Zimbabwe: Marange Diamonds - Zanu-PF's Best Friend?

4 February 2013

Mutare — Concern is growing in Zimbabwe over missing diamond revenues, which many believe to be lining the pockets of ZANU-PF officials.

Following last week's admission that the government's public account contains only $217, Zimbabwe's Finance Minister Tendai Biti has stressed "government finances are in paralysis". He warned that the "economy needs every resource it can get".

Yet several sources have suggested accessing its resources may be more difficult than anticipated. At Zimbabwe's Diamond Conference in Victoria Falls last November, former South African president Thabo Mbeki voiced concerns that Zimbabwe's diamond industry had fallen under the control of a "predatory elite".

Mbeki was alluding to a widespread belief that the Marange diamond fields are under the clandestine control of groups of ZANU-PF officials - using their access to state power to enrich themselves against the interests of the people. Presumably acting in collusion with the mining companies, many fear ZANU-PF could even be using these illicit funds to undermine democratic processes - particularly concerning with presidential elections scheduled for later this year.

Fields of dreams

Marange's potential revenues are staggering. Geologists estimate that the 80,000 hectares of diamond fields at Marange could hold between two and seven billion carats of raw diamonds and the fields are currently contributing as much as 25% of global diamond output.

Eddie Cross, economist and MP for Movement for Democratic Change (MDC-T), claims that in 2012 alone more than $4 billion worth in diamonds has been extracted from Marange. However, his MDC-T colleague and a deputy in the Ministry of Mines, Gift Chimanikire, told Voice of America that while he was unsure of the source of Cross's figures they seemed "exaggerated".

Nevertheless, the extent to which this is translating into revenue for Zimbabwe's state coffers is another matter. A report published last month by Partnership Africa Canada (PAC) claims Zimbabwe may have already lost up to $2 billion in diamond mining revenues over the past three years. Many are suspicious of ZANU-PF officials' expenditure and surmise it can only be emanating from underhand deals at Marange.

Understandably, the director of the Centre for Natural Resources Governance (CNRG), Farai Maguwu, has already expressed fears that errant diamond revenue could be used by ZANU-PF to subvert the country's democratic processes in upcoming elections.

ZANU-PF's best friend?

Indeed, some fear the rot is already very deep. Earlier last year, Tendai Biti, Zimbabwe's Finance Minister and Secretary General of the MDC-T, suggested Marange revenues may be funding a "parallel government".

Douglas Mwonzora, a spokesperson for the MDC, blamed the dire state of the budget on diamond revenue going to ZANU-PF cronies, explaining "the most important thing is that money from diamonds is not being remitted to government coffers". Last July Biti drew attention to poor revenue inflows from the Marange diamond fields. Of the $600 million expected from diamond sales revenues in 2012, only $41.6 million had been received by halfway through the year. Consequently, the 2012 national budget was cut from $4 billion to $3.4 billion.

Some believe that ZANU-PF officials are being helped by international companies operating in Marange who are in cahoots with them. The diamond fields belong to the Zimbabwe Mining Development Corporation (ZMDC), which fully owns Marange Resources Ltd. However, ZMDC also holds 50-50 joint ventures with three other mining firms - the Diamond Mining Corporation (DMC), Mbada Diamonds and Anjin Investments (a joint venture with a Chinese construction firm).

Each of these companies has conspicuous connections to the ZANU-PF structure. Mbada Diamonds, for instance, is chaired by Zimbabwe's former Air Vice-Marshall Robert Mhlanga - rumoured to have been Mugabe's personal pilot. Anjin's board includes the Permanent Secretary at the Ministry of Defence, two commissioners of the Zimbabwe Republic Police, and current and former officers of the Zimbabwe Defence Forces.

