ZIMBABWE should step up its efforts to improve transparency and plug revenue leakages in the multi-million-dollar diamonds industry, an international diamond watchdog has said. This comes amid revelations that the country’s security forces benefitted from the plunder of diamonds, while Treasury coffers went dry.
By Elias Mambo
In a report, titled “An inside job Zimbabwe: the state, the security forces, and a decade of disappearing diamonds”, Global Witness confirms the Zimbabwe Independent investigations that the military is the single biggest local beneficiary of Anjin Investments Pvt Ltd’s diamond mining revenues.
The military controlled a 30% stake in the joint venture with the Chinese government-owned corporation, the Anhui Foreign Economic Construction (Group) Co Ltd (Afec), but operations of the mining firm remained largely opaque. This news article helps the ongoing investigation into the Marange alluvial diamonds discovery and subsequent plundering at various stages by state and non-state actors.
The special series is supported by the Investigative Journalism Fund.
Anjin is a joint venture between Afec, a large construction company which sources say is connected to the military-industrial complex in China, and Matt Bronze Enterprises, which was formed by the Defence ministry and the Zimbabwe Defence Forces through Glass Finish Investments (Pvt) Ltd.
The agreement to form a joint venture was signed by Brigadier-General Charles Tarumbwa for Matt Bronze (Pvt) Ltd and Peng Zheng on behalf of Anhui.
The new report finds that Zimbabwe’s military and intelligence personnel, along with political elites, siphoned off the country’s diamond wealth despite the majority of Zimbabweans living in poverty.
The new “An Inside Job” report looked at five mining companies operating in the Marange diamond region, and explores relationships between the government agencies and mining companies, while demonstrating the gap between what Zimbabwe is mining and what officials report on their exports.
According to the report, “very little of Zimbabwe’s diamond wealth has benefitted ordinary people. Since 2010 Zimbabwe has officially exported over US$2,5 billion in diamonds, according to official figures from the Kimberley Process. Limited available government reports show only around US$300 million of this can clearly been identified in public accounts”.
The reports also states that Zimbabwe’s Central Intelligence Organisation (CIO) holds a stake in Kusena Diamonds, which recently merged into the new Zimbabwe Consolidated Diamond Company (ZCDC). Those diamonds are traded on international markets, as are those from Anjin Mining. The latter, a partnership between Zimbabwe’s military and a Chinese investor, likely sells in violation of European Union sanctions related to a company owner.
“Among other examples is Mbada Diamonds, where it appears the secret owner of a 25% stake is Robert Mhlanga, a retired member of Zimbabwe’s security forces and a staunch President Robert Mugabe and Zanu PF supporter,” the report says.
Mhlanga has always dismissed this as untrue. The report calls for transparency in the mining of diamonds in order to root out corruption and abuse of proceeds from natural resources.
The diamond sector watchdog also advised government to “publicly commit to root and branch governance reforms aimed at making Zimbabwe’s diamond industry, and associated revenue flows, transparent and accountable to the people of Zimbabwe.”
The report recommends that government should “publish detailed information about all mining related revenue flows, including diamonds. These should, at a minimum, be disaggregated by company, year, and type of revenue stream.”
“Account for all diamond mining revenues, from extraction to sales and transfers of proceeds, and publish timely audited financial statements of state owned mining entities, in line with commitments made to the International Monetary Fund (IMF),” it says.
According to the report, government is also urged to publish all joint venture contracts signed with companies operating in the Marange diamond fields and make the final beneficial owners of all private investors and companies public.
“Any new investors should be required to disclose their beneficial ownership and publish their contracts,” it adds.
Apart from calling for more transparency, the report says government should remove serving and retired members of the security sector from control or ownership positions in Marange diamond companies.
The report also recommends that government should initiate an independent and impartial investigation into allegations that the Central Intelligence Organisation has an undisclosed interest in a diamond mining company. Turning to the Zimbabwe Mining Development Commission (ZMDC), it says government owned investment vehicle should timeously “publish annual reports, including audited accounts, for each of the years in which the ZMDC has been a joint venture partner in diamond companies.”
The pressure group further states that ZMDC should “publish detailed company accounts that include disaggregated information about all diamond-linked payments made to the Zimbabwean Treasury and private joint venture partners.”