12 November 2012

Zimbabwe: Alan Martin From the PAC On Behind the Headlines

Photo: Denford Magora
Zimbabwe diamond.


My name's Gerry Jackson and I'm standing in for Tererai on Behind the Headlines. The government is, once again, trying to legitimize Zimbabwe's diamond industry at a conference being held in Victoria Falls. As the conference began, PAC (Partnership Africa Canada), released a damning report highlighting the violence, abuse, corruption and theft that surrounds Zimbabwe's diamond industry. I spoke to Alan Martin from the PAC and asked him how they estimated that two billion dollars had been stolen so far.

Well I think with a lot of the numbers we used in this report, we erred on the side of being very conservative and I think that included both in coming to that estimate and also even the estimate of Minister Mpofu's own wealth but I'll just give you a few ideas of how we came to that: there were several numbers we talked about in the report - one was the disappearance of the 2.5 million dollar, sorry, 2.5 million carat stockpile which has never been really accounted for despite having a forensic audit in 2011 but by even current day's depressed prices, that would be valued at almost 200 million but I think that we could even make that double that because of the prices at which, during the time that there was a stockpile, the rough prices were double what they are now. Certainly the prices from Marange were double what they are now. We also looked at the estimate that was given in one of the Kimberley Process review mission reports which talked about how industry experts had estimated that about ten million carats had been removed prior to 2010 and again, if you were to take that at today's depressed prices of about 60 dollars a carat out of Marange, that would be about 600 million dollars. And then you also have just the kind of money that Tendai Biti, the Finance minister, is talking about missing, that he had budgeted for and has not received. So those are three of the ways in which we looked at it and also looking at production accounts which we've heard from inside a company like Anjin where there was supposed to be about 35000 carats per month coming out and we're not seeing that necessarily at the other end.

 So we're talking about really big money here. Now, is it a small group of people who are ripping the country off or is it a whole bunch of people?

Hmm, it's both. I think that if we look at the way in which the smuggling is happening I would say there's really about three streams, three ways in which it is happening. I think we have what you could classify as being really (inaudible) smuggling which is the kind of smuggling that's been happening for really since the beginning of Marange where you have small independent figures who dig up a stone and they might be in cahoots with sort of low level military police and they have syndicates and they will sell them, drive them across the border to South Africa and in the old days they'd drive them across the border to Mocambique but that trade I think has really slowed down in the last year or so. And then you have a second tier where you have people who are sort of mid-level and higher in the military who are using proxies, and I think we named some of them; people like Shmuel Klein from Israel or Alan Banks who was a Zimbabwean businessman who died, which we talk about, those people are sort of a mid-tranch and they're pretty serious but they're not the big guys. And then I think you have the top level who are actually the highest level of officials within the military, within the mining ministries, both the minister of Mines and the state parastatals, things like the ZMDC and the MMCZ and that is where you are seeing the very high level smuggling and that idea of selling diamonds at a lower value than they are worth and then seeing those diamonds exit out of Dubai at twice the price. Usually the people who are selling at or who are controlling the trade through Dubai are also the same people who are receiving them in India so there's a sort of a, although it's going through different countries, it's actually the same people who are controlling the trade of those diamonds.

And of course the main custodian of all this is the Mines Minister Mpofu. Now he's been throwing his cash around quite dramatically lately but he's not the main guy is he? He seems to have handed over many of his responsibilities to the military chiefs.

Yes, we focused on Mpofu for a reason. I think he is certainly not the only one and he's certainly not the largest person who is benefitting but I think he is, we chose him for two reasons: one I think is because he has a fiduciary responsibility as minster of Mines to make sure that this resource is properly managed and he's, I think, failing in that regard. I think also he's the one who has been most ostentatious. Clearly the stories are not, there's no shortage of stories of Mpofu allegedly buying things in Matabeleland and I think he's also done things where, it's on the public record about him buying a bank and his tourist assets but I think the other thing that concerned us about him was that it seemed that he was using his position as minister to take the money from diamonds and, or his access or his role, his responsibility of the Ministry of Mines and branch out into other businesses and I think one of them which we see is his entry into the coal industry. He's had his lawyer, Farai Mutambira who he's appointed the board of Hwange Colliery. I think there's a sort of pattern which he's following in the way in which he is using his position. So that's why we chose him - it wasn't necessarily because he's the biggest or the worst example of it, I think that Robert Mhlanga is also pretty clearly been buying up a lot of real estate in South Africa as well under dubious circumstances but I think in the case of Obert Mpofu I think he has a case to answer for because of his role as a minister.

