/ 16 November 2012

Zimbabwe at centre of gem row

Abbey Chikane
Abbey Chikane

The conference, held in the resort town of Victoria Falls, was meant to win credibility for Zimbabwe's controversial diamond sector. With all the top figures of the diamond industry represented, it was also a chance for the process to mend differences over the group's future.

But it ended in a row between groups hoping to keep controversial gems from the Marange diamond fields on the market and those campaigning for their restriction.

A sign of the divide was the cold reception given by delegates to a report claiming that $2-billion worth of diamonds has been stolen from Zimbabwe. The report received wide international media coverage and support from rights groups, but it was mostly ignored by the hundreds of investors at the conference, who focused instead on lobbying for an end to sanctions on diamonds from the Marange fields.

The process was split into two camps: Western governments and rights campaigners that want Zimbabwean diamonds excluded from world markets and a larger group, made up of influential industry players, who back Zimbabwe's efforts to lift the remaining restrictions on its diamonds.

The Partnership Africa Canada Report, Reap What You Sow: Greed and Corruption in Zimbabwe's Marange Diamond Fields, failed to sway diamond businesspeople from Zimbabwe. It sought to make the gathered delegates feel guilty about dealing with the country, but Zimbabwe's vast potential seemed to be gaining enough support from the world industry.

In a heated session on November 13, the tension between the two sides bubbled over. Industry players pointed out that the Kimberley Process had certified Marange diamonds as fit for sale. But the United States and other Western governments have maintained a blockade on Marange, saying its diamonds were tainted by rights abuses.

Kimberley Process chairperson Gillian Milovanovic came under intense fire from delegates, who accused her of collusion with the US in blocking Marange diamonds.

Abel Chikane, a member of the process who was part of a team that inspected the Marange fields, suggested that Milovanovic had to resign because she was compromised, a sentiment shared by many delegates. Milovanovic angrily dismissed the charges.

South Africa, which backs Zimbabwe on the controversy, takes over as Kimberley Process chair next year, bolstering the campaign against the Western group.

The gap between Western governments and investors was shown when Mark Gonzales, the political and economic chief at the US Embassy in Harare, said that his country's embargo on Marange gems would be lifted only when Zimbabwe reformed politically. His remarks were sharply criticised by well-known "diamond hunter" Yianni Melas. "I am willing to take the risk on Zimbabwe," Melas said.

Ahmed Bin Sulayem, chairperson of the Dubai Multi-Commodities Centre, said he was working hard to ensure the truth about Zimbabwe's gems was known, "not the lies and dishonesty" that, he said, had been driven by the media.

Stephane Fischler, president of the Antwerp World Diamond Centre, said restrictions on Marange gems were damaging Zimbabwe. "We are convinced that the resulting de facto exclusion of imports from certain areas negatively affects [its] ongoing social and economic development."

On November 12, former South African president Thabo Mbeki urged an end to sanctions on Zimbabwe, but warned against allowing the diamonds to fall into the hands of a "predatory elite".

"This must also mean that [its] political leadership, including all the parties which serve in the … government, must absolutely ensure that the diamond mining industry is not governed by a predatory elite, which uses its access to state power to enrich itself against the interests of the people as a whole, acting in collusion with the mining companies."

Rights campaigners also want to widen the definition of "conflict diamonds" to include wording that would ban gems from regions where rights abuses are reported.

"Consumers are – or will be – looking for more and the core definition of 'conflict diamond' therefore needs to be updated as our own investment in the Kimberley Process's future as a modern and relevant system of certification, just as other industries are doing as we speak," Milovanovic said.

But there is suspicion that powerful governments want to use the proposed changes to exclude diamonds from Zimbabwe.

Namibian Mines Minister Isak Katali said: "Unfortunately the discovery of diamonds in Zimbabwe has been a thorn in the flesh to those that have issues with Zimbabwe."




Diamonds, smuggling and a dead body


A Mafia-style murder, a web of unknown mine owners and disappearing diamond stockpiles are part of the “biggest single plunder of diamonds the world has seen since Cecil Rhodes”, according to a new report by Partnership Africa Canada.

In Reap What You Sow: Greed and Corruption in Zimbabwe’s Marange Diamond Fields, released this week, the partnership, which campaigns against “blood diamonds”, links the murder of Harare businessperson Allan Banks to diamond deals. Banks was found dead in the boot of his car in July with a plastic bag around his head, an event that led to rumours he may have been involved in diamonds.

The partnership based its claims on “a source with first-hand knowledge of Banks’s ­diamond dealings”. However, his family has previously denied he was involved with diamonds.

Banks, claimed the report, had been introduced to diamonds by members of an army unit who had asked him to sell stones they had “acquired during their rotations in Marange”. Banks had then been granted “privileged access to diamond vaults”, but he and his associates were “soon in above their heads” when they began dealing in diamonds worth millions of dollars.

The report also said the March arrest of Israeli pilot Shmuel Klein while trying to board an aeroplane to South Africa carrying $2.4-million worth of diamonds showed how easily runners were getting in and out of Zimbabwe. His arrest was likely a “mistake by a junior customs official” because he was later acquitted and only fined on an immigration charge. “His passport had no entry stamp, suggesting he had been accorded VIP treatment in circumventing immigration officials upon arrival,” the report said.

The partnership places the military at the centre of diamond smuggling. Its report charges that “estimates place the theft of Marange goods at almost ­$2-billion since 2008”.

“In 2010, leading experts had predicted annual production estimates of as much as 30-million to 40-million carats if the Kimberly Process restrictions were lifted. At the current average of $60 a carat, the low end of that estimate would have realised annual sales of almost $2-billion.”

Not a trickle, but a flood
The report claimed collusion between Zimbabwean and foreign traders. It said 10-million carats of Marange diamonds were exported to Dubai late this year for $600-million, half of its actual value. The parcel was sold for double when it left Dubai for Surat, India, where the bulk of the world’s diamonds are cut.

The Marange smuggling “is not a trickle, but a flood”, said the report.

One of the biggest beneficiaries of illicit diamond trade had been Mines Minister Obert Mpofu, who had become one of Zimbabwe’s biggest property owners, it said. Mpofu had spent up to $20-million – mostly in cash – buying up properties and businesses and the figure did not include the $500000 he had doled out in donations this year alone.

Mpofu dismissed the report, saying it was the work of “detractors” and that its release had been deliberately timed to cloud the diamond conference. Defence Minister Emmerson Mnangagwa earlier this week brushed off charges that the diamonds were funding military cartels. “If they have that evidence they should present it,” he said.

The partnership said its sources for the report included “liberation-era guerrilla leaders, insiders from across the political spectrum, former smugglers and sources in several of the companies operating in Marange with government approval”.

Marange mines are mostly owned by Chinese and Zimbabwe army joint ventures, but the true beneficiaries were not known, the report said.

“Little is known of the corporate structure of companies operating in Marange. However, several are known to be registered in secret tax havens such as Mauritius, where their owners are protected from public scrutiny.”