The United States of America has placed businessman Kuda Tagwirei and his firm Sakunda Holdings under sanctions over his support for the Zimbabwe government.

The step had long been expected after Tagwirei received repeated public criticism from American diplomats, leading to his long-time partners Trafigura buying him out earlier this year.

In a statement issued on Wednesday, the US Treasury Department said Tagwirei has been sanctioned “for providing support to the leadership of the Government of Zimbabwe”.

The step, the American government says, “corresponds with the second anniversary of the Zimbabwean government’s violent crackdown against its citizens who were protesting flawed government elections and the delayed results of the election, which resulted in the deaths of at least six civilians on August 1, 2018”.

“Tagwirei and other Zimbabwean elites have derailed economic development and harmed the Zimbabwean people through corruption,” said Deputy Secretary Justin Muzinich. “The United States supports the economic well-being of the Zimbabwean people and will target repressive and corrupt acts and graft by Zimbabwean politicians and their financiers.”

Tagwirei, the US alleges, has used his relationships with high level Zimbabwean officials to gain state contracts and receive favoured access to US dollars.

“In turn, Tagwirei has provided high priced items, such as expensive cars, to senior-level Zimbabwean government officials. Since former Zimbabwe President Robert Mugabe’s 2017 departure, Tagwirei used a combination of opaque business dealings and his ongoing relationship with President Mnangagwa to grow his business empire dramatically and rake in millions of US dollars.”

The US also says Sakunda was involved in what it says is an unaccounted for US$3 billion allocated under the Command Agriculture program.

Appearing before Parliament in March, Sakunda CEO Mberikwazvo Chitambo showed documents that he said proved that his company had received around US$1 billion between June 2016 and May 2019 for Command Agriculture.

The US$3 billion was the total that had been paid out for farm programmes, including the presidential input scheme. In November, Treasury Secretary, George Guvamatanga, also said the total paid out for Command Agriculture since its inception in 2016 was US$1 billion.

US Secretary of State, Michael Pompeo, said the sanctions on Tagwirei were meant to show the Zimbabwe government that America did not tolerate public corruption.

We support a stable and democratic Zimbabwe. Our new sanctions against Kudakwashe Tagwirei and Sakunda Holdings today demonstrate to the government and people of Zimbabwe that the U.S. will not tolerate public corruption or hesitate to take action to promote accountability.

— Secretary Pompeo (@SecPompeo) August 5, 2020

What does it mean for Tagwirei?

Now that he is designated on the sanctions list, any property or interests that Tagwirei or Sakunda have in the US, or that is in the possession of any American, must be blocked and reported to the US government.

This means that any international transfers of money to and from Tagwirei or Sakunda can no longer be channeled through the United States, which handles a significant proportion of global banking transactions. Banks that deal with him risk being fined. It will be tough for Tagwirei or Sakunda to open international bank accounts and transfer money, as those banks, even if they are not American, can be fined.

In April 2019, Standard Charterd Bank plc was fined US$18 million by the US government for handling transactions for Zimbabwean state-owned firms and sanctioned individuals. Barclays plc was fined US$2.5 million for transactions in handled between between 2008 and 2013.

CBZ was also fined heavily for handling transactions on behalf of ZB Bank, then on the sanctions list. Tagwirei is said to now hold a stake in the bank.

American citizens are also now banned from having any dealings with either Tagwirei or his company.

Sakunda is involved in the commodities business and logistics, and sanctions could hurt its capacity to trade.

Not unexpected

Sanctions on Tagwirei were inevitable.

Earlier this year, two US senators wrote to America’s State Department and Treasury to add to the sanctions list the names of those involved in “public corruption”, raising talk that Sakunda and Tagwirei could be listed.

Tagwirei was also the target of strong criticism from US Ambassador Brian Nichols, who has described his relationship with the Government as corrupt.

“An American firm won the tender for the construction of the Dema Power plant in 2016, but the government cancelled the contract and awarded it to Sakunda Holdings, which had not even placed a bid,” Nichols complained last year.

Nichols has also repeatedly spoken out against Sakunda’s Command Agriculture deals.

Sakunda’s dealings, under which the company received US$366m in Treasury Bills for Command Agriculture in 2018, was also subject to criticism by the IMF in 2019. Maturity of the bills, the IMF team noted privately to Zimbabwe Treasury officials, had driven up money supply by as much as 80% last year.

With signs that sanctions were coming, Trafigura announced in February that it had bought out Tagwirei from their partnership. This was a move by the company, one of the world’s largest oil and metals brokers, to stave off the likely impact of impending sanctions on their long-time partner.

[Click to read: Why Trafigura is buying out long-time partner Kuda Tagwirei]

Before this, Trafigura held a minority stake of 49% in Trafigura Zimbabwe, with Tagwirei’s Sakunda, which operated Puma Energy, holding the controlling interest. Trafigura bought Sakunda’s 51% in the fuel business.

Earlier, in October 2019, Trafigura was forced to release a statement saying it had nothing to do with Sakunda’s operations outside of the fuel business.

Tagwirei’s recent deals

Tagwirei has been deepening his investment in mining, and has made several deals over the past year.

Through his Landela Mining Ventures, Tagwirei last year become the local 50% partner in Great Dyke Investments, which is developing the US$500 million Darwendale platinum project. Landela and Afromet JSC now have equal 50% stakes in the project. Afromet JSC is 100% owned by Russia’s investment and industrial group Vi Holding, which has spearheaded the Darwendale project since its inception in 2013.

Obey Chimuka, MD of Fossil Contracting, a company associated with Tagwirei, now sits on the GDI board. Chimuka has in the past sat on the boards of the ZMDC and Marange Resources. He also sat on the board of Sakunda Supplies, according to his company’s website.

In October 2019, Sotic International, a Mauritius-based commodities company in which Tagwirei has interests, bought UK-listed Asa Holdings’ controlling 74.13% stake in Bindura Nickel Corporation. Bindura then appointed three Tagwirei associates to the board; Christopher Fourie, a director of Sotic International, Jozef Behr, the commodity company’s head of trading, and Chimuka.

Sakunda has an interest in Africa Chrome Fields and has been tied to ferrochrome producer Zimbabwe Alloys.

Landela was also announced recently as winning bidder for state-owned ZMDC mines. The company has also recently taken over Shamva and Mazowe mines from Metallon Corporation. Sakunda was also awarded a coalbed methane prospect in Lupane.

Only Sakunda is, for now, under sanctions.