Kleptocrats love buying property, partly because it’s a good way to get rid of a lot of money at once, but mainly because it tends to be both a good investment and gives one a nice place to live. So kudos to the authors of this report for showing which countries aren’t doing enough to keep the kleptocrats out. 

“Real estate has long been known as the go-to avenue for criminals and the corrupt for laundering their ill-gotten gains. Seeking security for their investments, they often target the world’s most attractive markets to place their dirty money,” the report states.

Many countries can be a bit lax about cracking down on these purchases, because they see them as useful investment into their economies. In fact, they have a bad habit of offering golden visas alongside the property to further incentivise purchases, although some countries – including, earlier this month, Spain – have begun to realise these are not the convenient source of free money they were presented as, precipitating as they do housing shortages and rising rents.

TI divided its analysis into two halves, highlighting not just flaws in the anti-money laundering architecture, but also in the availability of data. If journalists, analysts or activists can’t see who owns what, then no one can tell if kleptocrats have been allowed to sneak through the net. It’s worth reading in full, particularly because of the way it shows that these two halves of the problem feed off each other, for good and ill. 

South Africa, Singapore and France get singled out for praise, with the worst performers – Australia, the United States and South Korea – losing out because they were marked down dramatically on the weakness of their anti-money-laundering protections. When it came to the opacity of ownership information, the worst offenders were Japan, India and the United Arab Emirates (surprise! Okay, not at all a surprise).

I hope that this report informs national and international discussions about fighting kleptocracy. But I also hope someone points out that TI needs a better acronym before OREO becomes entrenched. My suggestion for a new name, after literally minutes of intense thought, would be Lax Ownership Of Property Hurts Ordinary Law-Abiding Entities (LOOPHOLE). 

Although I concede that “entities” isn’t a great word at the end there. Neither is “lax” at the beginning, to be honest. 

WITH ‘FRIENDS’ LIKE THESE

While on the subject of acronyms, thank you to a reader for alerting me to the existence of the “Mobilizing and Enhancing Georgia’s Options for Building Accountability,
Resilience, and Independence” bill, which has been put forward by a bipartisan group of US congresspeople. I am a sucker for a daft acronym, and suspect this is the first time a Georgian word has featured in a proposed piece of American legislation. “Megobari” being, of course, Georgian for “friend”.

Georgia has been suffering from political turbulence for some time, with the Georgian Dream political party – backed by the country’s richest man, the Russophile oligarch Bidzina Ivanishvili -- cementing control over the country. Transparency International’s Georgian branch has been publishing a list of high-level officials who hold what it considers to be questionable wealth. There are worrying signs that Western companies are happily enabling what’s happening in the South Caucasus. Georgia used to be a rare success story when it came to combating corruption, as well as a staunch Western ally in a difficult part of the world.

We would be fools to let it slip back to its bad old ways, without at least trying to arrest the slide a little, so I hope the Megobari bill makes some progress. “This bill provides Georgian Dream officials with a choice to abandon the would-be dictator Ivanishvili or face sanctions,” said Congressman Joe Wilson, Republican of South Carolina. With the “MEGOBARI” Act now being approved, it marks at least legislative support for Georgia’s EU-leaning democratic aspirations.

WHO NEEDS ENEMIES?

And sticking with acronyms, the House and Senate bills put forward to (under-)regulate the stablecoin industry, and which Donald Trump wants rushed through by August, have the acronyms STABLE and GENIUS, which is witty if you like that kind of thing. 

Back in the latter days of Trump’s first term, Representative Brendan Boyle (Democrat of Pennsylvania) introduced the STABLE GENIUS bill, to try to force the president to undergo a mental acuity test. There’s probably some deep lesson in the fact that an acronym that was intended to mock Trump in his first term is being used to flatter him in his second. But frankly it’s all too depressing to contemplate, so let’s move on.

Though onto a topic that’s also depressing. Here’s an interesting column about how Russian oligarchs are apparently back in the market for New York real estate. It’s been a tough few years for rich Russians, since sanctions have forced them to stay away from their traditional playgrounds in London, Manhattan and the south of France.

But, according to real estate brokers in New York at least, they’re back. “We’re seeing a lot of Russian nationals,” a broker said. “I’ve had five Russians look at properties in the $10 million to $20 million range in the past few weeks -- condos and townhouses.” Over the last couple of years, the broker confirmed, “oligarchs couldn’t buy anything in the U.S., and Putin put pressure on Russians not to buy here or in Europe.”