 You do also state in the report that South Africa is the main gateway for smuggled stones but you did mention the Democratic Republic of the Congo and of course that was tied in with Zimbabwe's assistance in the war there which began in 1998. There were concessions given to ministers and Zanu PF chefs at the time for that assistance in the war - so this is just a sort of giant criminal ring between the two countries presumably?

Well to be fair to DRC I don't think the DRC continues to be the conduit that it used to be. I think that was more in the early days and I think a lot of that was more because of the military connections that had been made during Zimbabwe's intervention on behalf of President Kabila in the late 1990s. I think that's where you start to see a lot of these individuals, the military individuals, including even the late Solomon Mujuru, there's a lot of allegations that even some of the diamonds from River Ranch were probably smuggled out through DRC but I think that politically I think, as the KP has tried to adjudicate on this issue, I think the DRC has often had its hands tied because of the, in the words of one DRC official, he told me, he said that we are beholden to Zimbabwe so I think certainly that this debt of that owed to Zimbabwe which stopped DRC politically from ever intervening when it was the chair of the KP. But I think now in South Africa you are seeing, and I think this has been the case for even we saw this in the last report we did in 2010, that diamonds were certainly being driven across the border. I think that they are also being flown across the border to South Africa; the arrest of Shmuel Klein the Israeli was evidence of that. There's also another Israeli individual Gilad Halachmi who also flew them out and we've also heard more recently that because of the way in which either the European and North American sanctions are working and also after ways in which it's become a lot more, it's more of a gamble to give diamonds to a courier to take across to South Africa that a lot of the big guys are just flying in with their own planes; they're making deals with the Zimbabwe defence industry, individuals and other people in the ZMDC, they just fly them straight to Dubai and then on to India.

Can we just talk briefly about the Kimberly Process which you mentioned, the KP? Now Zimbabwe has been desperate to get legitimacy through this process and the KP is supposed to police the diamond industry if I'm not mistaken to make sure there's no blood diamonds on the market but there seems to be confusion about what constitutes a blood diamond.

Yes it's a good question, this is one of the debates that the Kimberley Process is trying to resolve right now as part of a reform process to revisit this idea as to what constitutes a blood diamond because ten years ago when the Kimberley Process was created, it was borne out of the experience of wars in west Africa and Angola where you had people like Jonas Savimbi and Charles Taylor who were essentially getting the finance from the trade of rough diamonds to fuel conflict. I think over the last ten years we've seen both criminality and violence in the diamond industry change quite considerably and if you look at now to places like Angola or even in Zimbabwe, you see evidence more of the involvement of state actors or private security companies, so PAC and other civil society organizations and also some governments have been trying very hard to update this definition to reflect the reality that people are now dealing with. And I think that it's running into a lot of problems because in the Kimberley Process everything is done by consensus and I think that you only have to have one country say no and any reform idea gets kyboshed. So it's one thing that's going to be on the agenda at the Kimberley Process meeting in Washington at the end of this month and we'll see how that goes but I think that clearly you have a lot of compromised governments, not just Zimbabwe who I think are probably going to try their best to make sure that definition doesn't come into effect. So yes, that's the reality of it.

Of course Zimbabwe's diamonds are spattered with blood - you mention briefly in the report that incident that happened some time ago when 200 illegal gold panners were shot in the back from helicopter gunships and then you mention people like Alan Banks, the businessman found in the boot of his car with a plastic bag over his head - so he's not the only one presumably who's under threat? You also mention a professional hunter who you ominously say in your report is still alive at the time of publication. So there's a lot of murder and brutality that goes on at the same time?

Yes I think there's different kinds of violence at play - the gunship incident that you referenced was back in 2008 and that was what initiated the quarantining of Zimbabwe's or Marange's diamonds because of that and I think after that in Marange you had very frequent but lower levels of violence where you had different police and military individuals who were in Marange exercising violence upon either the local communities or the smugglers and the diggers. I think that to a large extent is not what it was two years ago. You still get stories, community groups in Marange still have recordings of people mostly involving dog bites with private security companies. I did investigate an incident in May of a miner, an illegal miner who was killed at the Anjin site, he was shot in the head at close range but I think that's where those kind of examples highlight the need for people to recognize the role of these private security companies. But I think that with the case of Alan Banks I think a lot of that was more a case of criminality where he was, my understanding of it was he was trying to get out of the business and I think that people felt that he was, that would compromise them if he were to walk away so they killed him. And I think in some ways that if you play with fire then you can't be surprised that you get burnt either. So it's unfortunate but I think it was part of a game you play when you are engaging those kind of illicit activity.

