Former judge George Smith, who was a special counsel for River Ranch in which retired general Solomon Mujuru had a stake, advised African Consolidated Resources to take its case to court after the government took over its Marange claims.
According to a cable released by Wikileaks, ACR’s troubles were compounded by reports that retired army commander Solomon Mujuru had a small interest in the company.
The embassy said this had elevated issues in light of the ongoing ZANU-PF succession battle in which Mujuru was viewed as an opponent of President Robert Mugabe.
“To illustrate the point, in March, William Nhara, principal director of Zimbabwe’s ministry without portfolio and an ally of Mujuru, was arrested and charged with aiding the attempt of a Lebanese woman to smuggle diamonds out of Zimbabwe,” the cable said
ACR has denied that Mujuru had a stake in the company but a special report by the Partnership Africa Canada group said he had.
Full cable:
Viewing cable 07HARARE319, SUBJECT: DIAMONDS: THE GOVERNMENT OF ZIMBABWE,S
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|
Reference ID |
Created |
Released |
Classification |
Origin |
VZCZCXRO3685
RR RUEHMR RUEHRN
DE RUEHSB #0319/01 1030741
ZNY CCCCC ZZH
R 130741Z APR 07 ZDK
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 1363
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHUJA/AMEMBASSY ABUJA 1567
RUEHAR/AMEMBASSY ACCRA 1433
RUEHDS/AMEMBASSY ADDIS ABABA 1571
RUEHRL/AMEMBASSY BERLIN 0238
RUEHBY/AMEMBASSY CANBERRA 0834
RUEHDK/AMEMBASSY DAKAR 1197
RUEHKM/AMEMBASSY KAMPALA 1626
RUEHNR/AMEMBASSY NAIROBI 4030
RUEHFR/AMEMBASSY PARIS 1396
RUEHRO/AMEMBASSY ROME 2054
RUEHGV/USMISSION GENEVA 0694
RUEKJCS/JOINT STAFF WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RHEHAAA/NSC WASHDC
RUEHBS/USEU BRUSSELS
RUCNDT/USMISSION USUN NEW YORK 1788
C O N F I D E N T I A L SECTION 01 OF 03 HARARE 000319
SIPDIS
SIPDIS
AF/S FOR S.HILL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
STATE PASS TO USAID FOR E.LOKEN
STATE PASS TO NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN
E.O. 12958: DECL: 04/11/2012
TAGS: PREL PGOV ECON EMIN ETRD ZI
SUBJECT: SUBJECT: DIAMONDS: THE GOVERNMENT OF ZIMBABWE,S
BEST FRIEND
Classified By: Ambassador Christopher Dell under Section 1.4 b/d
——-
Summary
——-
¶1. (C) Zimbabwe is at risk of losing its Kimberley Process
Certification as a result of the how the GOZ has handled the
discovery of diamond deposits in Eastern Zimbabwe. The
state-owned Zimbabwe Mining Development Corporation (ZMDC)
seized the deposits from African Consolidated Resources (ACR)
and the Minerals Marketing Corporation of Zimbabwe (MMCZ),
another state agency, is suspected of funneling Marange
diamonds out of the country and using the revenue to support
the ruling party. ACR is appealing to the courts. Industry
insiders say that if they lose it would have a chilling
effect on private investment in the mining sector. End
Summary
————————————–
Wild West at the Marange Diamond Field
————————————–
2 (U) Diamond deposits have been discovered Zimbabwe at three
locations: in Marange, in Murowa in southern Masvingo
province, and at the River Ranch Mine near Beitbridge on the
South African border. This cable examines the first two
sites; we will report septel on disputes surrounding the
River Ranch Mine. The Marange diamonds, which are found in
about a meter depth, are large and of industrial quality,
with some reasonably-sized gem-quality stones as well.
¶3. (U) The discovery of diamonds at Marange last year set off
a wild rush to develop the deposits. When De Beers’
three-year Exclusive Prospecting Order (EPO) for the Marange
(Mutare West district) alluvial diamond field lapsed in early
2006, African Consolidated Resources (ACR) moved quickly to
register the claim. However, despite ACR’s registered claim,
the GOZ granted rights to the same site to the state-owned
Zimbabwe Mining Development Corporation (ZMDC) last year.
¶4. (U) The ensuing ownership dispute brought ACR’s activity
at the site to a halt; with ACR no longer on site, a
free-for-all occurred with panners descending on the area in
the thousands in the latter half of 2006 as word of easy
pickings leaked out. At the height of diamond fever at the
end of the year, youths were reportedly lined up along the
roads in and out of Mutare, their fingers held high in a
rhombus shape that indicated diamonds for sale.
¶5. (C) Chamber of Mines CEO David Murangari told econoff that
Minister of Mines and Mining Development Amos Midzi and
Manicaland Governor Tinaye Chigudu had fanned the frenzy by
broadcasting support for “indigenous miners;” Zimplats CEO
Greg Sebborn, a keen observer of the mining sector, told us
the frenzy was &government orchestrated8 from the start.
In his view, the GOZ intended to stir up anti-foreign,
anti-white sentiment about mineral rights development in
Zimbabwe.
