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STOLEN INFLUENCE: ZIMBABWE’S POLITICAL CARTEL

Sam Brennan; Illicit Finance and Economic Threats (IFET) Team

Week of Monday, August 9, 2021


Systems of political corruption that existed under the Mugabe regime

remain intact in Zimbabwe, despite the change of power in the 2017 coup[1]


According to Transparency International’s International Corruption Perception Index, Zimbabwe was ranked the 24th most corrupt country in the world in 2020.[2] Reports have estimated that Zimbabwe loses an estimated 20% of its yearly GDP to corruption as the personal wealth of politicians, bureaucrats, and police officers all eclipse the annual income of the average Zimbabwean, which only amounts to $1000 USD per year.[3] Since the ousting of former President Robert Mugabe in 2017, systemic corruption has not been addressed by the ruling Zimbabwe African National Union – Patriotic Front (ZANU-PF) party. Under the new direction of President Emmerson Mnangagwa, who initially promised to protect human rights and fight rampant corruption, the systems of power and corruption that existed under Mugabe have remained largely unchanged. If significant anti-corruption efforts are not undertaken in Zimbabwe, it is likely that domestic cartels will expand their illicit financial networks in neighboring countries like South Africa and Mozambique. These financial and criminal networks could help finance terrorist and militant groups currently operating in these countries posing a serious regional threat. Continued corruption will also likely drive further civil unrest within the country as economic conditions continue to deteriorate driving opposition to the regime of President Mnangagwa and domestic cartels.


The main actors behind political corruption in Zimbabwe are the ruling elite that control the vast majority of the nation's wealth. Domestic cartels with the help of the ruling regime of the ZANU-PF have monopolized key industries like fuel, agriculture, and mining.[4] Zimbabwean cartels pose a serious threat to legitimate economic activities in Zimbabwe and other countries like South Africa and will likely help spread corruption and criminal activity to bordering countries with strong economic ties to Zimbabwean industry. Corruptive practices have had the effect of discouraging legitimate industries and economic growth while promoting illicit industries that serve as the only economic escape for impoverished citizens. Profound wealth inequality between the wealthy elite that control the centers of politics and industry and the citizens of the country which are left with nothing will likely foster continued resentment. As the economic situation in Zimbabwe continues to further regress, the likelihood of a domestic armed conflict between state security forces backed by the nation's elite and the country’s impoverished citizens continues to increase.


Most notably, key market players like the tobacco industry, which is the largest of its kind in Africa, are known to dodge excise taxes by smuggling cigarettes into neighboring South Africa or back into the country to be sold on domestic black markets.[5] Major economic industries within the country are highly corrupt and have strong ties to major figures within the ZANU-PF such as President Mnangagwa and former relatives and allies of former President Mugabe. The Pacific Cigarette Company, which is the main tobacco cartel within Zimbabwe, is co-owned by the nephew-in-law of former President Mugabe, Adam Molai.[6] It is likely that as President Mnangagwa further consolidates his power he will become a threat to the continued position of former associates and family members of Mugabe creating further internal power struggles within the ruling elite of the country. Cartel practices have had the effect of spreading illicit financial activity to neighboring countries creating challenges for law enforcement in dealing with Zimbabwean-sourced illicit goods. Illegally smuggled cigarettes from Zimbabwe have undercut South African vendors contributing to further economic hardship that has driven civil unrest within the country. The illicit trade for Zimbabwean goods undercuts domestic goods, deprives governments of tax revenue, and allows for criminal networks to profit at the expense of legitimate industries.


Other industries, such as the highly lucrative gold and diamond mining industries within the country, have been heavily exploited by domestic mining cartels working in conjunction with the ZANU-PF to strip mineral resources and smuggle them out of the country. It has been alleged that the first lady and son of President Mnangagwa are directly implicated in a gold smuggling ring that also mentioned the leader of Zimbabwe’s Miners Federation, along with 6 other state security officials, in an operation that looked to smuggle gold bars through Dubai.[7] Such exploitation has resulted in billions of dollars worth of rare minerals leaving the country through illicit avenues and likely helping finance further criminal enterprises as such goods are often traded over black markets amongst criminal and terrorist groups that seek to evade traditional financial routes. In 2016, the United Arab Emirates (UAE) saw $15.1 billion USD worth of gold imported from Africa which did not amount to the total exported from African countries including Zimbabwe.[8] This signals that gold smuggling and illicit financial activity still can be traced back to the Zimbabwean mining cartels as well as individuals connected to the ZANU-PF. Investigations into the connections between the ZANU-PF and profits made on the Dubai commodity markets would likely be crucial in bringing criminal cases for corruption against responsible figures within the party. Profits made by figures connected to President Mnangagwa and the ZANU-PF in the Dubai commodity markets have come at the expense of Zimbabwe's impoverished citizens.


