Defence committee confirms RBZ arm behind surge in gold smuggling

The latest report by Parliament’s Portfolio Committee on Defence, Home Affairs and Security Services on the security of minerals, illicit trading and mineral leakages has confirmed that delay in payments for gold by Fidelity Gold Refiners (FGR), the sole buyer of the mineral, is contributing to the current surge in looting and smuggling of the precious mineral.

In 2020, the government of Zimbabwe said the country was losing about US$1,8 billion of mineral revenues; especially from gold smuggling.

A committee tasked to investigate causes of gold smuggling on Wednesday presented a report in the National Assembly.

It noted that porous borders and delays in payments by FGR, an arm of the Reserve Bank of Zimbabwe (RBZ) tasked to officially buy gold, were some of the reasons behind the surge in illicit gold smuggling.

“The Committee was informed by small-scale producers that Fidelity Gold Refiners, the sole buyer of gold, takes more than one week to pay producers after surrendering of gold.

“This is not amenable to the economic well-being of the small-scale producers, because they require their money in the shortest possible period,” read part of the report.

“As a result, the small-scale producers were selling their gold to unregistered buyers who offered cash upon delivery of the gold, Gold smugglers prefer to sell gold in external markets where they are guaranteed cash payments and not bank transfers.

“Therefore, buyers would then smuggle the gold out of the country using undesignated exit points and thus robbing the country of thousands of dollars.”

The committee further established that porous borders were also to blame. It noted that there were fifteen well-known unregistered exit and entry points between Mozambique, South Africa and Zimbabwe facilitating gold smuggling.

“When the Committee visited Beitbridge Border Post, it was informed by ZIMRA (Zimbabwe Revenue Authority) officials that there was a stretch of 230 kilometres of the borderline encompassing Zimbabwe, Mozambique and South Africa, which was poorly manned by law enforcement agencies in Zimbabwe.

“Along that borderline there were over fifteen well-known unregistered exit and entry points between the three countries. Smuggling was rife at these points and was a source of gold leakages among other commodities.

“The law enforcement agencies, which include the ZRP and Zimbabwe National Army (ZNA), were unable to control these illegal crossing points because they do not have vehicles and the roads are impassible.

“In addition, there was no network coverage in these border lying areas, which made it difficult for law enforcement authorities to coordinate their efforts effectively along the border.

“The security forces requested for vehicles, tents, drones, testing and communication devices and the establishment of a reaction team to arrest would-be smugglers,” read the report.

Recently, the “gold mafia” documentary exposed how Zimbabwean authorities are largely involved in gold smuggling and money laundering.

In October 2020, President Emmerson Mnangagwa’s niece and president of the Zimbabwe Miners Federation (ZMF) Henrietta Rushwaya was arrested for trying to smuggle 6 kg of gold (worth more than US$366,000) out of the country.

She was controversially acquitted last year after telling the courts that she had picked a wrong bag.