I’m a little bit suspicious of the claim that Russians are once more hunting for NYC real estate, since I think it would be a foolish oligarch who trusted a large amount of money to there being any stability in U.S. policy towards Russia. But if it is the case, it does highlight some of the issues raised by the OREO (ugh!) index, particularly in the light of the Trump White House’s decisions to scrap much of the anti-corruption architecture. 

That said, I wouldn’t expect much dirty money to be coming from Russians at the moment. Russian buyers have been drying up in Turkey and the UAE, which suggest the Russian economy is not generating the kind of cash that leads to property splurges, not least with U.S. tariffs leading to potentially lower oil prices. In my view, real estate brokers might do better to look more towards the old faithful klepto-gushers of South America and China.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Across the water, shimmering in the heat, stand imposing steel and concrete structures — the brand new plants built by Sinomine, one of the several Chinese companies that have invested in Zimbabwe’s nascent lithium mining industry. Soon, Sinomine will be exporting the lithium from its Bikita mines to massive battery manufacturing factories in China. This neglected rural district is now one more pawn in China’s gambit to control the world’s supplies of rare earth elements and minerals.

The Mungezi River forms the border between Bikita and the equally poor neighboring district of Gutu. On a Friday afternoon in July, Nelson Chamisa, the young, charismatic leader of Zimbabwe’s opposition, is on the campaign trail.

“Our minerals are being exploited,” Chamisa says to the crowd at a rally. “You are getting nothing. The only thing you are getting are cracks in your houses from the dynamite blasts. Our people are still jobless, they still remain poor.” 

On August 23, 2023, Zimbabweans are scheduled to vote in a general election. Chamisa and the incumbent president, Emmerson Mnangagwa, are — as they were in 2018 — in a standoff, with none of the other candidates expected to be in the running. Mnangagwa took over the presidency in Zimbabwe in 2017, when long-time president and strongman Robert Mugabe was deposed in a coup. A year later, Mnangagwa won a disputed election. During his time in office, Zimbabwe has lurched from one economic crisis to another.

But now Zimbabwe has been marked as a potential lithium hub. “Lithium batteries,” Elon Musk tweeted last year, “are the new oil.” China is, by a significant margin, the world’s largest manufacturer of these batteries, which are used to power electric vehicles, laptops and mobile phones among other things. And as the pressure to transition away from fossil fuels grows, the demand for lithium has been outstripping supply, raising prices and setting off a scramble to discover alternative sources.

Chinese and Western companies have their eyes on mining minerals across Africa, including, for example, Morocco and the Democratic Republic of Congo. The cobalt reserves in the DRC are critical to the manufacturing of lithium-ion batteries, leading to a rush to mine the metals often under inhuman conditions. When Pope Francis visited Kinshasa, the DRC’s capital, he said that the “poison of greed” was “choking Africa” and that the continent was “not a mine to be stripped or a terrain to be plundered.” 

But with the value of the EV battery market projected to increase from about $56 billion in 2022 to an estimated $135 billion in 2027, Zimbabwe’s lithium deposits represent an enormous economic opportunity for a debt-ridden country that has been suffering from international economic isolation and U.S. sanctions for 20 years. 

Sanctioned by the United States, Mnangagwa has turned to China, Russia and Iran for support. In July 2023, Iranian President Ebrahim Raisi stopped in the Zimbabwean capital Harare as part of his three-country African tour. The crowd waved Zimbabwean and Iranian flags. Mnangagwa described Raisi as his brother. “When you see him, you see me,” said Mnangagwa. “When you see me, you see him.” 

And at the 2023 Russia-Africa summit in Saint Petersburg, Vladimir Putin reportedly gave Mnangagwa a helicopter. Putin also included Zimbabwe among a half dozen nations that Russia promised to supply with grain for free after refusing to extend the Black Sea grain deal that enabled exports of Ukrainian grain to Africa. Victims of American sanctions must cooperate, Mnangagwa said, “and this is the cooperation we are seeing.”

In Mnangagwa’s view, the West has had decades to mine and invest in Zimbabwean minerals and has done little. Sinomine and other Chinese companies, on the other hand, have moved quickly. The fruits of Chinese investment are evident across Zimbabwe. Last year, Mnangagwa delivered a State of the Nation address from a new $200 million parliamentary building entirely funded and constructed by China. Opponents of Chinese investment, Mnangagwa says, just want to hand Zimbabwe to the West. “They want our lithium,” Mnangagwa says of Western companies, “they want our minerals.”