In 2018, Zimbabwe’s auditor general stated that 82% of government expenditure had financial irregularities.[9] This figure indicates the extent to which corruption has become institutionalized within the country’s political systems and the complicity of the ZANU-PF in the maintenance of corrupt schemes using public expenditure on behalf of individuals within the party and domestic cartels. Collusion between the state and private industry to avoid accountability under the law allows the ZANU-PF and the cartels to act with impunity in directing state sponsored subsidies and policy for their personal benefit. It is highly likely that public expenditure will continue to be used to finance the personal income of party insiders and the country’s wealthy elite. As a result of this Zimbabwean public facilities like roads, health centers, and other public development projects will continue to degrade. This will likely have the effect of increasing poverty within the country and lower the standard of living which is already amongst the lowest in the world.


The rapid devaluation of the Zimbabwean dollar also indicates that key figures within the ZANU-PF and domestic cartels operate in foreign currency and likely route their personal finances through foreign banks in countries with bank secrecy laws like Switzerland. This means that efforts by foreign governments to identify and freeze the assets of top officials could produce significant results in combating political corruption within the country. In 2019 the Financial Action Task Force (FATF) reached an agreement with Zimbabwean lawmakers to strengthen its anti-money laundering schemes. While the agreement is unlikely to produce significant results, international pressure has effectively highlighted the systems of corruption within the country and will likely create further awareness of the issue within Zimbabwe and across the globe. The UK also announced new sanctions against advisors related to President Mnangagwa signaling international attention to freezing foreign assets related to Zimbabwean political corruption.


In Zimbabwe, 67% of all citizens live in poverty and 13% live in extreme poverty; in rural areas, up to 35% of people are food insecure.[10] Rapid and frequent currency devaluation has led to the emergence of underground markets that operate in foreign currency and increase the dependency of ordinary Zimbabweans on illicit industries. Desperate circumstances will likely cause impoverished citizens to increasingly turn to criminal activity and cause further social unrest within the country. It also increases the likelihood of criminal networks based in Zimbabwe attempting to expand their operations into neighboring countries like Mozambique and South Africa as the domestic situation further deteriorates.


Criminal networks in Zimbabwe are likely to be the origin for a myriad of regional and international criminal threats including but not limited to human trafficking, drug smuggling, and auto theft rings. Drug smuggling and human trafficking operations originating from Zimbabwe are likely expand to neighboring states like South Africa and Mozambique as the political and economic situations in those countries worsen. Porous borders have allowed for an increase in smuggling operations in which Zimbabwean criminal organizations have been able to traffick drugs like crystal meth and cannabis to larger markets in the region. This will likely have the effect of increasing the effects of drug addiction like poverty, public health crises, and civil unrest which the region is ill-prepared to combat. Regional destabilization caused by a new influx of Zimbabwean drugs would also likely cause a surge in emigration from the region. This poses a serious threat to regional stability as law enforcement in neighboring countries are ill equipped to fight a rise in drug trafficking.


In September 2020, opposition groups within Zimbabwe were accused of arms smuggling and being aided by political allies in South Africa.[11] These developments signal the civil unrest growing inside of the country due to the increasingly repressive laws instituted by President Mnangagwa and the desperation caused by wide scale economic corruption. Due to the extensive black market networks within Zimbabwe, arms smuggling is likely to increase among domestic opposition groups, criminal networks, and regional terrorist groups looking to acquire Zimbabwean sourced weapons. Zimbabwean arms markets could provide ISIS insurgents in Mozambique with a source of firearms and other weaponry that could prolong and intensify the ongoing conflict in the country. South African criminal organizations would also likely look to acquire Zimbabwean sourced weapons as deadly riots have seen some 337 die as a result of violence and an estimated $3.4 billion USD lost to looting and fires.[12] The emergence of black market weapons markets also threatens to escalate civil unrest within Zimbabwe as opposition groups become increasingly desperate to combat the repressive regime. Efforts to combat corruption have been met with violent backlash by state security forces as seen in several instances where striking workers have been either violently threatened, physically beaten, detained, and killed.[13] Proliferation of illicit firearms within the country could escalate tensions into full blown civil conflict threatening to destabilize the region.


The South African Development Community (SADC) in conjunction with the African Union (AU) and United Nations (UN) instituted the Zimbabwean Anti-Corruption Commission (ACC) in 2004 which has proven ineffective at prosecuting for offenses likely due to influence efforts within the organization by the ZANU-PF.[14] Crackdowns by the ZANU-PF against media outlets and journalists have seriously limited internal independent reporting within the country. Media exposure should be directed at showcasing how poverty within the country is caused by its elites tied to the ZANU-PF and domestic cartels. Substantial domestic and foreign media campaigns directed at highlighting the effects of corruption as well as further identifying the key players responsible could create more opposition to the regime, limiting its power to abuse its offices. Zimbabwean cartels connected to the ZANU-PF have largely benefitted from a substantial lack of regional cooperation by neighboring countries to limit illicit financial flows stemming from Zimbabwean industry. Neighboring countries have lacked the initiative to address the issue as many regional governments, like the African National Congress in South Africa, have close historical ties to the ZANU-PF in the struggle for independence and African majority rule. Regional efforts by the SADC to identify cartel industries and limit imports from these companies combined with stringent border control efforts aimed at tackling smuggled goods will likely reduce the illicit financial inflows that maintain the ZANU-PF. It would also have the effect of limiting illicit cross-border financial inflows that maintain underground markets throughout the region severely handicapping unregulated industries and further legitimizing the economic activity of millions.