———————————————
Government, Insiders Seize Field and Diamonds
———————————————
¶6. (C) By late February, as the site sank ever deeper into
chaos and became a subject of international attention armed
HARARE 00000319 002 OF 003
forces entered the area, drove off the panners, and cordoned
the site off to all but local residents. Village youths told
econoff during a visit to an adjacent rural area on March 9
that the police had fired live ammuition to disperse the
panners. They added, and Mrangari and Sebborn confirmed,
that the police temselves were now panning the site. Giles
Mutsekwa, MDC MP from Mutare North and the opposition party’s
secretary for defense told econoff on March 6 that the armed
SIPDIS
forces were, in fact, cadres of Green Bombers in police
uniform.
¶7. (SBU) MDC MP Joel Gabbuza, Chairman of the Parliamentary
Portfolio Committee on Mining, held a closed-door hearing on
the Marange diamonds on March 29. He told the press after
the hearing that the MMCZ had impounded about 26 kg of
diamonds that it believed ACR had bought from illegal miners
in Marange. Sebborn, who was in close contact with ACR, said
the police had seized “a few hundred thousand (US) dollars”
worth of diamonds in a “totally illegal” raid. He said ACR
believed that the Mineral Marketing Corporation of Zimbabwe
(MMCZ), a para-statal controlled by ZANU-PF insiders, had
auctioned off the seized diamonds.
¶8. (C) The Reserve Bank of Zimbabwe is also reportedly
pondering how to generate quick revenue from diamonds. In a
confidential paper on “Foreign Exchange Requirements and
SIPDIS
Alternate Sources of Revenue” (reftel), it recommended
holding a one-month long, no-questions-asked, GOZ buy-up of
illicitly obtained diamonds from the Marange site. Chamber
of Mines President Jack Murehwa, however, did not believe
that a diamond sales amnesty would generate significant
revenue. He told econoff on March 16 that most diamonds
exploited in the panning frenzy had long since found their
way over the border.
——————————————— —-
Pending Court Case Could Further Chill Investment
——————————————— —-
¶9. (SBU) On the advice of ACR consultant and ex-Supreme Court
Justice George Smith, ACR had taken its case to the courts.
Almost certainly compounding ACR’s troubles, retired Army
commander Solomon Mujuru was reported to have a small
interest in the company, elevating the issues in light of the
ongoing ZANU-PF succession battle in which Mujuru is viewed
as an opponent of President Robert Mugabe. To illustrate the
point, in March, William Nhara, principal director of
Zimbabwe’s ministry without portfolio and an ally of Mujuru,
was arrested and charged with aiding the attempt of a
Lebanese woman to smuggle diamonds out of Zimbabwe. (He is
awaiting trial.)
¶10. (SBU) Murangari said the ruling, expected in the next one
to two months, would be an acid test for the future of the
sector. If it went against ARC, Zimbabwe could “kiss
goodbye” to minerals investment. Sebborn said such a finding
would be the death knell for the mining industry and could
tip the scales toward Zimbabwe losing its Kimberley Process
Certification. Sebborn said he did see “blood” in the
diamonds. He claimed that MMCZ CEO Onesmo Moyo was
overseeing smuggling of the diamonds out of Harare Airport
and that the illicit trade had fueled a sudden massive
accumulation of wealth in a circle of ZANU-PF cronies.
¶11. (SBU) Cameron McRae, Director of Rio Tinto’s Murowa
diamond mine in southern Zimbabwe, said his company was
HARARE 00000319 003 OF 003
closely monitoring the Marange and River Ranch diamond
disputes. McRae said if Zimbabwe lost its Kimberley
Certification the company would seek an exception for its
diamonds. Rio Tinto had a 78 percent share in the
small-scale open-pit Murowa diamond mine which opened in 2004
in Zvishavane district, in southern Masvingo province. McRae
said Rio Tinto was prepared to invest US$200 million in the
rapid expansion of the Murowa mine, over and above its
initial US$11 million investment. But it would only do so if
it were assured secure tenure of its claim and a normalized
foreign exchange regime.
¶12. (SBU) The European Commission (EC) is current chair of
the Kimberly Process and with respect to it also acts on
behalf of the European Union in Zimbabwe. Xavier Marchal, EC
head of delegation in Harare, told us that in January the GOZ
had requested the Kimberly Process to arrange a review visit
to Zimbabwe. The EC was in the process of organizing a team
and dates; Marchal expected the visit to take place in May or
June.
——-
Comment
——-
¶13. (C) The diamond “rush” is virtually an archetype of GOZ
policy. The rush was fueled by corruption, fostered by
theft, justified by xenophobia and charges of racism, and
ultimately self-defeating. A handful of ZANU-PF insiders
appear to have gotten very rich through the seizure of ACR’s
mine. However, by giving into their greed and stressing
short term gain over long term development they have further
dampened investment prospects in the mining industry, the one
economic sector in Zimbabwe still attracting external
investment. Moreover, if it is proven that a state agency
has used the revenue from the illicit sale of illicitly
gained diamonds to enrich ruling party cronies it could have
serious ramifications for Zimbabwe’s Kimberley Process
Certification.
DELL
(121 VIEWS)
