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Sam Pa, Sino Zim and Anjin ‘must be probed’

IN this seventh instalment of the latest Global Witness report Financing A Parallel Government? which makes interesting revelations about Chiadzwa, Global Witness argues consumers who want clean diamonds should not buy gems originating from the Marange mines until they can be certain they will not fund the Zimbabwean secret police, military and police, and makes several recommendations.


Investments (Pvt) Ltd the Kimberley Process (KP) is a certification scheme for rough diamonds set up in 2003 to prevent diamond-fuelled conflict and human rights violations. Global Witness invested over 10 years in establishing the scheme and attempting to make it effective.
However, the scheme is no longer fit for the purpose and Global Witness left the KP in 2011. Among the reasons for our withdrawal are: first, the definition of conflict diamonds is asymmetric — only applying to rebel groups, not governments such as Zimbabwe which commit human rights abuses.
Second, the KP only applies to part of the supply chain, covering rough diamonds not polished gems. Third, the scheme has failed to enforce its own rules and deals, including not dealing effectively with conflict diamonds from Côte d’Ivoire, and rule-breaking by Venezuela. While the United States has taken the chair of the Kimberley Process promising reform, we remain sceptical that a club which includes states such as Zimbabwe, and which requires unanimous agreement on any rule change, will implement effective reforms.
The most egregious failure of the KP over the past three years relates to Zimbabwe. The scheme has given the green light to diamond exports from several opaque joint-venture companies operating in the area, including Anjin, Marange Resources, Diamond Mining Corporation and Mbada. (Sino Zimbabwe Development never went into full production and so was never certified.) Kimberley Process monitoring inspectors investigated security and anti-smuggling procedures at firms such as Anjin, but never asked about the true beneficial owners of these companies, nor about revenue flows.
This blind spot allows KP members, for example, to permit exports from Anjin, a company part-controlled and part-owned by the Zimbabwean military and police.
Global Witness believes diamonds should be brought into the supply chain due diligence frameworks applicable to other conflict minerals. Such frameworks could cover the whole supply chain, could engage industry in the process, and would not be restricted to the narrow KP definition of a conflict diamond.
Due diligence frameworks would encourage and require companies to know: who their suppliers are, under what conditions diamonds are mined and processed, and who benefits financially from their production and sale.
Such a framework would require diamond companies to have a conflict minerals policy; to conduct supply chain risk assessments, including on-the ground checks on suppliers; to take remedial action to deal with any problems identified; to commission independent third party audits of their due diligence measures; and to publicly report results.
Consumers wanting clean diamonds should not buy gems originating from the Marange mines until they can be certain they will not fund the Zimbabwean secret police, military and police.
Companies should conduct due diligence investigations into the source of their rough diamonds. The violence perpetrated by Zanu PF and partisan security forces in the 2008 election followed similar outbreaks during the elections of 2000, 2002 and 2005.
Global Witness fears the next election, around summer 2013, may also be accompanied by violence. The role of the military, police and CIO in past violence underscores the need for security sector reform. A crucial part of any reform must be civilian and democratic control of the budgets of security organs. Off-budget financing allows security forces to set their own agendas and fund operations from their own resources.
The cabinet of a democratically elected Zimbabwean government should exercise control of the CIO’s budget, via the Ministry of Finance. This would allow the government to have oversight of the CIO’s strategic direction and to ensure that its activities match the priorities set by Zimbabwe’s National Security Council.



The likely part-ownership and part control of Anjin by the Ministry of Defence, military and police and the apparent part-ownership and part-control of Sino Zimbabwe Development, by the CIO, create vehicles for off budget financing of the security sector and by its very nature this undermines Zimbabwean democracy.
Sam Pa appears to have provided a significant amount of money, which according to a CIO document was US$100 million, to the secret police (this is a large sum: in 2011 the budget of the CIO’s parent department — the Office of the President and Cabinet — was US$121m). Together with the apparent provision of vehicles for use by the CIO, these actions undermine Zimbabwe’s democratic processes and institutions.
The CIO may have used this money to actively undermine senior MDC politicians through covert activities under the codename “Operation Spiderweb”.
Recommendations international community
1) The processes by which Sino Zimbabwe Development and Anjin Investments were awarded their Marange concessions were opaque. The ZMDC has claimed in public to be a joint venture partner for Sino Zimbabwe Development and Anjin. By falsely portraying itself as the joint venture partner in these deals, the ZMDC deliberately obfuscates the true beneficiaries of the Marange concessions currently held by Anjin and previously held by Sino Zimbabwe Development and intentionally provides cover for the Zimbabwean CIO, police and military. The ZMDC should be retained on targeted sanctions lists.
2) Sadc plays an active role in mediating the political process in Zimbabwe. Sadc facilitators should give the problem of off-budget financing of security forces a high priority in forthcoming negotiations, with the aim of securing democratic, civilian control over the budgets for the security services. It may also be necessary for Sadc to appoint an expert panel to investigate these claims of a parallel government.
3) The widespread use by the Queensway syndicate of companies registered in the British Virgin Islands, a secrecy jurisdiction, is designed to obscure the beneficial ownership of companies such as Sino Zimbabwe Development. In the case of Strong Achieve Holdings Ltd, Global Witness believes that the company is controlled by a member of the Zimbabwean secret police. The Financial Action Task Force, which is the inter-governmental body that sets the global anti-money laundering standards, should adopt a standard that requires every jurisdiction to collect and list publicly the beneficial ownership information for any company incorporated in that jurisdiction.
4) Diamonds traded by Sino Zimbabwe Development (Pvt) Ltd or Sam Pa may have financially benefited the Zimbabwean secret police. Similarly, Anjin diamonds may benefit the Zimbabwean military and police. Companies in the diamond supply chain should conduct due diligence investigations into the source of their rough diamonds and, if concerned, refuse to purchase diamonds sourced from Anjin, Sino Zimbabwe Development or Sam Pa’s Marange diamond-buying operation.
To be continued next week.

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