Last May, Finance Minister Biti accused Anjin of having remitted nothing to the Treasury despite being the largest diamond producer on the Marange diamond fields. However, the Chinese-owned diamond producer claim they remitted $30 million and said they were being made a scapegoat for the government's over-estimation of diamond revenues, denouncing Biti as being "untruthful, incompetent or illiterate" for allegedly miscalculating what was owed.

Mpofu, Cross, Biti: diamond geezers in dispute

Obert Mpofu, Zimbabwe's Mines Minister, has also joined in the reaction against Biti. At a Mining, Engineering and Transport conference in Bulawayo last July, Mpofu maintained that the mining industry was contributing enough and called Biti "a liar". Yet Mpofu has been accused of benefiting from the Marange diamond fields himself, and is famously rumoured to own half of the resort town of Victoria Falls - expensive property alleged to have been bought with ill-gotten gains.

In fact, Mpofu has been accused of being a liar himself. MDC-T MP Eddie Cross has accused Mpofu of misleading parliament when he claimed Zimbabwe had only realised $200 million from the sale of raw diamonds over the last five years. During this time, total payments to the Treasury had been over $174 million.

Mpofu's suggestion that the mining firms had paid out most of the money earned from the sale of diamonds was, according to Cross, patently false.

Cross also suggests that ZANU-PF granted the Marange fields to compliant companies to ensure the party would continue to gain funding after it lost control of the Treasury and the National Social Security Authority (NSSA) with the establishment of the unity government.

If these allegations are correct, there is little hope of transparency around Marange so long as the current actors retain their licences. This conclusion forms the basis of the MDC-T's support for the nationalisation of the fields - something on which Cross has claimed Zimbabwe "can expect action shortly".

Tendai Biti strongly advocates legislative action to shift the current status quo. Claiming that due process was not followed in awarding the concession, Biti has been pushing a Diamond Control Revenue Bill, introduced in 2011.

The bill seeks to void all existing claims to concessions at Marange, while nationalising the fields under the joint supervision of both the mining and finance ministries.

Carats and sticks

Naturally, ZANU-PF denies the party is lining its own pockets at Marange. Tafadzwa Musarara, director at Resources Exploitation Watch (an NGO partisan to ZANU-PF), has condemned accusations of opaqueness in the mining industry. He insists that mining firms are protected by law and, like any private company do not have to make public their balance sheets.

He added that the Treasury should be more realistic in its revenue expectations, arguing that firms were still recuperating their infrastructural investments.

Another ZANU-PF member - Edward Chininga, former Minister of Mines and current chairman for the Parliamentary Committee on Mines and Energy - recently blamed the current international sanctions on Zimbabwe for the limited revenue flow. Chininga has argued that sanctions are "creating loopholes for illegal trade and fiscal leakages" - a muted confirmation, at least, of shadowy diamond deals in the sector.

All four firms operating at Marange were targeted by US sanctions, with ZMDC a primary target of the financial restrictions. However, Chininga has called for the sanctions to be lifted since the four companies are now fully compliant with the Kimberly Process Certification Scheme (KPCS). He claims all the sanctions are currently achieving is to "force companies to circumvent normal export channels", perhaps explaining why their balance sheets remain so opaque.

Whether or not the accusations against ZANU-PF's grounded in any truth, many are becoming concerned by the way in which Zimbabwe appears to be haemorrhaging revenues from its mining industries. Claims against controversial figures within ZANU-PF, such as Obert Mpofu, need to be further investigated, while the entire industry needs more accountability.

Whether MDC-T plans to nationalise the diamond fields are realistic remains to be seen, but at such a time of empty coffers, Marange's massive revenues are hardly something the government can afford to be missing out on.

Bernard Chiketo is a Zimbabwean journalist with more than 10 years experience. He has reported extensively on health, children, environmental, political and women's issues in Zimbabwe. He has also been doing health communications for over a dozen local organizations covering reproductive health and HIV and AIDS interventions at community level gaining insight into how sub-Saharan African economies and politics impact on the life of ordinary people.

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