A public management company constituted by the United Nations and the International Finance Corporation (IFC) and based in Johannesburg has been providing assistance to a mine owned by one of President Robert Mugabe’s top lieutenants for the past four years, in an apparent breach of United States legislation aimed at bringing about democratic change in Zimbabwe.
The US government, which had recently threatened to impose stiffer sanctions on Zimbabwe following the disputed run-off presidential election, has been made aware of this operation on several occasions but has so far taken no action.
The African Management Service Company (Amsco), an entity jointly managed by the United Nations Development Programme (UNDP) and the IFC, the private sector arm of the World Bank, has been providing assistance to River Ranch Diamond Mine which is owned by Solomon Mujuru, the former commander of the Zimbabwean army and husband of vice-president Joyce Mujuru, since November 2004.
Mujuru, a member of the ruling party’s politburo, is one of the nearly 130 Zimbabweans on the US’s targeted sanctions list. The list also includes more than 30 companies or properties owned by people linked to Mugabe.
The US imposed targeted sanctions against Mugabe’s top lieutenants under its Zimbabwe Democracy and Economic Recovery Act (Zidera), which was passed in 2001 “to provide for a transition to democracy and to promote economic recovery in Zimbabwe”. The sanctions, however, became effective only on March 7 2003.
Zidera was aimed at supporting “the people of Zimbabwe in their struggle to effect peaceful, democratic change, achieve broad-based and equitable economic growth and restore the rule of law”.
The legislation
The sanctions are administered by the Office of Foreign Assets Control (Ofac) of the US treasury department. Ofac says the sanctions prohibit people from the US or anyone in the US from engaging in any transaction with any person, entity or organisation undermining democratic institutions and processes in Zimbabwe.
This also precludes anyone on the designated nationals’ list or immediate family members of these designated individuals from engaging in these activities.
Prohibited transactions include exports, imports, trade brokering, financing and facilitation, as well as most financial transactions.
The regulations define US as: “Any US citizen, permanent resident alien, entity organised under the laws of the US or any jurisdiction within the US (including foreign branches), or any person in the US.”
Zidera specifically mentions international financial institutions such as the World Bank, the IFC, the African Development Bank and the African Development Fund.
Amsco, which is registered in the Netherlands but has its operational headquarters in Johannesburg, lists the African Development Bank as one of its shareholders.
River Ranch
Mujuru took over River Ranch Diamond Mine in April 2004 when he was invited to join by Saudi Arabian billionaire Adel Abdul Rahman al Aujan, who had taken over the mine from Bubye Minerals, a company owned by Michael and Adele Farquhar.
The Farquhars took River Ranch to court in an ownership dispute, but lost the battle in 2006. They have appealed against the ruling but the appeal has so far been blocked.
The mine was discovered in 1971 by Kimberlitic Searches, a subsidiary of De Beers, but it forfeited its rights in 1991 following a wrangle with the Zimbabwe government over the marketing of the gems. The mine was taken over by Auridiam, an Australian company that entered into a joint venture with Canadian company Redaurum.
The mine was officially opened in November 1995 but ceased operations in February 1998 Redaurum decided to pull out because of low global diamond prices. It was then taken over by Bubye Minerals as a going concern.
Bubye Minerals entered into an agreement with Aujan under which Aujan’s Rani International would buy out the Australian and Canadian shareholders.
Aujan took over the mine on April 26 2004 after when he fell out with the Farquhars and invited Mujuru and Tirivanhu Mudariki, a businessman and former Zanu-PF MP, to join as directors through their company Khupukile Resources.
The assistance
Amsco started helping the mine in November 2004 by providing five professionals, including the managing director, the chief financial officer and the chief of security.
In an official statement in 2007, Amsco managing director Ayisi Makatiani said Amsco started providing management assistance in response to a request from the mine. It was not specified who in River Ranch asked for the help.
The man Amsco seconded to River Ranch as the managing director was George Kantsouris, a South African who was present at the board meeting at which Mujuru and Mudariki were brought into the company. According to the minutes of that meeting, a copy of which the Mail & Guardian has in its possession, Kantsouris was to represent Rani International. Rani International has operations in South Africa and Mozambique.
Amsco’s interest in the mine has been even more surprising because the mine was barred from selling its diamonds at least until the end of last year, because of the ownership dispute.
River Ranch legal adviser George Smith said the company started trading again this year but this could not be verified with the Minerals Marketing Corporation of Zimbabwe, which is responsible for marketing diamonds.
The mine has officially been operating since June 2006 and employs more than 300 people.
Deaf ears
The Farquhars and their lawyer, Terrence Hussein, have questioned the financial and technical support given to the mine in view of Zidera but say they have not received any response.
They have written to the former US ambassador to Zimbabwe Christopher Dell, who left the country last year, as well as to Secretary of State Condoleezza Rice.
In their letter to Rice in June last year, they said: “Our complaint is as follows: The World Bank which funds the IFC, which funds Amsco, is providing funds and assistance to River Ranch Limited in circumstances where the mine was acquired using unlawful means.
“The World Bank is providing financial assistance to River Ranch Limited, whose shareholder is retired General Mujuru, a specified person for targeted sanctions in terms of the Zimbabwe Democracy and Economic Recovery Act.
“This is compounded by the fact that in terms of the said Act, members appointed by the US government are to veto any funding to such persons.
“We wonder whether the members appointed by the US are aware that they are breaking your own country’s laws and are also funding the breakdown of law, order and property rights in Zimbabwe.”
Bubye never received an official response, though its lawyer spoke with a person named Dan Fogerty in Rice’s office on several occasions.