How Zimbabwe uses gold smuggling to evade sanctions choke

Zimbabwe’s government is using smuggling gangs to sell gold worth hundreds of millions of dollars, skirting some of the consequences of tough Western sanctions imposed on the country over human rights abuses, Al Jazeera’s Investigative Unit (I-Unit) can reveal.

The smuggling feeds into an enormous money-laundering operation, all facilitated by Fidelity Gold Refinery, a subsidiary of Zimbabwe’s central bank, and enabled, in some cases, directly by senior government officials and relatives of the country’s president, Emmerson Mnangagwa.Zimbabwe’s government needs United States dollars because the local currency has no value in international trade following sustained hyperinflation over many years. Gold – the country’s biggest export – is a good way to earn dollars.

But although gold trade itself is not barred, the additional scrutiny sanctions bring on Zimbabwean officials smother the government’s ability to transact directly in the international financial system, especially in dollars, said Karen Greenaway, a former US Federal Bureau of Investigation (FBI) agent who tracks illicit money flows.

“So you have to figure out other ways to do that,” she told Al Jazeera.

Meanwhile, global money launderers have undeclared cash they need to turn into legitimate money. Gold smugglers offer a way around these complications both for money launderers and the Zimbabwe government.Smugglers, who do not face the sanctions government officials do, carry Zimbabwe’s gold to Dubai, where it is then sold in exchange for clean cash. This money is transferred to the bank accounts of the money launderers, who hand over an equivalent amount of their dollars to the Zimbabwe government, through the smugglers.

“Moving the money abroad and then washing it and then moving it back in. It’s a very common money laundering technique,” money laundering expert Paul Holden told Al Jazeera. “What I haven’t seen is the use of gold, which I think is quite interesting.”

This revelation is part of The Gold Mafia, a four-part series that reveals how rival gangs have taken over the gold trade in Southern Africa and how they launder hundreds of millions of dollars.

Al Jazeera’s reporters posed as Chinese criminals looking for a way to launder more than $100m. Several gangs with high-ranking connections in Zimbabwe’s government all offered ways to launder the money using smuggled gold.

“When a person comes to sell me gold, I don’t have to write his name down, I don’t have to do anything,” said Macmillan, while offering his services to the Al Jazeera reporters. “I just take his gold, pay him, he leaves. I deliver to the government. Government asks me no questions.”

Pattni has a similar deal with the Reserve Bank of Zimbabwe, documents accessed by Al Jazeera show.

The central bank, in turn, has issued licenses to these smugglers to carry millions of dollars worth of gold out of the country, the documents reveal.

“This country has sanctions. So the country can’t sell the gold. So an individual can sell it, because he doesn’t have sanctions,” Macmillan said.Cleaning gold and money
Using a group of couriers, the gold is then smuggled to Dubai in hand luggage and suitcases, where it is refined and marked with a Dubai stamp, removing any trace of its troubled origins and making it easier to sell on international markets.

“It’s smuggling, that’s what it is,” Macmillan smilingly acknowledged.