Court ruling exposes deep cracks in Zimbabwe's gold trade

A High Court ruling in favour of Al Shams Global has exposed significant weaknesses in Zimbabwe's gold trading system and raised fresh questions over the conduct of the Reserve Bank of Zimbabwe (RBZ), following a dispute involving millions of dollars in cash transactions.

The case centred on funds linked to businessman Jayesh Shah, whose agent brought US$12 million into Zimbabwe in 2025 for gold purchases. The money was declared on arrival and deposited into an account held by Fidelity Gold Refinery at GetBucks Microfinance Bank.

Days later, the RBZ froze the account, demanding clarification over US$7 million of the funds despite the full amount having been declared through official channels.

Al Shams, Shah's trading firm and a long-standing participant in Zimbabwe's gold market, challenged the move in court — triggering a case that has laid bare the inner workings of the country's gold financing arrangements.

In his ruling, High Court judge Joseph Mafusire criticised the RBZ's actions as irrational and inconsistent, highlighting the central bank's extensive financial relationship with Al Shams.

Court documents revealed that the RBZ has, for more than two decades, relied on Shah's company for hard currency loans, often described as funding for "national needs." Under a 2022 agreement, the government has reportedly been repaying the debt at a rate of US$250,000 per week, with total obligations exceeding US$53 million.

"The first respondent has from time to time borrowed from the applicant… millions of dollars in hard currency," Mafusire noted, underscoring the contradiction in the RBZ later questioning funds from a known and trusted counterparty.

The case also spotlighted Zimbabwe's unusual gold trading model, in which large volumes of physical cash are moved across borders to facilitate transactions.

Under a 2024 arrangement, the RBZ supplied Al Shams with at least 100kg of gold weekly. The company would export the gold to Dubai, sell it, and return proceeds in cash, which were then deposited locally.

Mafusire questioned the prudence of such a system, noting that Zimbabwe may be unique among gold-exporting nations in allowing cash-based transactions of this scale.

"The applicant makes the point that Zimbabwe is about the only gold-exporting country where a central bank permits… carrying cash into the country," the judge observed.

Beyond the substance of the dispute, the court found serious procedural flaws in the RBZ's handling of the matter.

The central bank failed to provide adequate justification for freezing the account and did not give Al Shams an opportunity to respond — a breach of administrative justice requirements.

Its legal defence was further weakened when a key affidavit was struck out after it emerged that it had been improperly commissioned while the RBZ governor was outside the country.

With no valid opposing evidence before it, the court set aside the RBZ's decision and ordered the immediate unfreezing of the account, along with costs.

The ruling not only restores access to the disputed funds but also raises broader concerns about regulatory oversight, transparency and financial governance in Zimbabwe's gold sector.

Mafusire concluded that the dispute reflected deeper institutional issues rather than a genuine legal conflict, suggesting it should have been resolved outside the courts.

"The parties know it: this was a matter not for the courts," he said, attributing the escalation to "personality clashes and the preservation of self-images."

The judgment is likely to intensify scrutiny of Zimbabwe's reliance on private financiers in strategic sectors and could prompt calls for reforms to strengthen anti-money laundering safeguards and central bank accountability.