Instead, it is Chinese companies, the Zimbabwean government argues, that offer Zimbabwe the best deal. For instance, Sinomine expects to create 1,000 jobs at its two Bikita plants and export up to $500 million of lithium concentrate every year. By comparison, the plants’ previous European owners did nothing for 50 years.  

Standing on the back of a pickup truck, Nelson Chamisa tells cheering supporters that these projections of Chinese success mean little unless locals benefit from the jobs and the profits. “Do you see any development from the lithium here?” Chamisa asked his supporters in Gutu. “Kana,” they roared back. Nothing.

According to the Zimbabwe Investment Development Agency, international investors are flocking to the country for lithium. Of the 116 investment licenses issued to foreign investors in the first three months of 2023, 42 were given to companies seeking to buy into the lithium industry. “Without doubt, mining outstrips every other area,” Tafadzwa Chinhamo, the head of ZIDA told me. “Most of our licenses right now are for lithium mining, prospecting and processing.”

His list of applications for licenses tells the story of the race to mine Zimbabwean lithium. In the first half of 2023, he told me, ZIDA received 160 investor applications from China, up from 53 over the same period in 2022. By contrast, there were only five U.S. applications and 10 U.K. applications. The Chinese applications for the first quarter of 2023 pledged investments of $944 million, compared to $166 million proposed by U.S. investors.

Zimbabwe’s opposition claims that Chinese companies are being given free rein over the nation’s mineral resources and allowed to cut regulatory corners and scar the environment. The ruling party says the opposition are megaphones for the West.

This has not gone unnoticed in Washington, D.C.

At a March confirmation hearing for Pamela Tremont, the U.S. ambassador-designate to Zimbabwe, the Senate Foreign Relations Committee was clear on what they expected her to do — go to Zimbabwe and counter China’s influence. Chinese and Russian interests, Tremont told the committee, “comprise about 90% of the foreign direct investment in Zimbabwe’s mineral sector.” Expressing doubt about the terms of the contracts, Tremont added that she “would certainly hope the Zimbabwean government is ensuring that the Zimbabwean people are getting fair compensation for the minerals taken from their country.”

Her comments riled the Chinese embassy in Harare. A spokesperson told The Herald, Zimbabwe’s state-owned daily newspaper, that “Zimbabwe should not be used as a wrestling ground for major-country rivalry.” China, the spokesperson said, was focused on bringing more development to Zimbabwe, while the U.S. was slapping “illegal” sanctions on Zimbabwe and meddling in its internal affairs.

But Chinese investment in Zimbabwe is not without controversy.

Goromonzi is a farming area just east of Harare, the capital. Standing on a red-soiled ridge, I saw maize fields stretching to the horizon on one side of the Nyaguwe River. On the other side, Shengxiang, a small Chinese company, has started mining for lithium. According to the local office of the Environmental Management Agency, the company is operating in the area illegally.

“We inspected the mine, found them in breach of regulations, fined them and ordered them to stop operations until they got an EIA [environmental impact assessment authorisation],” said Astas Mabwe, the officer in charge of the area. Still, Mabwe told me, the company kept mining.

A member of the ruling party told me anonymously: “Who is going to go out and fight an investor when the president is calling for more investment?”

The Chinese Chamber of Enterprises in Zimbabwe, which represents over 80 companies in the country, insists that companies like Shengxiang are in the minority. Allegations of illegal operations, Chinese authorities say, are part of a campaign of deliberate misinformation.

Last year, local newspapers published a series of articles that argued that Chinese companies in Zimbabwe had flouted a number of laws safeguarding the environment and labor rights. The reporting was attributed to the Information for Development Trust, a journalism program funded by the U.S. embassy in Harare.

Aja Stefanon, from the U.S. embassy’s economic affairs department, said last year that the program’s “work has ensured that the media plays its watchdog role in safeguarding shared goals in labor, human rights, and natural resources governance.”

Predictably, the Chinese embassy saw it differently. It told The Herald that the Information for Development Trust was “a puppet sponsored and manipulated by the U.S. Embassy to attack Chinese investment in Zimbabwe.” It “had long fabricated false information and published anti-China news,” the Chinese embassy said.  

Back in Bikita, Sinomine, under the conditions of its mining license, will spend an extra $2 million to supply uninterrupted power to local villages. This June, Sinomine started to drill 35 boreholes to provide water to these villages.
Until then, Molly Mandityira, a local village head said, eight villages shared a single borehole. “This,” she told me, “changes everything.” With people in rural areas generally voting in far greater numbers than people in urban areas, Mnangagwa might be counting on Chinese investment to win him the election

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