CHAPTER 1

ZIMBABWE

Charles Goredema

PART I: ORGANISED CRIME IN ZIMBABWE

Introduction

In contemporary Zimbabwe a significant amount of organised crime draws on linkages between the formal and informal sectors. To an increasing extent it is becoming institutionally embedded within the legal economy and committed by individuals, or by small groups with no relationship to traditional or emergent hierarchical syndicates. Contrary to bureaucratic or hierarchical perspectives that have tended to hold sway in the United States and Eastern Europe , organised crime in Zimbabwe is dominated by autonomous entrepreneurs and small transient groups that are not segregated from mainstream economic society. Trends emerging from the interaction between organised crime and the formal political, economic and law enforcement sectors will therefore be outlined.

Country profile

Zimbabwe attained independence in 1980 following decades of white minority rule. The country is theoretically a constitutional democracy, with its parliament and government largely dominated by both the Zimbabwe African National Union (Patriotic Front) (ZANU(PF)), and the current president, Robert Mugabe, since independence. After proclaiming its socialist orientation in the 1980s, the government has erratically pursued economic reforms since 1990. However, economic conditions have failed to improve because of sustained mismanagement and the limited implementation of agreed policy. The legislative elections in June 2000 produced a parliament nearly half of whose elected membership belongs to the opposition Movement for Democratic Change (MDM).

Two decades of political dominance by the ruling party over other sectors and structures have resulted in a state characterised by the fusion of the economic and political domains, in which political power is regarded as the key to achievements in all other spheres. In consequence, politicians and their associates have the capacity to exert much influence in most aspects of economic activity.

Resources and infrastructure: population

Zimbabwe 's population was approximately 12.6 million in mid-2000 and is projected to rise to 16.4 million by 2015. The urban population was estimated at 34.6% in 1999, up from under 20% in the 1970s, and has been growing at over 5% per year in the 1980s and 1990s. This is much faster than overall population growth and indicates sustained migration from the rural areas. The largest metropolis, Harare , combined with nearby Chitungwiza town, now probably has a population of over of two million, although official data put it lower. The population density of the country is about 30 people per km2.

Police strength at the end of 1999 was 19,000. Measured against a population of 11 342 521, the ratio of police to population at that time was 1:596. The ratios in neighbouring countries were as follows: Botswana 1:270, Lesotho 1:897, South Africa 1:416, Swaziland 1:433, Tanzania 1:1 298, and Zambia 1:737. Police strength arguably has a bearing on the level of risk that must be considered by organised criminal syndicates operating within a given country.

A number of factors have precipitated a calamitous deterioration in Zimbabwe 's economy, which was expected to decline by a further 5.3% in 2002. Inflation was 115.3% at the end of February 2002, up from 112.3% in December 2001 according to Central Statistics, with a resulting erosion of real salaries and wages and purchasing power. The projected budget shortfall for 2002 was Z$138.3 billion (US$2.51 billion). Major sources of economic stability, namely agriculture, mining and manufacturing, have been performing poorly for the last three years and the tourist industry has been adversely affected by the almost perennial political turmoil in the country.

The concept of organised crime

At present there is no formal definition of organised crime in Zimbabwe, but the country is a signatory to the United Nations Convention Against Transnational Organised Crime (the Palermo Convention) and it may therefore be appropriate to adapt the conceptualisation employed by the Convention in defining the phenomenon of organised crime, and to use this to survey the situation in the country.

The term 'organised crime' may be loosely and generically used to describe the activities of organised criminal groups consisting of three or more persons who commit serious crimes over a period of time for profit. In most countries police and lawyers have struggled to develop a satisfactory definition of organised crime, mainly because its nature differs from country to country. The fact that the well-known Mafia groups in the United States have clear hierarchical structures has led to some American definitions emphasising structure when elucidating the concept of organised crime. In southern Africa , however, indications are that organised criminal groups are not as structured as the Mafia. They tend to function in loose and shifting associations and alliances with others, or in networks without a clear hierarchy. Different definitions have thus been used by police agencies in different parts of the world.

Article Two of the Palermo Convention also defined serious crime as "conduct constituting an offence punishable by a maximum deprivation of liberty of at least four years or a more serious penalty" and a structured group as "a group that is not randomly formed for the immediate commission of an offence and that does not need to have formally defined roles for its members, continuity of its membership or a developed structure".

Theoretical perspectives

Certain underlying theoretical perspectives help to explain current trends in the incidence, forms and gravity of organised crime in Zimbabwe .

Dramatic changes have occurred in the country as a result of the deteriorating economic situation, and sectors once regarded as the mainstay of the economy are on the wane. As in Nigeria and Zambia in the late 1970s and early 1980s, educated and entrepreneurial Zimbabweans have found many 'traditional' sources of income unavailable to them at a time when the environment in which they have to survive is quite hostile.

Matrofski & Potter1 argue that the driving force behind organised crime is the profitable market for illicit goods and services. Thus, the motivation for stealing motor vehicles can be traced to the huge returns from informal markets in the country and the wider region. To limit the power and influence of organised crime, the state must manipulate either the market or the capacity of criminal enterprises to compete for it.

Policy responses based on this understanding of the rationale for organised crime will typically seek to enhance the appreciation of the market for illicit goods and services by law enforcement agencies. Improved industry-focused, intelligence gathering operations are key tasks in this regard. Also important is sensitivity to shifts in the legitimate economy, to technological advances, legal changes and social trends, which might shape the opportunities for criminal enterprise by changing the risks and returns of various illicit entrepreneurial activities. Inevitably such policy responses call into question the capacity of law enforcement agencies to perform the required tasks, particularly in an environment undergoing macroeconomic transition.

The economic downturn in Zimbabwe has been accompanied, and to an extent exacerbated , by two significant related developments: the crisis in the Democratic Republic of the Congo (DRC) and the rise of political opportunism. The latter was precipitated by the demise of the popularity of the ruling ZANU(PF) party as the economy continued to slide into recession. The response of the party and the government was to create and occasionally expand opportunities for the acquisition of wealth by the beneficiaries of patronage. These new opportunities were occasionally exploited through crime and corruption. Part of this report deals with the exploitation of resources in the DRC following the intervention of Zimbabwe in the conflict in that country. It also surveys the criminal activities that accompanied and became part of the invasion of land and corporate institutions from the first quarter of 2000, and argues that there is a discernible link between the vicissitudes of the economy and the growth of organised crime.

Major forms of organised criminal activity

The main forms of organised criminal activity in Zimbabwe are:

• armed robbery, including robbery of cash-in-transit;

• theft of motor vehicles;

• serious fraud;

• counterfeiting and money laundering;

• extortion rackets;

• telephone service piracy (international call centres scam);

• drug trafficking;

• diamond and gold smuggling; and

• corruption.

This chapter examines patterns and trends on a crime-by-crime basis.

Patterns and trends

Armed robbery, including cash-in-transit heists

From the point of view of the public, armed robbery has probably been the most visible and prevalent form of organised crime in Zimbabwe in the past two years. It has generally taken two forms: robbery of motor vehicles and cash-in-transit robberies. Armed robbery occurs in both forms in the urban and peri-urban areas, but it is particularly widespread in Harare .

The Anti-Hijack Trust in Harare reports that between January and December 2000, 417 motor vehicles were seized in robberies in Harare . The same period in 2001 showed a decline to 204 vehicles. In 2000 there were 77 unsuccessful attempts to rob vehicles and the number declined to 42 the following year. Various methods have been used in the commission of robberies. Available reports indicate that in the majority of cases criminals trail victims to their residences and confront the driver at the gate. Recent variations are to ambush motorists at traffic intersections, at breakdown situations and even at road humps. Robberies have been committed using firearms, knives, bayonets, stones, knobkerries and even broken bottles.

Mazdas and Toyotas are most vulnerable to robbery. While some stolen vehicles are marketed locally, others are destined for external markets. Stolen vehicles have been smuggled to Zambia , Mozambique , the DRC, Botswana and Namibia . Stolen luxury vehicles are usually exported for sale in a foreign currency, the US dollar being the favoured currency. Vehicles that are not exported are either used in committing other crimes, such as armed robbery, or are stripped for spares.2

To facilitate the exportation of stolen vehicles, criminals use forged Temporary Import Permits (TIPs) and vehicle registration books and, occasionally, false registration plates. According to the Interpol sub-regional bureau for southern Africa , after a vehicle is stolen the criminals enter its identification particulars, such as the engine and chassis numbers, on the import permit and in the registration book. These documents enable them to go through police roadblocks and to drive across borders, as the authorities are unable to probe beyond the TIP. The relatively low use of technology to disseminate information on stolen vehicles among law enforcement agencies within the various states and across their borders works to the advantage of criminal syndicates. It is standard practice to alter or remove identification features and engine and chassis numbers.

The routes that have been used in getting vehicles out of Zimbabwe are the Great North Road between Harare and Chirundu, the Nyamapanda road between Harare and Mudzi, the road from Bulawayo to Victoria Falls , and the Mutare road to Mozambique . The Beit Bridge and Plumtree border posts do not seem to be used in the exportation of vehicles from the country, although there is evidence that vehicles stolen in South Africa and Botswana have been driven through.