Can you assume that this criminality, this plunder goes all the way to the top and I'm talking about the presidency and the vice presidency? We know that Joice Mujuru and her family have been involved in various illegal deals involved in the DRC - can we take it that far? Can we go higher? Where can we go with this?

Well I think that, I don't have any evidence of Joice Mujuru being involved in this. I think she might through her husband who is involved in River Ranch, there might have been some involvement and I think certainly her husband was playing some role in the illicit trade but the funny thing is that Mujuru and the people who are really in control are really at odds politically. Mnangagwa and his faction I think are the ones who are better in control of it than Mujuru. I think Mujuru had a role but not a central role. Mugabe I think in some ways is in a bit of a similar boat as Mpofu; I think he is a person who gets a top-up, he gets a, he's given a slice of it but he's not he one who's really controlling it. The only one where we see, we certainly see companies like Mbada paying for a lot of things, paying for the lifestyle of Mugabe in terms of flying him to different medical treatments in Asia and we see a very close relationship between DMC, the Dubai-based company, and Grace Mugabe but I think that the two big companies, Marange and Anjin I think are very clearly controlled by a faction that is separate from everybody, it's more the top echelons of the military and I don't even think Mpofu has much to do with that. I think he has been very clever in recognizing that he essentially has to allow them to do whatever they want to do if he wants to remain in the ministry and keep at least a toe-hold in the business.

Now you have some recommendations in your report on how to resolve these issues but when you look at the number of countries involved, the number of people involved, the fact that it's big, big money - how do you ever turn this into something that benefits the country instead of draining the country?

Well I think there's a number of recommendations we made and I think we tried to find examples of things that were based upon African experience and also point to examples where Zimbabweans themselves had shown the ability to ameliorate the situation and I think that if you look at the parliamentary committee on Mines and Energy for example, they've done some great work in the past revealing the ownership structure of these different companies and individuals who are involved on the boards and in other ways and I think that they would be well placed to re-examine a lot of these different deals that have been concluded ostensibly by Minister Mpofu but by others above him and to really assess whether these contravene either Zimbabwean law or are not in the public's interest. I think that if they determine that they are then I think they should recommend that these licences be rescinded and/or be re-negotiated. I think that Tendai Biti for example is also in the process of doing, or drafting a new Diamond Act and I think this Act from what I've seen of it is actually very positive. It has a lot of good ideas about trying to add value added exports, or sorry, value added things that can come off it by boosting a local cutting and polishing sector and trying to create checks and balances in the system so the public good is protected. I think he's looking at this idea of a sovereign wealth fund which could benefit Zimbabwe in the same way that oil revenues have in places like Norway and elsewhere or even next door in Botswana or if you look at the Royal Bafokeng in the north west province in South Africa who are sitting on very rich platinum resources who have created ways of ensuring the good management of a very promising resource. So I think there's a lot of ways where we're trying to find African examples which also fit with something called the African Mining Vision which is an attempt by the AU to essentially break the resource curse that has been so destructive in so many parts of Africa. So and I think in a wider way if you're looking beyond it I think there's examples where the diamond industry certainly has to rethink a lot of things. The Kimberley Process has always been about pressuring national governments to do, whether they are compliant with the Kimberley Process standards and industry people have largely got to buy from that, they don't really have much to account for despite the fact they often are engaging in illicit activity whether it's the receipt or the trading of these diamonds. So there's a lot of international effort underway right now through the OECD for example which has done a lot of work on other conflict minerals, high value but conflict-prone minerals, mostly things associated that you find in smart phones and computers and things like that and so I think there's lessons to be learned from those initiators at the OECD but I think the other side of it is if you look at the industry itself, the better managed aspects of the industry I think are very concerned about countries like Zimbabwe and how they impact on the consumer confidence of the product. Because people I think in the industry are very aware that at the end of the day, diamonds are only carbon, they are very, it's a luxury item, people don't necessarily have to buy them and the price and everything else about them is very artificial and I think they are very open to the idea that their product can be tarnished very quickly and I think that is what caused the industry back in the late 90s to get on board with the Kimberley Process and making it a reality. So I think now industry has a greater role to play in terms of demanding better of people who are knowingly and willingly trading these diamonds and I think this is one of the points we tried to make in this report is to essentially look at how a lot of these people who are trading these diamonds are not necessarily a bunch of gangsters, a lot of these people who are now taking receipt of these diamonds are actually very well respected people within the industry and that's the case in South Africa, it's the case in Israel, it's the case in India and I think that those people have to recognize that they have to change their game if they want to have a business dealing with them.

 Alan Martin thank you very much for speaking with us today.

No problem Gerry thanks very much.

I was speaking to Alan Martin from Partnership Africa Canada, an organization that works to build sustainable human development in Africa.

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