ZIMBABWEAN business tycoon Kudakwashe Regimond Tagwirei (pictured), accused of capturing the state for personal gain alongside with the Presidium, has been slapped with sanctions by the United States government, which will no doubt affect his huge business empire.
Tagwirei and his energy firm Sakunda Holdings were added to the sanctions list on Wednesday by the United States Department of the Treasury’s Office of Foreign Assets Control (Ofac). There was already speculation that Tagwirei and Sakunda could be sanctioned in this manner. For example, in October 2019, the Netherlands-based multinational commodity trading company, Trafigura Group Pte Ltd indicated that it intended to buy out Sakunda Holdings from the local entity Trafigura Zimbabwe under which oil firm Puma Energy operates.
At the time, Trafigura Pvt Ltd held a minority stake of 49% in Trafigura Zimbabwe, with Sakunda Petroleum holding a controlling stake of 51%. But, in December 2019, Trafigura Pvt Ltd announced it had signed an agreement to become the 100% owner of Trafigura Zimbabwe a deal which is awaiting regulatory approval.
“Definitely this is going to affect him (Tagwirei). He has got a lot of assets outside Zimbabwe so definitely the ways things are going they will be frozen there,” a source privy to this matter to told the Zimbabwe Independent.
“He has got assets in one of the offshore jurisdictions like Mauritius and three other countries and I think it will be very difficult to transact using those offshore companies.”
“But, businesswise, it’s not going to really affect our economy as a whole as Tagwirei’s empire spreads across all sectors of the economy. Tagwirei could have a net worth close to US$1 billion,” the source said.
Financial expert Persistence Gwanyanya said transactions with these sanctioned parties were going to be affected
“The effect of sanctions is that the transactions relating to Sakunda and his outside business partners will be significantly affected, especially those involving the United States dollar…so the operations of the affected companies are going to be affected by the mere fact of Sakunda being placed on the sanctions list.”
He said the sanctions would also affect business dealings of Sakunda Holdings and Tagwirei with local firms who will seek to distance themselves from both.
Since the former late Zimbabwe president Robert Mugabe’s 2017 departure, Tagwirei has been using a combination of opaque business dealings and his relationship with President Emmerson Mnangagwa to grow his business empire and rake in millions of US dollars, according to Ofac.
Tagwirei’s dealings with the leadership have also resulted in Sakunda Holdings enjoying the lion’s share of Zimbabwe’s fuel market which is where they are expected to be most hurt. “It is a big win for players who are then going to fill in the gap that has been left by Sakunda Holdings because it has been dominating in the business space in this country. The fact that Sakunda is going to be impacted negatively will create some space for other players,” Gwanyanya said.
Tagwirei and Sakunda’s connection to fuel was mainly through the Reserve Bank of Zimbabwe’s monthly foreign currency allocations or letters of credit to import fuel.
RBZ governor John Mangudya said none of the letters of credit for foreign currency used to import fuel were made on behalf Sakunda Holdings.
“If you check all the schedules, I don’t see schedules of Sakunda on the LCs for the purpose of the fuel. All fuel companies, called the oil marketing corporate companies of Zimbabwe, such as Total and Engen, those are the companies that we see,” he told the Independent yesterday.
“Who established the LCs? These are established by commercial banks so, because they are done at that level, it means it is at that commercial bank level where that compliance are done. So, before they come to us for allocations or the LCs they first have to go through the commercial banks. They must first pass the compliance levels of the commercial banks before they get anything from us. We are still studying the communication from Ofac and its implications on Zimbabwe. That is the official position. Obviously when Ofac issues rules, they need compliance”.
Mangudya said commercial banks which represent Tagwirei and Sakunda Holdings will be affected as they have to comply with the Ofac rules.
“The onus is on the commercial bank who Sakunda and Tagwirei deal with to ensure compliance with Ofac. They don’t just come over to the RBZ,” he said.
In July 2019, it was also reported that Tagwirei possibly held about 30% shares of one of Zimbabwe’s largest financial institutions, CBZ Holdings, through the company Akribos Capital, which is said to be linked to the businessman.
In an interview with the Independent in February, CBZ Holdings chairperson Marc Holtzman, when asked of Tagwirei’s involvement in the financial institution said:
“Yes, I have met him. I know most of our major shareholders…”
CBZ Holdings was already dealing with a US$3,8 billion penalty which had been slapped on the bank by Ofac, making the involvement of Tagwirei in the institution also problematic.