Armed robbery of motor vehicles is perceived by the local police to be a prevalent offence, and they are also aware of its cross-border dimensions.3 Information on the criminals was retrieved from police and court records. Relatively small groups, with an average of three in each group, have been implicated in the armed robbery of motor vehicles. Where the theft is motivated by an intention to dispose of the vehicle beyond the borders of the country, however, there are indications that a larger number of people tend to be involved. Most of the cases under investigation have not unveiled the 'concealed' players.

Links with other criminal syndicates

Even though these two case studies do not reflect this, a police survey of profiles shows that in Zimbabwe a typical established syndicate specialising in vehicle theft has a multinational composition, involving at least three nationalities. It is quite common for one or more members to hold dual citizenship, which is partly the result of the periodic migrations that litter the history of Southern Africa . Many Zimbabweans were born and lived for some time in Zambia , and many South Africans were born and bred in Zimbabwe or Zambia . A high number of Mozambicans have 'roots' in both Zimbabwe and Mozambique . The same applies to some nationals of Malawi , Botswana and Angola . The utility of these links cannot be underestimated in either the functioning of regional crime syndicates or their ability to evade the law. Through them, criminals have a head start over law enforcement authorities that rely on standard methods of international cooperation. The organograms below illustrate the structure and national composition of two syndicates known to Interpol.

(Note: It appears that one of the Manhangas is now deceased. At the time of writing, the police had yet to confirm the identity of the deceased.)

The vertical lines linking names show which individuals are known to operate together and do not necessarily denote hierarchical relationships. Thus David Tarr is a central figure who would probably be known to all the others. Diresh Rameschada, on the other hand, might not know Raymond Manhanga, even though the activities of one could affect the other. It is possible that they have never met, since they are likely to be operating in different countries. It should also be noted that the presentation above is simplistic. Any of the 'fringe' operators, such as Raymond Manhanga, could have his own network that supplies the main syndicate but is unknown to it.

During the 1980s the Muzeya brothers and cousins became notorious for motor vehicle theft. At the height of their exploits, five members of the family were active. Of Zimbabwean origin, most of them grew up in Zambia during the 'UDI years' and police believe that the contacts that assisted them in vehicle theft were developed during that time. The family fell upon difficult times in the early 1990s after a major police and judicial crackdown. It appears that only one member remains active, working with entirely different confederates.

Links with state functionaries

Motor vehicle theft is a high-risk activity. To minimise the risk, criminals will inevitably try to bribe law enforcement officers and regulatory personnel such as customs officials. Corruption forms part of the tools of the trade. The ultimate prize for criminals is to plant agents in key sectors. Cognisant of the risk, the Car Theft Squad of the Criminal Investigation Department in Zimbabwe regularly rotates officers. In the last three years no links between criminals and detectives have been reported .

The Customs Department, which is part of the Zimbabwe Revenue Authority, is responsible for managing the TIP system. It did not have statistics on the incidence of forged TIPs, or irregularly issued TIPs. This is an area requiring further research. The Southern Africa Regional Police Chiefs Co-operation Organisation, in cooperation with Interpol, introduced a regional vehicle clearance certificate at the beginning of 2000 to distinguish stolen vehicles from legitimately acquired ones. The certificate is believed to have had a modicum of success.4

Cash-in-transit robberies

It has been established that the weapons used in some of these robberies were stolen from security guards on duty at industrial premises, but others were acquired from neighbouring countries such as Mozambique .

Syndicates comprising insiders and professional criminals have been implicated in stage-managed theft of cash in transit. The information at hand is that more than 60% of them are indigenous and male in composition. A widely reported case that was pending at the time of writing involved 12 participants, one of whom was a driver for a well-known security firm, Fawcett Security. The driver connived with his accomplices to stage-manage a robbery of the van that he was driving from a commercial bank to the head office of a building society in Harare . He was given a cell phone to enable him to communicate with accomplices. Z$7 million in cash was stolen.

Links with other criminal groups

In this case no links with other criminal groups are known, but the leader of the gang, one Norman Karimanzira, fled to Mozambique after the robbery, moving on to Zambia , where he was arrested after a few months. At the time of his arrest, he held a Mozambican passport, apart from his Zimbabwean identity documents and passport. He might also have a Zambian passport.

Links with state structures or functionaries

At least one member of a syndicate involved in armed robbery, George Chikanga, has been linked to a former Minister of Justice. Press reports allege a familial relationship between the ex-Minister and the syndicate member. It was further alleged that, while in prison, the latter boasted that the Minister was his father and would get him released. A High Court judge found that the former Minister had acted irregularly in March 2000 by ordering Chikanga's release from prison, where he was serving a lengthy term for armed robbery. He committed another robbery after his release and is now back in prison.

During the trial, it emerged that the ex-Minister directed the release of funds, found in Chikanga's possession on his arrest, to the accused's mother, even though the funds were suspected to be the proceeds of crime. The court ordered him to appear and explain his role. The ex-Minister refused, opting to file an affidavit in which he conceded the impropriety of the release but blamed it on the Permanent Secretary and a personal assistant. Both officials had died (of natural causes) by the time of the trial. The judge in the case has since resigned from the bench.

Police believe that Norman Karimanzira managed to evade arrest for a long time by using the contacts he had developed, through bribery, with well-placed police officers.

Theft of motor vehicles

Government crime statistics show that between January 1996 and April 2000, 6,393 vehicles were stolen in Zimbabwe , an average of 125 a month. This figure evidently includes vehicles stolen using violence. Statistics for the period May 2000 to date could not be found. Disposal trends are similar to those relating to robbed vehicles, outlined above.

Police perception

Vehicle theft, with or without the use of violence, is considered to be prevalent, and to have cross-border dimensions.

Serious fraud

Urban residential stands scam

Kay Makhela, also known as Gerald Marimudza, is accused of defrauding several thousand home seekers of millions of dollars by misrepresenting that his company, Metof Investments, owned and had the authority to sell residential land. Taking advantage of the acute demand for such land, Metof is alleged to have received deposits from home seekers even though it did not have title to the land or the required authority to subdivide it. It is believed that depositors were defrauded of up to $70 million.

It has not been established whether Makhela was acting in association with others. It is also not known whether his criminal operation has links to others within or outside Zimbabwe . He has managed to evade arrest since the falsity of his representations became known. In the meantime, there has been a proliferation of bogus estate agencies claiming to be active in the property market but dealing in non-existent residential stands. Five are known to operate in Harare , and two have been discovered in Bulawayo .

Bank fraud

This generic class of criminal conduct is proving problematic in Zimbabwe . Fraud is committed by the use of false national identity particulars and stolen or forged cheques. The basic method involves penetrating the National Registration Bureau and falsifying the identity photograph on stolen identity disks. Using the false disk, the criminal opens a bank account with a cash deposit, forges stolen cheques, deposits them into the newly opened account and subsequently withdraws the proceeds, which can run into millions of dollars, particularly in cases where there is collusion with bank employees.

The prevalence of this kind of fraud has been exacerbated by the fact that large numbers of banking staff have been laid off in the last five years as the banks battle to survive in a shrinking economy.

The Criminal Investigation Department finds these fraud cases difficult to investigate as the legitimate owner of the identity disk is often an innocent victim of theft, who may even have reported the theft to the police. There is not much integration of databases between the police and financial institutions to prevent the opening of accounts under false names or particulars.

Links with state organs or other criminal syndicates

While it is possible for the mode of fraud outlined above to be committed without involving bureaucratic collusion, this would be difficult as the resources to produce false identity documents are costly. Furthermore, to allay suspicion the identity particulars need to bear some resemblance to genuine particulars in the national system. It is far easier to obtain a ready-made disk from the government office responsible for this function. No case has yet been established against an officer from the National Registration Bureau, but it is believed that there is collusion and that it is motivated by bribery. It is also suspected that it extends to the banking sector, with certain bank employees participating in defrauding clients or their employers by facilitating the payment of forged cheques. Bribery is also at the centre of these activities. The involvement of former bank employees also makes it easier for these frauds to be committed : such individuals are obviously better versed in the finer aspects of banking than those without banking experience.

The Officer Commanding the Serious Fraud Squad believes that bank frauds are highly prevalent. The identities of syndicates were expected to be revealed during 2002.

Counterfeiting and money laundering

Counterfeiting and money laundering, though not technically the same, tend to occur in close proximity. The police response to a survey questionnaire at the end of 1999 indicated that trade in counterfeit notes was a prevalent offence in Zimbabwe , but it was difficult to obtain statistical data to substantiate or contradict this position. This part of the report focuses on money laundering related to currency fraud and on telephone piracy, both of which are visibly prevalent offences.

Zimbabwe opted for a broad definition of money laundering to encompass doing virtually anything with the proceeds of crime, even merely possessing such proceeds. There have been very few prosecutions, despite the practice having been criminalised in 1990. With the advent of currency speculation, money laundering is described as being 'rampant' in the country.

In 2000 and 2001 there was a notable increase in corporate demand for foreign currency for the purchase of inputs and payment of creditors. Most large businesses rely heavily on foreign currency and have become vulnerable to criminals.

The typical fraud is initiated by a criminal, alone or as part of a syndicate, claiming to have one or more offshore accounts and offering to exchange some of the funds in the account for Zimbabwean dollars, at the going rate on the parallel market. A statement from a reputable foreign financial institution, which may or may not be genuine, often supports the claim. Transactions usually involve corporate institutions which have their own offshore accounts. Having struck an agreement, the criminal deposits a cheque or bank draft for foreign currency into the account of the corporate 'client', after which the 'client' pays the criminal the Zimbabwe dollar equivalent. Within days, the 'client' learns that the bank draft or cheque for foreign currency has been rejected and the transaction aborted by its foreign bank. By that time the criminal has disappeared.

