe (RBZ) officials tasked to maintain order and security in the mining sector have been accused of the smuggling of the precious mineral outside the country, a new damning report shows.
The revelations come at a time the government is struggling to contain gold smuggling amid stunning official disclosures that illegal dealers are shipping at least US$1,5 billion worth of gold outside the country annually.
The report, by Southern Africa Resource Watch (SARW), claimed that soldiers and police officers have been increasingly involved in illegal gold activities since the 2017 military coup which toppled the late former president Robert Mugabe in favour of the incumbent, Emmerson Mnangagwa.
Police spokesman Paul Nyathi could not comment yesterday as he said he had not read the SARW report.
He said: "We have not been furnished with the report. Therefore, we cannot comment on it. May those who produced the report forward it to us; then we can start from that point."
Reached for comment, Zimbabwe National Army (ZNA) spokesperson Alphios Makotore said he was out of office and would only respond to the issues raised in the report today.
RBZ governor John Mangudya said: "We are not aware of that as a central bank. If they have more information they can give us. We are not aware of that. It's news to us."
However, the SARW report claimed that most of the gold is illegally shipped from small-scale mines, to the bullion-trading hub of Dubai and to South Africa.
Zimbabwe's mining sector plays a significant role in the development of the country as it brings in foreign currency and contributes towards export earnings.
Since 2009, the mining sector has become the fastest growing with both small-scale mining companies, artisanal miners and multinational companies taking part in the gold rush.
But as a result of illicit financial flows, Zimbabwe has been losing money through gold smuggling into neighbouring South Africa and the United Arab Emirates.
To make matters worse, the security sector, which is supposed to guard against gold smuggling, is deeply involved in the illicit gold market, according to the latest report titled Illicit Gold Markets in East and Southern Africa by the Global Initiative Against Transnational Organised Crime (Global Initiative).
The report further indicates that a joint committee comprising soldiers, police officers and RBZ officials known as the Gold Mobilisation Technical Committee (GMTC), which in theory is entrusted with harmonising the work of different government institutions that have a stake in compliance issues in the gold sector and the mandate to plug gold leakages, has in fact become a major facilitator for gold smuggling.
Initially, the report says, the committee consisted of officers and RBZ officials, but soldiers, through the ZNA's investment vehicle, Nkululeko/Rusununguko Holdings, forced themselves onto it and assumed leadership of the outfit. This then corresponded with an unprecedented surge in gold leakages as Dubai emerged as the leading destination, overtaking South Africa.
Interestingly, this also coincided with a sharp decline in official deliveries to the Fidelity Printers and Refineries (FPR) - the RBZ's sole gold marketing entity.
Recently, RBZ figures show that in 2018, Zimbabwe received 34 tonnes of gold before the figures tumbled to 25 tonnes in 2020.
"It is not exactly clear when the GMTC was formed, but RBZ attributed increased gold deliveries from ASGM (Artisanal and Small-Scale Gold Mining ) in 2015 partly to the efforts of the GMTC," the report says.
"Initially, the GMTC comprised RBZ, and the ZRP department formerly called the Minerals Border and Control Unit, now called the Minerals, Flora and Fauna Unit.
"Zimbabwe's military is also becoming more involved in the country's illicit gold markets. After the military-assisted change of government in November 2017, the military, through its investment arm, Nkululeko-Rusununguko Holdings, is now part of the GMTC, and in fact is its de facto leader.
"GMTC is also involved in the vetting and final approval of gold buying licence applications. There are now stationed units of the GMTC in each province that regularly monitor the activities of gold producers - large-scale and small-scale producers. Their interest covers record-keeping, gold production returns, remittance of gold to Fidelity Printers and Refiners, and other compliance issues as required by the Mines and Minerals Act, the Gold Trade Act, and the Environmental Management Act."
The report also accuses the GMTC of being a haven for corruption as its officials allegedly solicit bribes from miners.
"Because of the potential rent-seeking opportunities this offers, as well as sizeable allowances, the GMTC is reported to be an attractive posting for military officials. The ZRP and army officials have been accused of frequenting mines and processing centres known to be non-compliant with licensing regulations in order to extort bribes. It is alleged that known gold buyers also pay regular bribes to the ZRP," it said.
The report also notes that Chinese nationals are prominent and influential actors in Zimbabwe's gold sector where they have formed partnerships with Zanu-PF elites, along with senior military and ZRP officers. Benefits allegedly include fast-tracking licences and protection from law enforcement agencies.
The report says one industry representative reported that the Chinese have the audacity to tell government compliance officers that "they are small boys".
"Chinese nationals rarely buy gold not produced at their milling centres and reportedly offer competitive gold prices, especially when wanting to retain a trade relationship with a miner who has quality gold ores," the report says.
"The quality of law enforcement heavily dictates whether the gold sector can be captured by criminals or not. The police may do their jobs to the letter of the law but, equally, they may become a tool to be used by corrupt politicians to get control of mining operations and markets."
The report also noted that there were several mining disputes that occurred in Zimbabwe when multiple mining titles were granted for the same location.
"While mining activity should be suspended while disputes are resolved, many actors instead use violence, political connections and bribery to continue operating in disputed areas," it said.
"This is especially the case when a gold rush occurs, with senior politicians reportedly abusing their power to quickly secure ownership of claims. If they are unable to secure permits, they may employ machete gangs (traditionally used for political violence during elections) to displace ASGM miners, secure access to mine sites and, in some cases, steal gold ore."
The report said in Zimbabwe, if a miner finds a profitable gold site, they must share the profits with senior politicians to secure protection against machete gangs.
