14 November 2012

Zimbabwe: KP Chair Under Fire Over Zim Diamonds

Photo: Denford Magora
The reddish-coloured diamonds of Marange in Zimbabwe.

Victoria Falls — KIMBERLEY Process Certification Scheme chairperson Mrs Gillian Milovanovic yesterday came under fire from delegates attending the inaugural Zimbabwe Diamond Conference here for failing to protect Zimbabwe's diamond industry from America. Delegates expressed concern that Zimbabwe's diamond sector continues to face obstacles despite the country receiving the KP's nod to trade its gems.

They unanimously agreed that the American approach towards Zimbabwe's gems sought to promote conflict diamonds.

During an open session, delegates said Mrs Milovanovic, who is American, should recuse herself from chairing the KP because she was failing to protect Zimbabwe from America's Office of Foreign Assets Control sanctions.

Under OFAC, money meant for Zimbabwean diamonds is intercepted.

But Mrs Milovanovic said she had nothing to do with OFAC sanctions on Zimbabwe.

She said the embargoes were imposed following a bilateral stand-off between the US and Zimbabwe.

The KPCS chair referred all questions she deemed political to US embassy head of political and economic affairs Mr Michael Gonzalez.

Mr Gonzalez, however, angered delegates when he said: "The sanctions were imposed on 120 individuals and companies responsible for undermining the rule of law, and this has nothing to do with the Marange diamonds.

"The two companies -- the ZMDC and MMCZ -- among other companies, were also put on the sanctions because of their contribution."

Namibian Minister of Mines and Energy Mr Isak Katali said the US should not extend its sanctions to diamonds.

He said there was a need for Mrs Milovanovic to ensure Zimbabwean diamonds were discussed and the KP came up with a position.

"The US can appoint a person to represent America in the KP, but if all members have agreed on a position, that should be binding," Mr Katali said.

"Zimbabwean diamonds should be sold because the country has complied with the rules."

Mines and Mining Development Minister Obert Mpofu said members of the KP should be equal and Zimbabwe demanded to be treated with respect.

"We are members of the KPCS and we have a charter. That charter makes us all equal and, as our chair, we expect to be treated equally like all other members. In this case, we request the chair to issue a statement," he said.

"We are asking the chair to speak for the KPCS and state the organisation's position on OFAC sanctions. The whole world does not believe in what the US is saying."

US diamond dealer Mr Yianni Melas said Zimbabweans had suffered enough under colonialism and later under illegal sanctions.

"This country has been through a lot. It has been under colonial rule where the locals were not even allowed to put on a watch," he said.

"The world does not talk about Botswana diamonds. There are 1,9 million people in that country, but over 50 percent of them are living in abject poverty.

"Why are they not boycotting Botswana diamonds?"

President of the Belgium-based World Diamond Council Mr Eli Izhakoff said the KP was supposed to ensure that Zimbabwean diamonds were freely sold on the world market.

"Zimbabwean diamonds should be allowed to be exported," he said.

"The KPCS cannot have legitimate and illegitimate diamonds. When I go back I am going to convince my board of directors on the need to engage the US government so that they remove the OFAC sanctions on Zimbabwean diamonds."

The US Senate crafted the Zimbabwe Democracy and Economic Recovery Act in 2001 to impose sanctions on Zimbabwe.

The Act was later changed to the Zimbabwe Transition to Democracy and Economic Recovery Act.

Responding to Mr Gonzalez, Minister Mpofu said the sanctions were not necessary.

"What rule of law? This is the most peaceful and democratic country in the world where if you steal a pen you will be arrested," he said.

"We hear of deaths in New York every hour. So what rule of law are they talking about? We are saying let the KP come up with a position that comforts the diamond traders."

The delegates said the industry was ready to accept and trade with Zimbabwe as a new member of the KP, but were afraid of OFAC sanctions.

Attorney General Mr Johannes Tomana said Zimbabwe convinced the world that it had the best diamond extraction methods, storage and transportation facilities.

Zimbabwe Mining Development Corporation chairman Mr Goodwills Masimirembwa said the KP was supposed to tell the conference how investors and buyers would move money to buy the Marange diamonds if OFAC sanctions were in place.

"You say Zimbabwe is compliant, but the traders will say how do we conduct business with Zimbabwe with OFAC sanctions in place," he said.

"If you do business with Zimbabwe, do it at your own peril. That question (of movement of money) needs an answer."

Under OFAC sanctions, the US government has intercepted over US$30 million meant for Zimbabwean diamonds.

Minister Mpofu said in a statement to mark the end of the conference that it was a success.

"The Zimbabwe Diamond Conference 2012 concluded today successfully after two days of talks, presentations and discussions in the presence of His Excellency

President Mugabe, former president of South Africa Thabo Mbeki, ministers of mining from other African diamonds producing countries and many international diamond industry leaders and diamonds company captains," he said.

Minister Mpofu said the conference focused on resolving the outstanding obstacles that continued to restrict free flow of rough diamonds from Zimbabwe into the downstream markets.

He said he was delighted with the reaffirmation by Mrs Milovanovic that Zimbabwe was fully KP compliant.

The conference attracted 480 delegates.

Zimbabwe produces about 25 percent of the world's diamonds.

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