The chain of events does not stop there as the criminal ultimately needs genuine foreign currency, rather than Zimbabwe dollars. With the funds obtained the criminal is in a position to acquire foreign currency on the parallel market. If he is well connected , or fortunate, the criminal may even be able to obtain such currency on the official market, at favourable rates. (For example, while a US dollar will cost him Z$350 on the parallel market, on the official market it costs only Z$55.) Rates vary, with lower rates being available outside Harare .

Once the criminal has found foreign currency, he may smuggle it out of Zimbabwe and invest it in any of the neighbouring countries. One case being handled by police in Pietersburg (Polokwane) in the Limpopo province of South Africa involves one Murangare, a Zimbabwean national, arrested while trying to cross into South Africa through an undesignated crossing point carrying R700,000. South Africa and Botswana are favourite destinations for this kind of capital. Proceeds from the investment can be used to generate more money through currency speculation along similar lines to the first act. Zimbabwe police suspect that the Zimbabweans involved in an armed robbery at Johannesburg airport at the end of 2001, in which goods and money worth R25 million were stolen, intended to launder the money and recycle it in South Africa .

Links with state functionaries and other criminal syndicates

Both types of money laundering involve links with external criminals and, in the case of the currency fraud, probably the involvement of functionaries within the banking sector. Such fraud could even involve employees of the 'victim' corporate body acting in collusion with the bogus currency traders. It has been difficult to date for the local police to trace the complex webs of deception, although they have been aware of them for some time. The delays in reporting cases do not assist the detection process. Criminals are aware that victims will invariably take time to report the matter because of the illegal nature of the underlying transaction and for fear of adverse market and shareholder reaction that might result from publicity.

Extortion rackets

Background

Extortion racketeering on a large scale is new to Zimbabwe . It has tended to be intricately connected to political developments between 2000 and 2002 and coincides with, and also symbolises, the general breakdown in law enforcement during that period. Criminal elements have taken advantage of the disorder created by the chaotic and extra-legal methods of land seizure and the bullying tactics adopted by the ruling ZANU(PF) party in the run up to the presidential elections. Extortion in this period has followed two patterns: the levying of protection fees and the extraction of illegitimate funds from industrial and commercial concerns.

Protection fee rackets

The land seizures have been characterised by incidents of farm occupation. Most of the occupations have been instigated and coordinated by the ruling ZANU(PF) party and its government agencies, partly to punish farmers perceived to be supportive of the opposition MDM and partly to establish bases from which to restrict the campaigns of that party. Occupations are accompanied by violence, usually against the farm owner and workers.

Protection fees, usually but not exclusively in the form of cash, have been demanded from certain white farmers to prevent or stop farm occupations. Crops and other property have also been demanded as a form of protection fee. Reports of extortion rackets first surfaced in the Shamva district of Mashonaland Central but indications are that the practice has occurred in other places as well. The Commercial Farmers Union has information of occurrences involving some of its members, but will not identify them. A former High Court judge has also confirmed receiving reports from some of the affected farmers, as have some lawyers representing them. Unfortunately the environment in Zimbabwe was such that disclosure of names and places was considered risky. Detailed information, which was expected to become available after the presidential elections, will probably only emerge later.

In the chaotic land appropriation and distribution campaign pursued by the Zimbabwe government during 2001 and 2002, acquired land was allocated to party activists and individuals connected to the regime. In some instances, no proof of allocation was required apart from a simple letter from the Minister of Lands and Agriculture. In some cases, displacement of a farm owner has occurred without any documentation. This provided a convenient backdrop to the classic methods used in extortion incidents.

In a publicised case, a criminal group used the ruse that a farm had been allocated to one of thema prominent party political activist in the ZANU(PF) partyand then demanded a percentage of the sales of the previous year's crop. Z$15 million (US$272 700) was demanded from the farmer, with accompanying threats that if he did not pay up by a certain date, unspecified harmful action would be taken against him. Fortunately the police responded to the farmer's report before the payment date and some members of the group were arrested . The case was pending at the time of writing.5

Extortion incidents during the invasion of companies, March-May 2001

Between March and May 2001, the premises of about 100 industrial and commercial concerns in urban areas of Zimbabwe were invaded. Labour disputes with current or former employees, for instance over retrenchment settlements, were a fairly common pretext. The invaders arrogated to themselves the right to resolve such disputes. The invasions were organised at the headquarters of the ZANU(PF) party in Harare and led by groups of 'liberation war veterans'. Invasions were coordinated by the ZANU(PF) Labour Committee, some government officials, and a trade union federation aligned to the ruling party. Invading groups comprised between three and 30 people. In 20% of the cases, former employees of the company who claimed to have an unresolved grievance accompanied war veterans in the invasion. Through violence and intimidation, the invaders demanded the disbursement of unlawful payments to workers as 'retrenchment' packages, or the reinstatement of dismissed workers. In incidents at the 50 companies surveyed in a study commissioned by the Friedrich Ebert Stiftung, the demands of invaders were complied with in 92% of the cases. Respondents reported making undue payments under pressure and in 18% of cases, lawfully dismissed workers were reinstated . In 99% of the cases, reports were filed with the police but they responded to only 8% of the reports.

In most instances the police preferred not to get involved on the grounds that the incidents were of a political nature. Partly in consequence, there are very few cases arising from the extortion incidents awaiting prosecution. Police records on the orgy of extortion during this period are scanty and unhelpful. It is difficult to determine how much was ultimately extorted or how the extorted funds were shared.

Police perception

The police did not regard extortion as prevalent. It must be noted that police statistics tended to sift out cases considered to be of a 'political' nature. Incidents arising from the state-supported chaos generally fell into this category.

Links with other criminal groups

Groups involved did not seem to have links with other criminal groups within the country or outside it. There was a relationship between the groups involved in the extortions on the farms and those involved in urban extortion in that the same criminals often featured. It also emerged that key participants were political activists of the ruling party.

Links with state structures or functionaries

As indicated at the beginning of this section, the extortion cases reported during this period were committed by criminals who took advantage of a situation created by state structures that would normally be expected to enforce the law but chose not to. Although it is not a state structure, the ZANU(PF) Labour Committee, which was centrally involved in coordinating the invasions, had considerable influence over state structures. The state turned a blind eye to the activities of the committee, and the police abdicated the law enforcement responsibilities imposed on them by the country's constitution and legislation. There was thus a link between state structures and the perpetrators of the urban and rural extortion in the sense that the state's inaction amounted to collusion in the extortion. Occasionally, corruption and theft facilitated collusion. In a reported incident, a police officer who had arrested a suspect for extortion seized some of the proceeds and retained them for himself. At the time of writing a charge of theft was pending.

Telephone service piracy

International call centres scam

Several occurrences of the interception of telephone exchange facilities for private use were detected in Harare in 2001.

Links with other crime syndicates

No specific foreign links have been established, but it is suspected that call centres may have been used to facilitate transnational drug trafficking. Call centres are both attractive and vulnerable to foreign syndicates with the necessary expertise. The evidence from Zimbabwe indicates an abundance of such expertise on the continent and beyond. A spokesman for the PTC stated that in recent years nationals from Ethiopia , Somalia , Nigeria , Kenya , the DRC, Pakistan and India have been implicated in the violation of telecommunications laws.6 In February 2002, two Senegalese nationals were arrested in Cape Town , South Africa , in connection with telephone piracy, committed by the interception and use of underground telephone lines. The case was pending at the time of writing.

Links with state structures

No links with state structures are known, but influence was exerted over employees of the PTC parastatal through bribery. In fact, the proliferation of telephone shops in the mid-1990s increased the exposure of the PTC to this kind of offence as former and current employees had interests in about two-thirds of the shops. There has not been much improvement in the parastatal's capacity to maintain its service and extend it to the population at large. As a result, telephone shops are still on the increase.

Telephone piracy, which has also surfaced in South Africa , appears to have involved officials within the telecommunications authorities. It could also involve corruption in the immigration department. There is no doubt that local pirates required, and relied on, a network of contacts operating in the countries in which the other exchanges were hosted . These contacts were needed to put the calls through and to ensure that payments for the service were made and the funds accounted for. They may also have been needed to purchase luxury commodities. To date none of the syndicates involved in telephone piracy have been apprehended, nor have their accomplices, whether local or foreign.

Police perception

The police do not regard these offences as prevalent, but the PTC, which at the time of writing had been restructured and renamed TelOne, is concerned about the incidence of telephone service piracy and its effect on revenue. The estimated cost of piracy was Z$20 million (US$363,636).

Diamond and gold smuggling

Background

Zimbabwe does not produce diamonds of any significant quantity or quality and most diamond transactions in which its nationals participate are likely to involve foreign diamonds. Key diamond producers include neighbouring Botswana , Namibia , South Africa , distant Angola and the DRC.

Zimbabweans have had access to all these countries. In particular, Zimbabwe 's security forces have conducted operations in Angola and the DRC in recent years. The Angola expedition was more limited in scope and duration than the intervention in the DRC, which officially commenced in August 1998 and involved at least 11,000 troops. Regular personnel changes provide opportunities for conveying various commodities between Zimbabwe and the DRC. Small-scale and organised diamond smuggling has been noticed.

