Court Battle Exposes Deep Fault Lines in Zimbabwe’s Gold Trade
by Staff Reporter · The Zimbabwe Mail
HARARE – A high-profile court case involving the Reserve Bank of Zimbabwe (RBZ) has once again cast a spotlight on structural weaknesses in Zimbabwe’s gold trading system, including regulatory gaps and longstanding reliance on private financiers.
The dispute centres on a 2025 transaction in which an agent representing Jayesh Shah, a prominent gold buyer and lender, entered Zimbabwe carrying US$12 million in cash. The funds were declared at the point of entry and subsequently deposited into an account belonging to Fidelity Gold Refineries at GetBucks, a bank linked to Shah.
The money was earmarked for gold purchases by Al Shams, Shah’s trading company, which has maintained a long-running commercial relationship with the central bank. However, shortly after the deposit, RBZ froze Fidelity’s account and demanded clarification over the source of US$7 million of the funds.
Al Shams challenged the move in court, triggering proceedings that have revealed critical weaknesses in Zimbabwe’s gold trade framework and anti-money laundering oversight.
Delivering judgment, High Court Judge Joseph Mafusire ruled in favour of Al Shams, criticising RBZ’s conduct and questioning its effectiveness as a regulator.
Under a 2024 agreement, RBZ was expected to supply at least 100 kilogrammes of gold per week to Al Shams. The company would then export the gold to Dubai, sell it, and return proceeds in cash to Zimbabwe for redeposit into the local banking system.
In his ruling, Mafusire raised concerns about the country’s regulatory posture, noting that Zimbabwe appears to be an outlier among gold-exporting nations in allowing large-scale physical cash movements tied to gold transactions.
On May 31 and June 18, 2025, Al Shams imported US$6 million and US$6.1 million respectively, totalling US$12.1 million—all declared to the Zimbabwe Revenue Authority. Despite this, RBZ froze the account and selectively queried US$7 million of the funds, a move the court found inconsistent.
RBZ defended its actions on “know-your-customer” compliance grounds. However, the court dismissed this argument, pointing out that the central bank had maintained a long-standing financial relationship with Shah and his entities.
Court documents revealed that the government has relied on financing from Shah for over two decades, with loans dating back to 2002. These funds were reportedly used for “urgent national needs,” with repayment arrangements including weekly instalments of US$250,000 under a 2022 settlement agreement on a debt exceeding US$53 million.
Al Shams argued that the freezing of the account had severely disrupted its operations and led to a breach of its gold supply agreement. The company described RBZ’s demand for proof of funds as inconsistent, given the historical financial ties between the parties.
The court agreed, finding that RBZ had failed in its supervisory responsibilities and had not acted in accordance with legal obligations.
Further weakening the central bank’s case was a procedural flaw in its defence. An affidavit submitted on its behalf was deemed inadmissible after it emerged that it had been sworn in Harare while the RBZ governor was reportedly in Washington at the time. The bank claimed the oath had been administered virtually, but the court rejected this, leaving RBZ without formal opposition on record.
As a result, the court set aside RBZ’s decision to freeze the account and ordered the central bank to pay legal costs.
In a pointed conclusion, Justice Mafusire suggested that the matter should have been resolved outside the courts, attributing the escalation to personal differences rather than substantive legal disputes.
The case has intensified scrutiny on Zimbabwe’s gold trade practices, particularly the use of cash-based transactions and the blurred lines between public institutions and private financiers, raising broader questions about governance, transparency, and financial regulation in the sector.