International governments, the AU, the UN, and the FATF should address the outlays of Zimbabwe’s political corruption as many of the individuals responsible for cartel activity and corruption likely have their personal fortunes stored in foreign bank accounts. Action by the FATF could highlight and freeze individual accounts tied to the regime and domestic cartels while also compiling investigations into Zimbabwean companies connected to the ZANU-PF. Companies related to cartel practices and corruption could be placed on international blacklists in an effort to regulate and legitimize Zimbabwean industry. Past efforts to combat corruption have attempted to create and empower domestic regulatory authorities which have subsequently been corrupted and hamstrung by the political influence of the ZANU-PF; future efforts should focus on international regulation by the UN, FATF, AU, and SADC to monitor, regulate, and prosecute individuals and companies connected to the ZANU-PF and domestic cartels to avoid these shortcomings. Further monitoring and implementation of good governance policies by institutions like the UN would be required to develop future legal and political frameworks that disincentivize corruption and provide adequate enforcement of anti-corruption measures.


The Counterterrorism Group (CTG) and the Illicit Finance and Economic Threats (IFET) Team will continue to examine how political corruption in Zimbabwe relates to illicit financing and black market industries in South Africa, Mozambique, Malawi, Zambia, and Botswana. The IFET team will look to consult the AFRICOM Team, Extremism, W.A.T.C.H. Officers, and CRIME Team to assess possible relevant threats to neighboring countries and report on these developments. Future reports will monitor further developments including any possible changes in the domestic political and economic circumstances in Zimbabwe and the implications for neighboring regional and international entities.

[1]Silver and Gold Coins on Green Textile” by Edwin Jaulani licensed under Pexels

[2] Zimbabwe, Transparency International, January 2021, https://www.transparency.org/en/countries/zimbabwe

[3] Exploring the role of illicit financial flows in Zimbabwe’s political economy, Mail & Guardian, May 2021, https://mg.co.za/special-reports/2021-05-27-exploring-the-role-of-illicit-financial-flows-in-zimbabwes-political-economy/

[4] Report on Cartel Power Dynamics in Zimbabwe, Maverick Citizen, January 2021, https://www.pindula.co.zw/images/c/ce/Cartel-Power-Dynamics-02-FEB-2021-Optimized.pdf

[5] The illicit tobacco trade in Zimbabwe and South Africa, Atlantic Council, March 2019, https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/the-illicit-tobacco-trade-in-zimbabwe-and-south-africa/

[6] The illicit tobacco trade in Zimbabwe and South Africa, Atlantic Council, March 2019, https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/the-illicit-tobacco-trade-in-zimbabwe-and-south-africa/

[7] Zimbabwe first lady rejects alleged link to gold smuggling, news24, November 2020, https://www.news24.com/news24/africa/news/zimbabwe-first-lady-rejects-alleged-link-to-gold-smuggling-20201102

[8] Gold worth millions smuggled out of Africa, Reuters, April 2019, https://www.reuters.com/investigates/special-report/gold-africa-smuggling/

[9] Zimbabwe: Explosive cartel report uncovers the anatomy of a captured state, Maverick Citizen, February 2021, https://www.dailymaverick.co.za/article/2021-02-09-zimbabwe-explosive-cartel-report-uncovers-the-anatomy-of-a-captured-state/

[10] Zimbabwe: Explosive cartel report uncovers the anatomy of a captured state, Maverick Citizen, February 2021, https://www.dailymaverick.co.za/article/2021-02-09-zimbabwe-explosive-cartel-report-uncovers-the-anatomy-of-a-captured-state/

[11] Zimbabwe Opposition Accused of Smuggling Weapons, allAfrica, September 2020, https://allafrica.com/stories/202009300509.html

[12] Death toll from rioting in South Africa rises to more than 330, government says, France24, July 2021, https://www.france24.com/en/africa/20210722-death-toll-from-rioting-in-south-africa-rises-to-more-than-330-government-says

[13] Zimbabwe: Excessive Force Used Against Protesters, Human Rights Watch, March 2019, https://www.hrw.org/news/2019/03/12/zimbabwe-excessive-force-used-against-protesters

[14] Political will missing link in graft fight: CiZC, News Day, July 2021, https://www.newsday.co.zw/2021/07/political-will-missing-link-in-graft-fight-cizc/

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