It has been reported that Zimbabwean soldiers allow local DRC nationals, known as Krizeras, to pan for alluvial rough diamonds along the Lubilanji canal, in the Mbuji Mayi area, and thereafter either share the spoils with them or buy diamonds from them. Probably more than half of the diamonds are sold to dealers in Mbuji Mayi , who subsequently sell them to international traders operating out of Kinshasa . A smaller number of diamonds are smuggled to Zimbabwe for sale to intermediaries. Dealers and intermediaries arrange onward exportation to major centres in Belgium , the Netherlands , Israel and the United Kingdom . According to a report compiled by the United Nations Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the DRC, smaller amounts end up in Mauritius , India , and the United Arab Emirates . It should be noted that the panel did not find any evidence of diamond smuggling from Zimbabwe . However, well-placed sources confirmed that a significant amount of smuggling was taking place.7 It has also been confirmed that incidents of diamond smuggling have been reported to Zimbabwe 's army commander. No action seems to have been taken against those implicated . The value of the informal diamond trade within the country has not been calculated .

Zimbabwe Defence Force commercial ventures in the DRC: Innovative public-private partnership or an alliance for plunder?

The decision by the Zimbabwe Defence Force (ZDF) to engage in commercial ventures in the DRC preceded the outbreak of hostilities between the Kabila regime and rebels supported by Rwanda and Uganda . It first came to light in 1996, when the Zimbabwe government expanded its support to what were then rebel forces led by Laurent Desire Kabila (now deceased) against President Mobutu. The initial indication was an undertaking by the Zimbabwe Defence Industries (ZDI) to supply food substances and war material to Kabila's rebel forces. After Kabila's accession to power, the arrangement was consolidated with the formation of a succession of joint-venture companies, namely Congo-Duka, Cosleg, Oryx-Zimcon and Sengamines. Partners were companies directly controlled by Kabila and a company based in the Cayman Islands, brought in ostensibly for its financial and mining expertise. The declared objective was to exploit the natural resources of the Congo to offset the costs of Zimbabwe 's military ventures in that country.

Congo-Duka had a short life. The ZDF component of its successor, Osleg (Pvt.) Ltd, is controlled by a board comprising the ZDF commander, Lieutenant General Zvinavashe; the permanent secretary of the Ministry of Defence, Job Whabira; the director of the Minerals Marketing Corporation of Zimbabwe (MMCZ), Onesimo Moyo; the general manager of the Zimbabwe Mining Development Corporation (ZMDC), Isaiah Ruzengwe; retired Major General Charles Dauramanzi; and Brigadier John Moyo. Osleg has interests in mineral, timber and other resources found in the DRC. Apart from diamonds, the DRC has gold, cobalt, coltan, copper and vast forestry resources. Osleg has a joint venture with Comiex-Congo, a Kinshasa-based company, in an entity called Cosleg (Pvt.) Ltd. Oryx-Zimcon is the joint-venture company formed between Osleg and Cayman Islands-based Oryx Natural Resources Ltd. Sengamines is the joint venture formed from the combination of Cosleg and Oryx-Zimcon. It is registered in the DRC.

In terms of the agreement between Osleg and Comiex-Congo, Osleg pledged resources to protect and defend, support logistically, and assist generally in the development of commercial ventures in the Congo , while Comiex-Congo pledged mineral, forestry and other natural resources under the control of the DRC. The joint venture responsible for exploiting forestry resources such as logging is called Socebo, an acronym for Societe Congolaise d'Explotation du Bois.

The joint ventures described could be beneficial to the ZDF and thus in the national interest. Such ventures have become common today, especially in the United States , the United Kingdom , South Africa and Canada . The Canadian Council for Public-Private Partnerships defines a public-private partnership as a cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards.8

The purpose of this study is to assess the legality of the ventures. It is submitted that an evaluation one way or the other must take account of the underlying legitimacy of the context in which the ventures are located , as well as the logistical realities of the resource exploitation that is the basis for their existence.

A study of the genesis of the DRC joint ventures and of the composition of the constituent partners reveals their vulnerability to exploitation for private wealth accumulation by individuals and political entities. It is known that the entire DRC expedition has not received public support in Zimbabwe and that its continuation is of questionable legality. Apart from the absence of parliamentary approval for the dispatch of troops to assist Laurent Kabila to repel his erstwhile partners after their fallout in 1998, the decision to enter into joint commercial ventures was highly secretive, with most of the established guiding principles9 in the sphere of public-private partnerships being either overlooked or ignored. Information on the existence of the ventures and the nature of the transactions they entail has never been reported to Parliament. In consequence, there is no accountability to the public outside the circles of individuals who are privy to the ventures. Government is vague and frequently evasive about the funding of military involvement in the DRC.

The conduct of commercial operations around the joint ventures is prone to corruption, as the public office holders have not extricated themselves from their private interests and roles are blurred. For instance, the commander of the ZDF, who is one of the directors of Osleg, was awarded the contract to transport supplies to the DRC as far back as 1997. As far as is known, the contract still subsists, with the contractors having changed to take account of the evolution of the arrangements in the DRC. His transport company also ferries mineral products from the DRC to Zimbabwe and to ports in South Africa . The commander is also believed to hold a minority shareholding in Socebo, the timber exploitation Cosleg subsidiary, through a nominee. Logging operations in some of the concessions have been assigned to Zimbabwean military personnel.

Osleg's proclaimed raison d'être of augmenting the financing of the war is inconsistent with its shareholding structure. At the time of the formation of Cosleg, each of Osleg's directors held 2,500 shares in Osleg in their private capacities. No accounts reflecting the performance of the company have been made public so it is difficult to determine the value of the private shareholding or the value of the joint ventures. According to figures released by the Ministry of Finance in February 2002, expenditure on the military for 2001 was a massive Z$16.2 billion (US$29.45 million), or more than 12% of the entire budget. No provision was made in the 2002 budget for inflows from joint ventures with external companies.10

The authority of Comiex-Congo to pledge national resources of the DRC has also been questioned. At the end of 2000 the majority shareholder of Comiex-Congo was Laurent Kabila. There is no evidence of any transfer to the DRC state after his death. If anything, the company appears to be continuing the role of privatising national assets and making them available to foreign entities through a web of joint-venture companies.

The UN panel of experts observed that one of the factors that motivated Zimbabwe 's involvement in the DRC war was "the declining exchange rate, the failing Zimbabwean mining industry, and the critical energy shortage in Zimbabwe [which] have left few sources for personal enrichment by Government officials". At the same time, the Kabila regime was under pressure to conclude informal and secret arrangements to secure military support.11 The nature and structure of the joint ventures undertaken on behalf of the defence force tend to support the panel's conclusion.

The official position of the Zimbabwe police is that illicit dealing in diamonds is not prevalent. Illegal extraction of gold is, however, considered to be a problem. There are informal reports that the scale of diamond smuggling is understated . Statistics on gold smuggling were not available at the time of writing.12

Links with state structures

The commercial structures and activities detailed above illustrate what one commentator has described as the combination of Zimbabwean military muscle and logistics with international mining technology and financing to exploit resources. The form of this combination presents much scope for the abuse of state structures and resources for personal enrichment. ZDI is wholly owned by the ZDF. Osleg, a ZDI entity, has private shareholders who are at the same time senior officials in state institutions such as the ZDF, the MMCZ (a parastatal with a monopoly in the marketing of minerals), and the ZMDC. Both Cosleg and Oryx-Zimcon maintain banking accounts with First Banking Corporation Ltd, a Zimbabwean incorporated bank in which ZANU(PF) holds a shareholding of almost 40% through two companies in which it has an interest, namely Zidco Holdings and African Resources Ltd.

Drug trafficking

The illegal cultivation of, and trafficking in, narcotics is a regional problem in southern Africa . Zimbabwe is among the most heavily affected countries, along with Mozambique , South Africa , Malawi and Swaziland . The most commonly encountered drugs in Zimbabwe are marijuana (cannabis), mandrax, cocaine and heroin. Only the first is of local origin, which explains why this is a sphere of much transnational syndicate activity.

The sub-regional bureau of Interpol in Harare has indicated that the trend in the trafficking of cannabis is from Lesotho , Malawi , Mozambique , Swaziland , Zambia and Zimbabwe into South Africa . In a few areas of Zimbabwe , notably in the three Mashonaland provinces, Central, East and West, cultivation is on a commercial scale, although occasional police raids have made certain that it is carried out secretly. Invariably the drug is ferried to Harare where it is prepared for transportation direct to Europe (particularly London and Amsterdam ) or through South Africa . Significant quantities have been discovered in the possession of airline cabin crews and passengers on the busy Harare-London route. An air hostess with Air Zimbabwe is serving a term of imprisonment in London for smuggling cannabis into the United Kingdom .

In a few instances cannabis consignments have been intercepted while being transported to Mozambique by road through the busy, relatively poorly staffed Nyamapanda border post. Interceptions of supplies heading in the opposite direction are, however, more common, indicating that there is a cannabis route between Malawi , Mozambique and Zimbabwe . Consignments can be massive. In February 2001, a load of 15 bags weighing 50 kilograms each was seized at the Mwanza border post in Malawi from a Zimbabwe-bound truck. Long-distance truck drivers are regularly used as couriers. In most cases they transport the drug for a commission, rather than to market it themselves. The cannabis is often concealed in legitimate goods such as shoes or farm produce. Indigenous players dominate much of the cannabis trafficking industry. International criminals tend to be involved if the drug is to be exported to Europe , as that requires marketing acumen not readily available locally.

