Most of the revenue from Zimbabwe’s controversial Marange diamond fields is being laundered through front companies and tax havens to top members of the security forces and foreign entrepreneurs, leaving almost nothing for Zimbabwe’s treasury.
Who gets the money from the eastern diamond fields near the town of Mutare has always been a mystery.
Now a report issued today by the British watchdog NGO Global Witness after a long investigation has uncovered a web of tax havens, front companies and nominee shareholders to protect the identities of the real beneficiaries.
The two companies operating in Marange which Global Witness investigated, Anjin Investments (Pvt) Ltd and Mbada Diamonds (Pvt) Ltd, both have joint ventures with the government of Zimbabwe via the Zimbabwe Mining and Development Corporation (ZMDC). Yet Global Witness says it believes that the treasury has no idea how much revenue is being earned from sales of the rough stones and that it has received very little so far.
Global Witness fears that because the revenue stream from Marange is so hidden, it will be secretly used to fund Zanu-PF violence ahead of the next elections expected later this year or early next year.
The report says members of Zimbabwe’s security forces, including some implicated in political violence, are directors of Anjin Investments. The Mercury reported in late 2008 that the Zimbabwean army had taken control of the Marange diamond fields from informal miners, firing on them from helicopter gunships and killing many of them.
Anjin’s partners, apart from the state, include a large Chinese construction company, the Anhui Foreign Economic Construction Group (AFEC) and a mysterious Zimbabwean company, Matt Bronze, whose directors are named but not the beneficiaries.
Anhui is well known for several huge projects in Africa, including the renovation of Maputo’s international airport. It is currently building a defence college in Harare.
Anjin’s CEO and company secretary is Brigadier Charles Tarumbwa, who was allegedly involved in political violence against Movement for Democratic Change (MDC) supporters during the 2008 elections.
Among the Zimbabwean members of Anjin’s executive board are: Martin Rushwaya, the permanent secretary in the Ministry of Defence; Oliver Chibage, a commissioner in the Zimbabwe Republic Police (ZRP); Nonkosi M Ncube, a commissioner in the ZRP; and Munyaradzi Machacha, a Zanu-PF director of publications.
Non-executive board members include retired Colonel Romeo Daniel Mutsvunguma, who has previously been identified by Human Rights Watch as responsible for political violence in 2008, and Morris Masunungure, a current or retired army officer.
Global Witness says: “Direct control of a source of funding (such as a diamond company like Anjin) by the police, armed forces or the Ministry of Defence, directly cuts across this democratic process. It enables the Zimbabwean military to set and fund their own agenda, with little control or scrutiny exercised by elected politicians.
“Diamond revenues should flow into the Ministry of Finance, which would allow the Zimbabwean cabinet to decide on its public expenditure priorities.”
However the finance minister is Tendai Biti, of Prime Minister Morgan Tsvangirai’s MDC, which makes it even less likely that the Marange diamond revenues will be funnelled to the Treasury.
Global Witness poses a key question about the partial control of Anjin by the Zimbabwean security forces: “Do Anjin or Matt Bronze make any payments direct to the Ministry of Defence, Ministry of Home Affairs, Zimbabwe Republic Police, Zimbabwe Defence Force, Central Intelligence Organisation or the Office of the President and cabinet?”
The second company in Marange which Global Witness explores is Mbada Diamonds (Pvt) Ltd which went into operation with funds raised by a SA company, New Reclamation (Pvt) Ltd, in which Old Mutual owns nearly 6 percent. David Kassel, CEO of New Reclamation, moved the company into Zimbabwe diamonds.
The Mercury has established that New Reclamation has a e150 million (R1.5 billion) bond listed on the Irish Stock Exchange which is due for repayment in February 2013 and its traditional metal recycling business is suffering in the recession. Global Witness has uncovered a complex and opaque legal ownership structure for Mbada, including companies in Hong Kong and the notorious tax haven, the British Virgin Islands, as well as a string of what appears to be nominees to protect the identities of the true beneficiaries.
Mbada is a joint venture between the state’s ZMDC and Grandwell Holdings, a company registered in Mauritius and a subsidiary of New Reclamation. In its 2011 annual report, New Reclamation said it had transferred 49.99 percent of the share capital of Grandwell to Transfrontier Mining Company Ltd which now owns almost 25 percent of Mbada.
Transfrontier Mining Company Ltd is, on paper at least, owned by a network of linked companies and individuals in Hong Kong and the British Virgin Islands which Global Witness names in its report.
Global Witness suggests the real owners of Transfrontier may be connected to Zimbabwe’s retired air vice-marshal Robert Mhlanga who was a key witness in a case involving treason charges – widely believed to have been purely politically-motivated – which were levelled by the Zimbabwe authorities against Tsvangirai weeks before presidential elections in 2002.
In SA, Mhlanga is the sole director of a mysterious company Liparm Corporation.
Liparm’s website originally said it valued its sister companies, Transfrontier Group Company Ltd, Skyview Minerals and Mbada Diamonds. But since questions were sent to Mhlanga about the Global Witness allegations, this section of its website has been removed.
Global Witness suggests that Liparm may be establishing a related company, Transfrontier International, in Dubai, a low tax zone in the United Arab Emirates.
In late 2011 in the Dubai yellow pages an employee of Liparm Corporation placed a public request for prices for two 2 500kg safes for an “associated” company called Transfrontier International which has established an office in Almas Tower in Dubai, home of the Dubai Multi Commodities Centre and the Diamond Exchange. It is not known whether Transfrontier International is actively trading in Mbada-produced diamonds in Dubai.
There has been uncertainty about who profits from Mbada since it was granted a mining licence in Marange.
The former CEO of the ZMDC has admitted to a parliamentary committee that “it would have been difficult to do due diligence on (Mbada parent company) Grandwell because it is a paper company, registered in Mauritius.”
Global Witness says it continues investigations to identify the real beneficiaries of Mbada and Anjin and will eventually be helped by new international anti money laundering laws which came into effect this month.