US embassy slams door on sanctioned firms

THE United States embassy in Harare, along with Washington’s development agencies operating in the country, are blocking the procurement of goods and services from companies controlled by designated individuals, the Zimbabwe Independent can reveal.

An investigation by the Independent this week showed how the US tightly monitors its spending in sanctions-hit Harare.

In multiple briefings, authoritative sources said although the embargo was cumbersome to enforce, the US was keenly following to fish out sanctioned individuals and entities who try to do business with Washington.

“Washington is engaging with likeminded foreign countries to curtail what it deems illicit financial flows (IFFs) fuelled by sanctioned individuals and entities,” one diplomat said.

The Zimbabwe Democracy and Economic Recovery Act (Zidera) of 2021 outlines how sanctions against individuals and entities suspected of undermining the rule of law and haemorrhaging Zimbabwe’s fragile economy through illegal activities are enforced.

The legislation has repeatedly been renewed, resulting in individuals like businessman Kuda Tagwirei and his wife Sandra Mpunga being designated due to their direct links to energy firm, Sakunda Holdings.

Tagwirei, an advisor to President Emmerson Mnangagwa, was slapped with US sanctions in 2020.

Investigations by the Independent showed how the US embassy had effectively ringfenced vast amounts of its funding from trickling into accounts controlled by specially designated nationals (SDNs).

In responses to questions posed by this publication, the US embassy said two years before Tagwirei and Sakunda’s designation, Washington had stopped purchasing fuel from the firm.

“We have not procured fuel from Sakunda Holdings since 2018,” the embassy said.

“We have not procured goods from companies listed as associated with Kuda Tagwirei and Sandra Mpunga since they were designated by the US government,” the embassy said.

“Additionally, the US government … prohibits both US and non-US partners from any transactions with or support to any individual or entity that is subject to sanctions administered by Ofac ((US Office of Foreign Assets and Control) the specially designated nationals and blocked persons list) or the United Nations (the UN Security Council consolidated list). This also applies to sub-award recipients,” the US embassy noted.

Within the US, designated individuals are curtailed from transferring and receiving funds through its financial system.

Entities caught on the wrong side have been slapped with penalties.

The US embassy’s statement said it procures fuel through a “competitive” public tendering system which excludes designated entities, including Sakunda among other sanctioned individuals.

“The US embassy sources its fuel by competitive procurement, engaging multiple fuel vendors via contract. As a requirement, all suppliers must be registered on the system for award management. Before engaging in a contract with a new vendor, we confirm that the entity is not on the excluded parties list,” reads the statement.

“US targeted financial sanctions only apply to transactions that would touch the

US financial system and the prohibition to deal with sanctioned individuals and entities primarily falls on US citizens and US companies.”

Questions sent to Sakunda chief operations officer Mberikwazvo Chitambo seeking an understanding of business deals between the petroleum company and the US embassy in Harare had not been responded to by yesterday.

The same questions were sent to the company’s secretary and legal advisor Maurice Makoni, who had also not responded.

Broadly, the US Department of Treasury website also spells out consequences of sanctions.

It says that entities which are directly or indirectly owned 50% or more by designated nationals are also placed under the radar.

Notwithstanding the embargo, Washington extended US$344 million to Zimbabwe last year, with the health sector receiving the largest allocation amounting to US$190 million while humanitarian assistance accounted for US$77 million.

Zimbabwe has vociferously campaigned against the embargo currently blamed for stagnating economic growth.

Towards the run-up to the 2013 harmonised elections which were won by the late former president Robert Mugabe, Zanu PF claimed that Zimbabwe had lost a staggering US$42 billion in about a decade, as a direct result of the sanctions.

No empirical evidence has been brought forward to back the ruling party’s claims.

Over time, Ofac also designated Nqobile Magwizi, Fossil Agro, Fossil Contracting, and Obey Chimuka, for their ties to Tagwirei and Sakunda Holdings.

Mnangagwa’s son Emmerson Jr was also designated in 2022.