Mandrax surfaced in Zimbabwe in the early 1980s when the country opened up after the extended period of isolation precipitated by the unilateral declaration of independence in 1965. Much of it was brought into the country from the Indian subcontinent, mostly for conveyance to South Africa . Dealers were usually from India and Pakistan and nationals of other African countries such as Cameroon , Nigeria , Zambia and Tanzania . Later, some of the Asian mandrax manufacturers set up factories in the region, notably Zambia , and continued supplying Zimbabwe from there. No factory has yet been discovered in Zimbabwe .

Links with state structures

Save for an isolated incident in the mid-1980s, in which a commissioner of police was successfully charged with stealing mandrax, no links with state structures have been found or proved. The commissioner's action appears to have been a frolic of his own, as a deputy, who was jointly charged with him, was acquitted .

Police perception

Police regard the problem as prevalent in the case of cocaine, heroin, cannabis and mandrax.

Corruption

Public sector corruption

In contemporary discussions of public sector corruption, a distinction is often drawn between political or grand corruption, on the one hand, and petty or bureaucratic corruption, on the other. The dichotomy appears to be premised on the divide between politics and administration.

Political or grand corruption takes place at the highest levels of political authority. It is when politicians and political decision makers (heads of state, ministers and top officials), who are entitled to formulate, establish and implement the laws in the name of the people, are themselves corrupt. Grand corruption deals with highly placed individuals who either exploit their positions to extract large bribes from national and transnational corporations and significant pay-offs from contract scams, or who embezzle large sums of money from the public treasury into private (often overseas) bank accounts. Political corruption also occurs when policy formulation and legislation are tailored to benefit politicians and legislators.

Political corruption can thus be distinguished from bureaucratic corruption, which is corruption in the public administration, at the implementation end of politics. This lowor 'street level'corruption is what citizens will experience daily in their encounters with public administration officials in places such as hospitals, schools, local licensing authorities, police stations, customs facilities, tax offices, and so on. The sums involved are rather modest (adjusted to local conditions) and therefore bureaucratic corruption is frequently referred to as routine or 'petty'. Even so, the sums involved may be considerable in particular cases and in aggregated terms.13

Both forms of corruption tend to go hand in hand and are mutually reinforcing: political corruption is supported by bureaucratic corruption and the latter is frequently caused and encouraged by the former. The symbiotic relationship is often manifested and reinforced by a phenomenon that is itself a form of corruption, namely favouritism. Defined as the inclination to accord preferential treatment to friends, family and acquaintances, favouritism is a mechanism for the biased distribution of resources

Zimbabwe is afflicted by both political and bureaucratic corruption. In fact, the legislative frameworks within which the procurement of goods and services occurs in the public sector bristle with opportunities for the extension of favouritism on political grounds, or simply as nepotism. The Prevention of Corruption Act (Chapter 9:16 ) serves as the primary law against which corruption is determined and prosecuted . It has proved to be woefully inadequate and on occasion it even creates loopholes for secondary corruption!

Political corruption

The economic crisis in Zimbabwe in the period under review exacerbated the incidence of political corruption, as high-ranking politicians took advantage of the opportunities presented by the ubiquitous commodity shortages. The lack of motor fuel products, for example, yielded many avenues for corruption.

A statutory corporation, the National Oil Company of Zimbabwe (NOCZIM), monopolises the importation of fuel into Zimbabwe . Owing to several cumulative factors, NOCZIM's capacity to import fuel during 2000 and 2001 was severely impaired, with adverse consequences for the operation of businesses. It emerged during mid-2001 that the corporation issued licenses to import fuel to 246 private individuals. Most of them were either government ministers or people and companies with government connections. Licences were issued to these entrepreneurs ostensibly for the importation of fuel for corporate or personal consumption. Some found the temptation to import fuel for resale irresistible. Inevitably there was abuse of public storage facilities as fuel imported in bulk had to be stored. A high-ranking government functionary appropriated storage tanks belonging to the National Railways of Zimbabwe in the Midlands towns of Gweru and Chivhu to store fuel imported from Botswana. No rental was paid. NOCZIM refused to release the names of private licensed fuel importers and they had to be obtained from an investigative reporter.

SHORTAGE OF FUNDS FOR RESIDENTIAL CONSTRUCTION: THE VIP HOUSING SCANDAL

A shortage of mortgage finance and funds for residential construction occurred in Zimbabwe from the beginning of the 1990s. Middle- and lower-ranking civil servants were particularly affected . Pressure from the various unions and associations representing them led to government setting up a contributory fund for house construction. From about 1995, the fund disbursed allocations, as loans, to individuals who did not qualify in terms of the criteria. The scandal was exposed when some of them failed to service the loans.

It turned out that allocations had been made to some judges, private lawyers, high-ranking civil servants, the commissioner of police, and the editor of a state owned newspaper. Even the president's wife, Grace Mugabe, benefited and used her allocation to build a large house in Harare. By the year 2000 repayments to the fund were still trickling in slowly. Most of the intended beneficiaries were seriously prejudiced, as the fund collapsed and their contributions were lost.

Bureaucratic corruption

In Zimbabwe bureaucratic corruption is exemplified by the claims for compensation submitted in terms of the War Victims Compensation Act (Chapter 11:16 ) between the end of 1980 and May 1997. The objective of the Act was to compensate individuals who were disabled during and as a result of the war of liberation. Following reports of widespread looting of the fund, a judicial commission of enquiry found that many false claims had been made and paid out during that period. Some of the claims were supported by false affidavits, certifying non-existent service in the war, or declaring that claimants had been discharged from the army when they were still serving, or exaggerating disability levels, or falsifying dates when injuries occurred. Acts of corruption were found to have been committed by personnel in the ZDF, at the compensation office (where claims were processed) and by a number of medical doctors, including Dr Chenjerayi Hunzvi (who later gained notoriety in connection with farm invasions, extortion and electoral violence). The series of corrupt actions admitted ly occurred outside the period under review, but it is of exceptional significance in establishing a recurring pattern of dishonesty.

The commission of enquiry concluded that:

Some of the signatures on the medical reports were illegible and appeared to have been forged. In fact, the Commission heard evidence from Mr Blackmore the handwriting expert (which confirmed the Commission's own suspicions) that in a number of cases one of the doctors, Dr C Hunzvi, had deliberately tried to disguise his handwriting to give the impression that another doctor had signed the forms. The doctor realised that his signature would raise suspicion as to the authenticity of not only the injuries on which the claims were based but also the medical examination purported to have been undertaken. The claimants were close relatives of his, i.e. his uncle Hopio and his cousin Jonathan. There was also strong evidence that Dr Hunzvi himself had signed his own application form again using a forged signature. The inevitable conclusion was that he had examined himself (if at all), and was sufficiently cognisant of the impropriety of his actions to try and disguise his signature.14

It was clear that Dr Hunzvi deliberately set out to defraud the state through influencing his relatives to file applications for compensation and then facilitating the successful processing of the claims. Dr Hunzvi claimed for 117% disability and was awarded Z$361,630.86 (at that time worth US$28,930) on the basis that he was 85% disabled.

The commission heard that Dr Hunzvi even carried out 'assembly line' medical examinations at the end of meetings of the War Veterans Association, which he led, and regularly recommended awards on the basis of disabilities in excess of 100%!

One of the beneficiaries was Reward Marufu, an in-law of President Mugabe. He claimed for a scar on the left knee (10% disability), ulcers (20%), recurrent aching feet and arms (10%), persistent headache (10%), and post-war stress syndrome (40%). Curiously, the total percentage of disability for which Marufu was compensated was 95%, and he received a whopping Z$822,668.55 (US$68,453). At the time of the commission's hearing, Marufu was assigned to the Zimbabwean embassy in Canada. Other recipients included the commander of the defence force (55% disability) and many members of parliament.

No prosecutions resulted from the claims or the findings of the commission

LINKS WITH STATE FUNCTIONARIES

Links with state functionaries are self-evident, as most of those involved wereand in some cases, still arehigh-ranking state officials.

Private sector corruption

There are fewer reported instances of corruption in the private sector but this does not mean that it is less prevalent or serious in that sector. With the exception of extortion, there is private sector involvement in the majority of cases of political corruption. This is particularly evident where bribery occurs for the award of tenders to supply goods and services.

The rigging of tender bids is notoriously associated with competition for public business, but it is by no means the most iniquitous form of corruption experienced in Zimbabwe . The following section deals with insidious practices that may be described as preparatory to bid-related corruption. Including these practices in a study of corruption might appear irrelevant, even controversial, as the current anti-corruption law does not directly proscribe them. However, one cannot begin to deal effectively with cross-sectoral corruption without identifying and combating its roots.

IRREGULAR FINANCE MOBILISATION

The mutual quest to access finance has resulted in a significant blurring of the distinction between the pubic and private sectors in Zimbabwe . The public sector exerts a great deal of influence over the decisions and activities of the private sector. One of the reasons for this is that the ruling party has interests in some private and quasi-private institutions that are involved in business transactions with public entities. In consequence, it functions in both sectors, employing a combination of formal and informal instruments.