In some cases, this can reflect a significant part of the value of the gold, which can add up to hundreds of thousands of dollars, according to the report.
The revelations come at a time the government is struggling to contain gold smuggling amid stunning official disclosures that illegal dealers are shipping at least US$1,5 billion worth of gold outside the country annually.
The report, by Southern Africa Resource Watch (SARW), claimed that soldiers and police officers have been increasingly involved in illegal gold activities since the 2017 military coup which toppled the late former president Robert Mugabe in favour of the incumbent, Emmerson Mnangagwa.
Police spokesman Paul Nyathi could not comment yesterday as he said he had not read the SARW report.
He said: "We have not been furnished with the report. Therefore, we cannot comment on it. May those who produced the report forward it to us; then we can start from that point."
Reached for comment, Zimbabwe National Army (ZNA) spokesperson Alphios Makotore said he was out of office and would only respond to the issues raised in the report today.
RBZ governor John Mangudya said: "We are not aware of that as a central bank. If they have more information they can give us. We are not aware of that. It's news to us."
However, the SARW report claimed that most of the gold is illegally shipped from small-scale mines, to the bullion-trading hub of Dubai and to South Africa.
Zimbabwe's mining sector plays a significant role in the development of the country as it brings in foreign currency and contributes towards export earnings.
Since 2009, the mining sector has become the fastest growing with both small-scale mining companies, artisanal miners and multinational companies taking part in the gold rush.
But as a result of illicit financial flows, Zimbabwe has been losing money through gold smuggling into neighbouring South Africa and the United Arab Emirates.
To make matters worse, the security sector, which is supposed to guard against gold smuggling, is deeply involved in the illicit gold market, according to the latest report titled Illicit Gold Markets in East and Southern Africa by the Global Initiative Against Transnational Organised Crime (Global Initiative).
The report further indicates that a joint committee comprising soldiers, police officers and RBZ officials known as the Gold Mobilisation Technical Committee (GMTC), which in theory is entrusted with harmonising the work of different government institutions that have a stake in compliance issues in the gold sector and the mandate to plug gold leakages, has in fact become a major facilitator for gold smuggling.
Initially, the report says, the committee consisted of officers and RBZ officials, but soldiers, through the ZNA's investment vehicle, Nkululeko/Rusununguko Holdings, forced themselves onto it and assumed leadership of the outfit. This then corresponded with an unprecedented surge in gold leakages as Dubai emerged as the leading destination, overtaking South Africa.
Interestingly, this also coincided with a sharp decline in official deliveries to the Fidelity Printers and Refineries (FPR) - the RBZ's sole gold marketing entity.
Recently, RBZ figures show that in 2018, Zimbabwe received 34 tonnes of gold before the figures tumbled to 25 tonnes in 2020.
"It is not exactly clear when the GMTC was formed, but RBZ attributed increased gold deliveries from ASGM (Artisanal and Small-Scale Gold Mining ) in 2015 partly to the efforts of the GMTC," the report says.
"Initially, the GMTC comprised RBZ, and the ZRP department formerly called the Minerals Border and Control Unit, now called the Minerals, Flora and Fauna Unit.
"Zimbabwe's military is also becoming more involved in the country's illicit gold markets. After the military-assisted change of government in November 2017, the military, through its investment arm, Nkululeko-Rusununguko Holdings, is now part of the GMTC, and in fact is its de facto leader.
"GMTC is also involved in the vetting and final approval of gold buying licence applications. There are now stationed units of the GMTC in each province that regularly monitor the activities of gold producers - large-scale and small-scale producers. Their interest covers record-keeping, gold production returns, remittance of gold to Fidelity Printers and Refiners, and other compliance issues as required by the Mines and Minerals Act, the Gold Trade Act, and the Environmental Management Act."
The report also accuses the GMTC of being a haven for corruption as its officials allegedly solicit bribes from miners.
"Because of the potential rent-seeking opportunities this offers, as well as sizeable allowances, the GMTC is reported to be an attractive posting for military officials. The ZRP and army officials have been accused of frequenting mines and processing centres known to be non-compliant with licensing regulations in order to extort bribes. It is alleged that known gold buyers also pay regular bribes to the ZRP," it said.
The report also notes that Chinese nationals are prominent and influential actors in Zimbabwe's gold sector where they have formed partnerships with Zanu-PF elites, along with senior military and ZRP officers. Benefits allegedly include fast-tracking licences and protection from law enforcement agencies.
The report says one industry representative reported that the Chinese have the audacity to tell government compliance officers that "they are small boys".
"Chinese nationals rarely buy gold not produced at their milling centres and reportedly offer competitive gold prices, especially when wanting to retain a trade relationship with a miner who has quality gold ores," the report says.
"The quality of law enforcement heavily dictates whether the gold sector can be captured by criminals or not. The police may do their jobs to the letter of the law but, equally, they may become a tool to be used by corrupt politicians to get control of mining operations and markets."
The report also noted that there were several mining disputes that occurred in Zimbabwe when multiple mining titles were granted for the same location.
"While mining activity should be suspended while disputes are resolved, many actors instead use violence, political connections and bribery to continue operating in disputed areas," it said.
"This is especially the case when a gold rush occurs, with senior politicians reportedly abusing their power to quickly secure ownership of claims. If they are unable to secure permits, they may employ machete gangs (traditionally used for political violence during elections) to displace ASGM miners, secure access to mine sites and, in some cases, steal gold ore."
The report said in Zimbabwe, if a miner finds a profitable gold site, they must share the profits with senior politicians to secure protection against machete gangs.
In some cases, this can reflect a significant part of the value of the gold, which can add up to hundreds of thousands of dollars, according to the report.
Source - the independent