A widely reported case involved the National Social Security Authority (NSSA), a statutory body dedicated to mobilising and investing public pension funds. ZANU(PF) has a 25% shareholding in the First Banking Corporation, held through the party's commercial arm, ZIDCO Holdings. In the mid-1990s the party started pushing an economic indigenisation programme, partly through state machinery and partly outside of the state. One of the strategies used was to buy shares in private corporations and in public corporations earmarked for privatisation. The bank was employed as a vehicle to advance the programme. In 1998 it purchased more than eight million shares in Bindura Nickel Mine for Z$280 million, on behalf of an indigenisation committee formed by the government. The bank was then required to 'warehouse' these shares, presumably for resale to indigenous entities later. The aspirations of the bank and the committee were not realised, as by mid-2000 it was clear that there would be no indigenous groups or individuals to take up the shares. In fact, the bank started putting pressure on the committee to liquidate its indebted ness, which was rising with the accrual of interest. The committee targeted the NSSA as a possible destination for the shares. The Minister of Labour and Social Welfare, as political administrator of the NSSA, was directed to get the NSSA on board. In spite of the objections of the management and the board of the NSSA, the authority eventually acquired the shares at a price of Z$28 each. The market price was Z$23 at the time. The share price subsequently fell dramatically, resulting in a loss of some Z$56 million. The objections of the general manager and the board precipitated the former's suspension and the board was replaced soon afterwards.

After the NSSA saga, it appears that a cartel of local entrepreneurs with the patronage of the ruling party targeted other pension funds as sources of capital for selected investments. Notable among them are the Mining Industry Pension Fund and the Local Authorities Pension Fund. The usual strategy employed is to gain influence over the board administering the affairs of the pension fund, which is relatively easy owing to the role of sponsoring politicians. Having achieved this, the cartel then sets about diverting funds to particular projects and companies. Occasionally this entails hostile takeovers of companies perceived to be opposed to the interests of the ruling party, but the objective is to extend influence over strategic sectors of the economy.

Another objective is to position members of the cartel, or the principals, to participate in the privatisation process. The pace at which the cartel mobilises finance has become an important determinant in the pace of privatisation in Zimbabwe .

Given the motivation behind the activities of the empowered cartel, and the control that government has over the process of privatisation, it is not surprising that a substantial amount of nepotism and preferential treatment underlies the processes of privatisation and public procurement, under the guise of indigenisation or 'South-South cooperation'. Conflicts of interest, which are inimical to good corporate governance, are common. The membership of the boards of various financial institutions over which the government exerts patronage reveals much about the composition of the cartel and the inherent conflicts of interest.

LINKS WITH STATE FUNCTIONARIES

Links with state functionaries are self-evident. As indicated above, the intimate involvement of important political figures in business, officially and informally, has a weakening effect on the will and capacity of government to resist corruption. In spite of the occasional official inquiries into corrupt conduct in the public sphere, and judicial exposures and condemnation, Zimbabwe is relatively highly tolerant of deviance in public office.

POLICE PERCEPTION

Corruption is regarded by the police as prevalent in both the public and private (business) sectors. An estimate given in April 2001 was that Z$30 billion (US$5.45 million) changes hands in corrupt transactions annually in both sectors. The police do not seem to be aware of the extent to which organised criminal syndicates are involved in corruption in Zimbabwe, although there is awareness that a high proportion of corrupt transactions involve functionaries at senior levels of government.

Conclusion

No detailed conclusions can be made at this stage as this is still a work in progress. What has emerged is that there are vast areas in which criminal activity is occurring but about which information still has to be gathered and analysed.

PART II: PENETRATION OF FORMAL SECTORS

Introduction

While there have been frequent references to linkages between the activities of organised crime syndicates and the formal sectors of society in Zimbabwe in the first part of this report, there is little analysis of the nature of the relationship, if any. This section seeks to establish whether such a relationship exists and if so, whether the formal sectors have been penetrated by organised criminal groups on account of it.

The concept of penetration

The concept of penetration of one structure by another lends itself to a variety of meanings. It may be convenient to use the term 'predator' to represent the penetrating phenomenon, and 'victim' for the targeted structure. The concept could mean the takeover of the victim sector by the predator, to the extent that the former serves the latter on demand. But penetration may also mean attaining a transient influential relationship, on an ad hoc but predictable basis. Between these two extremes, one could also attribute to the concept the infiltration of agents and members of the predator into the victim sector, to gather and pass on strategic information. In this part of the report, the concern is with the formal sectors as potential victims, and organised crime syndicates as predators.

The formal sector comprises the state and its structures, basic and subsidiary. This conventionally comprises the central executive, the government bureaucracy, the legislature, local authorities, the judiciary, and the statutory corporations. The formal sector also includes the organised (rather than informal) private sector, in its various productive segmentsagricultural, mining, manufacturing, retail and the service professions. It also includes the media, although it is debatable whether it should incorporate civil society groupings.

Why penetrate the formal sectors?

Collectively, the segments of the formal sector constitute both the context and the market place in which commodity exchange and profit-making occur. Organised crime is spurred to sustain its existence by business opportunities and economic considerations. Formal sector institutions influence both the existence of opportunities and the level of risk involved in exploiting them. One of the functions of any government is to prevent or control illegal activities. If that role is performed effectively, there is bound to be conflict with organised crime.

Organised crime uses infiltration of the formal sector as a standard practice to blend into society's decision-making structures. The public sector is a regulator and a source of patronage (and therefore business opportunities), whereas the private sector offers opportunities to blend legitimate and illegitimate business so as to disguise the latter and to launder illegally obtained assets. Examples from the developed and developing countries illustrates that the executive, legislative and law enforcement branches of the state are particular targets for infiltration.

It is in the interest of organised crime to identify and exploit opportunities and to minimise risks. Evading government efforts to control illicit activities may not always be a simple matterhence the need to extend influence over the public sector, so that a certain amount of activity can occur with impunity. Corruption is the most visible method relied on by organised crime to penetrate the public sector. Studies have shown that alternative methods, such as resorting to violence and blackmail, are used only if corruption is unsuccessful.

Typology of linkages between organised crime, corruption and the public sector

An assessment of the situation in Zimbabwe should be preceded by a brief typology of linkages between organised crime, corruption and the public sector. The analysis below draws on the work of the UN Office for Drug Control and Crime Prevention.

The relationship between organised crime and public sector corruption has been identified at five levels. The first level consists of simple bribery on an isolated basis. The second level consists of repeated acts of bribery, where the corrupted person is regarded as if they are on the payroll. At the third level, organised crime infiltrates government institutions. The fourth level involves the infiltration of higher levels of government, beyond the bureaucrats, while at the fifth level organised crime infiltrates the political arena or key components of the political system.

First level influence involves the organised criminal syndicate and a single public officer who occupies what the syndicate perceives to be a strategic position. It may even be initiated by the officer, and involves bribery in order to irregularly obtain a document such as a passport, or a service such as a telephone line. The commodity acquired is of high utility value in opening avenues to make money through crime, or to evade apprehension.

The second level is more common and is a development (or degeneration) from the first. Acts of bribery become continuous, as both parties acquire a stake in the continuation of the relationship. The corrupted officer becomes addicted to receiving bribes and appreciates the importance of sustaining the safety of the source of bribes. From the perspective of the briber, the flow of information is continuous and a measure of protection from law enforcement is assured. In the case of border control, this may take the form of uninterrupted entry and exit. In the sphere of procurement of goods and services, the briber is guaranteed earnings from poorly performed work or work not performed at all. The public officer at this level of penetration is usually of a relatively low rank, but occasionally higher ranked officials may also be hooked.

At the third level, infiltration occurs in various forms. One takes the form of entry into functionalthough not necessarily the toplevels of relevant departments of the public sector by members of organised crime syndicates or their friends/close relatives. Law enforcement agencies are not the only departments affected ; in some countries the prosecution, revenue and judicial services have also been infiltrated . Organised crime syndicates have been known to 'sponsor' members to enter the public service or even to 'buy' jobs for them. Highly placed functionaries can be bribed or blackmailed to hire such members.

The fourth level of infiltration may or may not evolve from the third. It manifests itself through the occupation of the commanding heights of formal sector entities either by members of organised crime syndicates, or by compromised individuals, either of which can enable the syndicates to control decisions and even policy-making. Major decisions are taken outside formal institutions, in secret caucuses, and imposed on the former. Where rules and processes impede either the functioning of the syndicates or decisions favourable to them, they are likely to be ignored or circumvented . Typical areas of infiltration are tender processes for procurement, law enforcement and revenue collection. Operatives infused into formal sectors during third level infiltration, who have ascended to higher positions, may be used in this phase. In the absence of such people, organised crime will make use of connections with corrupt highly placed officials to manipulate decisions.

The fifth rung of infiltration is at a more fundamental level. To facilitate infiltration of lower levels, organised crime may find it prudent to corrupt the system in which policy- and decision-makers assume office. Funding political campaigns and parties is a common method, but bankrolling electoral malpractices, such as buying votes, can complement it. Organised crime syndicates can use media control to promote or discredit prospective political leaders. Syndicates need to be involved in licit business in order to get a foothold in the economy and to maximise opportunities for money laundering. Licit business can also be used in fifth level infiltration. Colombian syndicates are heavily involved in sport, especially football and gambling. Mafia families in Italy have also been linked to professional football in that country. In 1999, the Ministry of Internal Affairs in Russia estimated the number of commercial businesses under the control of organised crime in the industrial region of Sverdlovsk , east of Moscow , at 362.15 Elsewhere in this work, Gastrow & Mosse report on the penetration of the business sector by organised crime in neighbouring Mozambique .

To answer the question of whether the public sector in Zimbabwe has been penetrated by organised crime, it is also useful to examine the factors that generally impact on vulnerability to penetration.

Zimbabwe is a state in transition, caught up in economic and social turmoil of traumatic dimensions. The direction of economic transition has oscillated from a command to a market economy and, apparently, back to a command economy. Characteristic of the situation is what Bond & Manyanya (2002) call "uneven return to dirigist policiese.g. exchange controls, a currency peg, luxury import tariffs (but followed by a regional free-trade agreement), foreign debt default, uncontrolled budgetary growth, negative real interest rates under conditions of desperation and capital flight".16

At a social level there is a visible retrogression as poverty levels rise to scales last witnessed in the 1970s. The political turmoil of the early twenty-first century has exacerbated the crisis situation.

Professor Louise Shelley has identified some of the factors that influence the incidence of organised crime in transitional societies. She argues that transitions tend to create power vacuums in power structures, which organised crime may fill:

Alternatively, organised crime may exploit the weakness in the control apparatusrepresented by the police, the courts and the security apparatus. In the change from a socialist to a market economy, significant property is transferred from (the) state to private hands. Organised crime groups will want to benefit from the process of privatisation and become key economic players in the new economy. The absence of controls in the society may also provide a hospitable climate in which organised crime groups, both local and foreign, can operate.17

The vulnerability of transitional states

The features of a transitional state which engender a peculiar vulnerability may be summarised as follows:

• occurrence of a power vacuum;

• diminished social control, as reflected by no (or weakly enforced) laws against economic crime;

• greater mobility of personnel within the country and transnationally;

• corruption precipitated by declining wages, increased opportunities, diminished penalties and falling moral values;

• close linkage between political power and access to economic leverage; and

• imbalance in resources between the law enforcement structures and criminal organisations; leading to

• frustration of law enforcement functionaries, and their absorption by the private sector or by organised crime; and

• unbridled opportunism.

It may be argued that while these factors make it more likely than not that a country will be afflicted by organised crime, they do not necessarily render its formal structures penetrable by organised crime. Studies on the evolution of the linkages between organised crime and the state in the former Soviet republics of Russia and the Ukraine demonstrate the relationship between the incidence of the predisposing features and the probability of penetration. Admitted ly the incidence and growth of organised crime in Russia predated the transition which commenced during the Gorbachev era, but that does not substantially detract from the strength of the causal nexus.

The political economy of organised crime in the Soviet Union also highlights the distribution of benefits betweencriminal syndicates and state bureaucrats. In their efforts to line their pockets, Soviet bureaucrats even resorted to extorting money fromcrime syndicates in exchange for protecting their illegal operations. This demonstrates the significance of a close linkage between political power and access to economic leverage. It also shows that the infiltration of the formal sector need not be, and is not always, at the instance of organised crime.

A study of the manner in which organised crime relates to the formal sectors in Zimbabwe suggests several patterns of possible infiltration. The most visible is the development of mutually beneficial personal and structural relationships between, on one hand, individuals and groups who occupy influential positions in the formal sector and, on the other, operatives from the private sector with a predisposition for corrupt behaviour.

The activities of fraud syndicates that target banks, using falsified identity data as described in the first part of the report, involve collusion with functionaries within the Ministry of Home Affairs, in particular the section responsible for issuing identity documents. The same kind of collusion facilitates the operations of drug dealing syndicates, which are engaged in the shipment of narcotics to South Africa and Western Europe . Some of the syndicates have foreign members. Since their advent in the mid-1980s, such syndicates have demonstrated an aptitude for integrating into the local community by clandestinely acquiring Zimbabwean passports.

Statistics on the extent of penetration of the kind under review are difficult to come by, as the police, the agency that would be expected to be the main repository, do not maintain any. Neither does the victim ministry. An additional factor is that many false Zimbabwean passports tend to be discovered in foreign countries, and there is little reporting between cognate agencies in different countries.

Joint venture partnerships and trans-border enterprises

Central to organised crime endeavours is a continuous positioning to take advantage of opportunities arising as the economic transition evolves. The state, in the form of central government, bureaucrats, and the statutory corporate sector, is predominant in charting the direction and pace of the transition. Its functionaries are repositories of information on new opportunities and therefore better positioned than others to participate. The major problem seems to be the shortage of capital, which explains the attraction of joint venture partnerships.

Joint venture partnerships have been a prominent feature of the participation of state functionaries in private enterprise since the beginning of the 1980s. The selected partners tend to be foreign or to have strong foreign links, partly because of the weakness of the indigenous financial base. Foreign partners with the necessary skills and capital occasionally include criminals and black market experts. Once formed, the joint venture companies depend on government procurement for a large part of their business. Spheres of operation are carved out for them by a combination of strategies, which include protection from competitive tender processes, or bid rigging, or continued statutory monopoly schemes.

Their interests are safeguarded by the inclusion on their boards of members of the executive or state bureaucrats. Serving ministers sit on the boards of companies in which the ZANU(PF) party has a controlling stake. Among those identified by Transparency International is Zidco Holdings, created in 1979 as a joint venture between ZANU(PF)'s M&S Syndicate, and Unicorn, a UK-based import and export firm. M&S owns 55% of the shares and Unicorn holds the remainder.

Unicorn's chief executive, Chandra Patel, is the uncle of Jayant Joshi, Zidco Holdings' managing director. Emmerson Mnangagwa, the current Speaker of Parliament and Sidney Sekeramayi, a former Minister for Mines,represent ZANU(PF) on the board of Zidco Holdings. Manharlal Chunibal, Joshi's brother, and Dipak Champakal, a British national, represent Unicorn.

Zidco Holdings' subsidiary Catercraft provides in-flight catering services for Air Zimbabwe , and all other international carriers using Harare and Victoria Falls international airports. Another subsidiary, Jongwe Printers, prints Hansard (the official transcript of parliamentary proceedings) and old textbooks and other educational material used in schools.

Inside Zimbabwe , Zidco acquisitions include prime agricultural and commercial land, agro-business, banking, property management contracts, car and truck retail and engineering dealerships, gold, coal, copper, nickel, asbestos mining and blanket manufacturing and sales.

Through its involvement in First Banking Corporation and Oryx Diamonds, Zidco has established itself in the international arena where it is involved in cobalt, copper and diamond mining and timber exploitation. The ZANU(PF) party is indirectly involved in the southern African rail network in Zimbabwe , the DRC and Zambia .

The second manifestation of infiltration emerges from the inter-linked commercial dealings of the ZANU(PF) party top hierarchy, the ZDF and entrepreneurial elites with the Kabila regime in the DRC in the late 1990s and early 2000s. These dealings indicate the systematic use of official positions for private gain. Among the central participants was Harare transport magnate, Billy Rautenbach, a close acquaintance of the Mugabe regime. With the assistance of Mnangagwa, Rautenbach became the chief executive of the DRC mining parastatal, Gecamines, from November 1998 to May 2000. Before and during his tenure, Rautenbach is reported to have acquired a number of concessions for cobalt mining in the Katanga Province . On his dismissal in May 2000, the Kabila regime accused Rautenbach of siphoning off profits to a fictitious legal entity. It subsequently emerged that Rautenbach was being sought by the South African authorities on allegations of US$8.6 million worth of customs fraud and related charges of money laundering. His assets were seized and at the time of writing, their disposal was pending. Initiatives to secure Rautenbach's extradition from Zimbabwe were also underway.

Apart from economic activities directly involving the military, the DRC opened up opportunities for enterprises prepared to work with the military. The tale of a Harare-based trading company is illustrative. As Nest recounts:

The manager of a Harare based trading company offered a typical story of an enterprise working with the military. From January 1999 his company exported chemicals for processing mineral ores to Lubumbashi . Having learnt through counterparts of opportunities in the minerals sector, his company diversified into purchasing diamonds from the DRC and then became interested in gold. The company transported diamonds by air to Zimbabwe through Lubumbashi airport, which was guarded by the ZDF, and used military personnel as a cover to avoid Congolese customs. The company worked with one particular officer who received a commission of 5% of the diamonds' value for his service.18

The story reveals several activities that could easily be transformed into organised crime. To maximise returns, lawful cargo (chemicals) is transported up to the DRC and illicit cargo (diamonds and gold) makes its way south on the return trip. Customs regulations and inspections are evaded through the use of military cover, and if necessary, through bribery. The ZDF or its contractors would probably carry out the freighting.

The scale of involvement by the business sector in illicit minerals ventures in the DRC along the lines described has not been fully explored, but there is evidence of involvement by dozens of indigenous business personalities. There is also anecdotal evidence of money laundering and currency speculation traceable to dealings in the DRC.

State response to infiltration by organised crime

The capacity of the state to detect and respond to infiltration by organised crime depends partly on the integrity and strength of its structures, particularly those responsible for law enforcement. The strength of law enforcement agencies, classically represented by the police, depends on their motivation as much as it is a function of resources. Both factors can be adversely affected by penetration by organised crime. Observations during the preparation of this report and interviews with officers within the police indicate a substantial weakening of law enforcement, which has arguably created a gulf between the law in the books and the law in practice. Part of the reason is the severe understaffing of the most relevant units of the police, such as the departments responsible for investigating serious economic crime and crimes involving precious stones.

The issue is whether the denudation of resources can be attributable to organised crime. There is no evidence of a direct link, but a campaign by police management has been detected , aimed at removing from the police ranks officers whose allegiance to ZANU(PF) is considered to be questionable. The head of the police is an active member of ZANU(PF), who has pledged to defend the party and its leadership. It is not surprising that the police force in Zimbabwe is a patently partial entity, incapable of facing up to patronage-related corruption. Police inaction during the extortionate invasions of corporate institutions in the first half of 2001 is pertinent in this regard. Police preoccupation in Zimbabwe is with restricting the space for democratic participation. The spate of arrests of journalists, in particular, in the first quarter of 2002, is merely the most recent illustration of this reality.

The extent to which the non-state sector has been penetrated by organised crime

The private sector comprises an amorphous range of enterprises in production, manufacturing and provision of services, both retail and professional. The multi-layered mode of penetration relevant to the public sector can be applied to the private sector as well, with modifications that take account of structural differences. The first four of the five levels of penetration can be replicated in the private sector.

In discourse about private sector penetration by organised crime, it may be necessary to keep in mind the distinction between what may roughly be described as blue-collar organised crime and white-collar organised crime.

Blue-collar (which is usually accompanied by violence, but just as systematic as any other) organised crime penetration of the formal private sector usually manifests itself in the incidence of crimes facilitated by the use of information, access to which is restricted to a limited number of persons inside the targeted institution. These tend to be employees or former employees. The Norman Karimanzira armed robbery, outlined in the first part of the report, is representative, involving security company personnel and outsiders.

The evidence relating to this is anecdotal, as the number of private sector organisations surveyed in this study was too small. The information indicative of infiltration is derived from investigated cases, as well as cases under prosecution.

As a general observation, one should point out that none of the investigated incidents of armed robbery of motor vehicles reported in 2001 were found to involve collusion with 'victim' drivers. It is estimated that less than 15% of those reported in 2000 involved collusion between criminals and apparent victims. In every instance the direct victim was an employee of a corporation.

What has proved to be more worrying in transitional societies is the threat of infiltration by white-collar organised crime. All spheres of the private sector are vulnerable, but particular concern has tended to be expressed about the financial services sector. This could be attributed to the potential for this sector's use in the infiltration of other spheres. It could also be abused to commit organised crime, for instance money laundering.

The emergence and somewhat rapid collapse of the Boka empire, (profiled in the first part of this report) revealed the ease with which syndicated crime can establish itself within the formal corporate sector. The identifiable ingredients in the Boka saga included:

• political patronage, which assisted in the granting of a licence to enter the financial services sector, to operate a commercial bank, and to gain access to lucrative, government supported CSC business;
  
  

• high level contacts, which facilitated externalisation of funds in foreign currency;
  
  

• weak supervision by the Reserve Bank, which ensured a sluggish detection and reaction to the irregularities and impending collapse;
  
  

• a non-existent or dysfunctional legislative framework against money laundering, which allowed the unchecked externalisation of funds and the abuse of a lawyer's trust account to facilitate the same; and
  
  

• an investigation system vulnerable to the whims of the executive, in the form of provisions of the Prevention of Corruption Act which could permit the Minister of Justice to usurp police functions.

Parallels can be drawn between the Boka collapse and similar developments surrounding the collapse of Bank Austral in Mozambique . Subsequent to the demise of the UMB, the governor of the Reserve Bank of Zimbabwe lamented the bank's lack of licensing authority. The power is vested in the Ministry of Finance and Economic Planning. The governor stated that he believed that only an entity autonomous of central government could counter the influence of political patronage.

The UMB collapse also highlights the potential role that could be played by professional service providers such as lawyers to facilitate money laundering. The incidence of abuse of trust accounts in the way exposed in the UMB case has yet to be explored. To what extent are the service professions under the influence of organised crime?

The potential for systemic, symbiotic relationships between the professions and organised crime syndicates cannot be gainsaid. Lawyers and accountants are among the most vulnerable professions in this respect. The English case of AGIP ( Africa ) Limited v Jackson & Others (1990) 1 Ch. 265 highlights how an accountancy firm can play a prominent role in laundering proceeds of crime. The facts were summarised in an undated symposium paper by Mitchell, Sikka & Willmott.19 In view of its illustrative value, the summary is quoted here in full.

The study found no reported instances of involvement by accountants in money laundering along the AGIP lines in Zimbabwe , although there appeared to be scope for it. There are indications of penetration of the estate agents profession by organised crime. At the time of writing the case involving Kay Makhela (Metof Investments) was unresolved. His agency was one of several implicated in the sale of non-existent residential property.

Zimbabwe is a significant transit point for cannabis and South Asian heroin, mandrax, and amphetamines destined for the South African and European markets.20 In respect of cannabis, the country is also a source and major consumer. Transit is by air and by road, on vehicles run by legitimate business entities. Although there have been a few incidents involving the discovery of narcotics on long haul vehicles and on one occasion on a cargo plane, there has not been sufficient evidence to impute knowledge by the company concerned of the conveyance of drugs. Invariably, the drivers of the vehicles have taken responsibility. In cases where they have implicated third parties, these have tended to be unconnected to the employer. It cannot be said that the transportation industry has been penetrated by organised crime, although regular use is made of its vehicles.

Notes

1. Matrofski & Potter, Controlling organised crime: A critique of law enforcement policy, Criminal Justice Policy Review, 2(3), 1987, pp 269-301.
   
   

2. Based on an interview with the liaison and training director of the Anti-Hijack Trust, Rachel Gaka, in March 2002.
   
   

3. See P Gastrow, Organised crime in the SADC region: Police perceptions, Institute for Security Studies (ISS) Monograph Series 60, ISS, Pretoria, 2001,p 42.
   
   

4. F Msutu, Responses to organised crime in SADC: Interpol and SARPCCO, in C Goredema (ed), Organised crime in Southern Africa: Assessing legislation, ISS Monograph Series 56, ISS, Pretoria, 2001, pp 13-24.
   
   

5. It was disclosed to the writer during a visit to Harare in early April 2002 that the charge against one of the accused had been dropped.
   
   

6. Collin Wilbesi, PTC spokesman, quoted in the Daily News, 10 January 2001 .
   
   

7. See the Zimbabwe Independent , 22 February 2002 . It was reported that a ZDF company, the Minerals Business Company (MBC), was bringing diamonds from the DRC into Zimbabwe . False certificates of origin obtained from South Africa facilitated export to major centres.
   
   

8. Public-private partnerships guidelines for best practices are accessible at <www.gov.nb.ca/0158/reports/protocol/protocol.htm>.
   
   

9. Public-private partnerships should be based on the following principles: (1) a clear project definition; (2) competitive private sector market; (3) shared rewards, with the public receiving value for money, and the private sector a fair return on its investment; (4) allocation of risk to the partner best suited to assume the risk; (5) fair and transparent procurement processes; (6) a signed contract; and (7) proactive, ongoing and transparent communications to keep people informed.
   
   

10. In the words of the UN panel of experts, the revenue from these ventures has not had a positive impact on Zimbabwe 's weak economy because " Zimbabwe 's holdings in the Democratic Republic of the Congo seem to be controlled by top military and party officials who are also the direct beneficiaries". United Nations Security Council, Final Report of the Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the Democratic Republic of the Congo, 16 October 2002, <www.reliefweb.int>, p 5.
    
    

11. Ibid. p 17.
    
    

12. The Mining Commission of Zimbabwe stated that all gold sales should be processed by the Reserve Bank, but an unquantified amount of gold, estimated to be as much as a third of annual production, appears to be diverted and smuggled out of Zimbabwe.
    
    

13. Jens Chr. Andvig & Odd-Helge Fjeldstad (eds), Corruption: A review of contemporary research,No 268 NUPI report, Oslo : Norwegian Institute for International Affairs (NUPI), 2001, pp 10-11.
    
    

14. Report of the Commission of Inquiry into the Administration of the War Victims Compensation Act (Chapter 11.16), Government Printer, Harare , Zimbabwe ,1998.
    
    

15. J Finckenauer & Y Voronin, The threat of Russian organised crime, US Department of Justice, 2001.
    
    

16. P Bond & J Manyanya , Zimbabwe 's Plunge, University of Natal Press, 2002,p 2.
    
    

17. L Shelley, Transitional states and organised crime, paper delivered at the Second World Conference on Modern Criminal Investigation, Organised Crime and Human Rights, Durban, 3-7 December, 2001, pp1, 2.
    
    

18. M Nest, Ambitions, profits and loss: Zimbabwean economic involvement in the Democratic Republic of the Congo , African Affairs, 100, 2001, p 484.
    
    

19. A Mitchell, P Sikka & H Willmott, Sweeping it under the carpet: The role of accountancy firms in money laundering, no date, <www.members.tripod.com/~orgcrime/genmluk.htm>.
    
    

20. Simon Baynham, Southern Africa 's role in the illegal drug trade in Southern Africa : International dimensions to a local crisis , SAIIA, Johannesburg , 1998, p 110.