United Nations-owned African Management Services Company (AMSCO) terminated its contract with Zimbabwean diamond mining company River Ranch Limited more than a year ago but it has refused to disclose terms of its three-year contract.
River Ranch also declined to discuss terms of the contract saying, “details of the contract and its implementation are confidential”.
Johannesburg-based AMSCO, a joint venture of the United Nations Development Programme (UNDP) and the International Finance Corporation (IFC) the commercial arm of the World Bank, however, admitted that it had been paid for its services by River Ranch.
It refused to disclose the amount arguing that it did not have the mandate to answer questions relating to River Ranch because it no longer had a contract with the mining company. River Ranch also said payments for services to AMSCO were confidential.
AMSCO has prevaricated about the terms of its contract with River Ranch for nearly a year refusing to answer any questions about its relationship with the Zimbabwean mining company. River Ranch is owned by Saudi Arabian billionaire Adel Aujan and Solomon Mujuru, Zimbabwe’s former army commander and husband of the country’s vice-president Joyce Mujuru.
The IFC only confirmed on August 5 that AMSCO had pulled out of the company in July last year after The Insider had published a story questioning its relationship with a company that is owned by one of President Robert Mugabe’s top lieutenants who is on the United States government’s sanctions list.
The United States government passed the Zimbabwe Democracy and Economic Recovery Act (ZIDERA) in 2001 barring United States companies and international financial institutions like the IFC from giving any assistance to persons or companies on its targeted sanctions list.
Several development agencies from European Union countries are also shareholders of AMSCO. They include Agence Francaise de Development (AFD), the main operator of official French development assistance; the BPI group, a Portuguese financial institution; the Netherlands Development Finance Company (FMO); the Finnish Fund for Industrial Cooperation (Finnfund); the Danish Industrialisation Fund for Developing Countries (IFU); and the Norwegian Investment Fund for Developing Countries (NORFUND).
The European Union was the first to impose targeted sanctions on Mugabe and his lieutenants. It expanded these sanctions in July bringing in those who were involved in the violence during the run-up to the presidential elections run-off. The list included two journalists working for the state-owned Herald and its sister paper the Sunday Mail.
AMSCO started assisting River Ranch in November 2004 when both the US and EU sanctions were already in force.
River Ranch was discovered by De Beers in 1971 but was first exploited by an Australian company, Auridium, which entered into a joint venture with a Canadian company Redaurum. It went into production in 1995 but was closed down in February 1998 when the owners sought voluntary liquidation because of poor diamond prices on the world market.
Bubye Minerals, a local company owned by husband and wife team Michael and Adele Farquhar, took over the mine and invited Adel Aujan to buy out the foreign shareholders. The business partners fell out in 2004 with Aujan kicking out the Farquhars and inviting Mujuru and Tirivanhu Mudariki to join the company.
Bubye Minerals took the case to court but lost in 2006. Its efforts to appeal against the ruling have been thwarted since.
River Ranch was, however, not allowed to sell its diamonds, at least up to the end of last year, because of the ownership dispute. Its legal adviser George Smith said it had since been allowed to sell the diamonds under the Kimberley Process Certification Scheme (KPCS) but declined to say when and how many carats the mine had sold.
Daniel Musiitwa, communications officer of the IFC- Private Enterprise Partnership Africa (PEP) in Johannesburg, confirmed that AMSCO had not renewed its contract with River Ranch when it expired in July 2007.
He, however, refused to answer other questions relating to the contract such as what the nature of the contract was and the names of the management personnel that AMSCO had seconded to the mine.
He said: “AMSCO’s mandate is to engage experienced expatriate managers to provide training and interim management services to client companies. This was the case with River Ranch Diamond mine. AMSCO does not disclose the specifics of individual contracts, or personnel – as this would constitute a breach.”
AMSCO chief executive Ayisi Makatiani disclosed in a press statement last year that: “Five AMSCO professionals have worked at River Ranch since November 2004, filling posts ranging from managing director to chief financial officer to chief of security.”
The Insider has established that the managing director was George Kantsouris, a South African of Greek origin. The financial director was Pradippta Susari while the chief of security was Lloyd Das.
Makatiyani confirmed that Susari was seconded to River Ranch by AMSCO under UNDP accreditation in a letter to Bubye lawyer Terrence Hussein in March last year.
Kantsouris was already an employee of Rani International, one of Aujan’s companies which is registered in Jersey but has offices in Johannesburg, before AMSCO came in. He attended the board meeting at which Aujan kicked out Bubye Minerals. Minutes of the meeting clearly state that he was representing Rani International.
River Ranch says on its letterhead that it is a subsidiary of Rani International Limited.
Smith also confirmed that “initially Mr. Kantsouris was employed by Rani International Ltd as Mr. Aujan’s personal assistant”. He was later employed by AMSCO and seconded to River Ranch.
Musiitwa could not explain how AMSCO had recruited Kantsouris as he did not fit its profile. In its latest annual report AMSCO says “it seeks out top managers across industries with expertise, experience and industry knowledge and seconds them to serve as interim management at its client companies”.
Kantsouris does not have any professional or tertiary qualifications. This was disclosed during the trial of the directors of Bubye Minerals who were taken to court by Kantsouris for allegedly stripping River Ranch Mine of its equipment. Judgement in the case is still pending.
When asked by another Bubye lawyer Godfrey Mamvura whether he had any professional or tertiary qualifications, Kantsouris said he was a stockbroker on the Johannesburg Stock Exchange and a Member of the Institute of Estate Agents of South Africa (MIEA).
He told the court that one did not require any professional qualifications to be a stockbroker but he had written examinations of the Institute of Estate Agents of South Africa.
Kate Colsell, the national coordinator at the Institute of Estate Agents of South Africa, said MIEA referred to membership of her organisation but Kantsouris was not one of their members. She, however, added that this did not mean that he was not an estate agent.
Colsell said that the compulsory body for registration as an estate agent was the Estate Agency Affairs Board. It was this board that used to set examinations. She had checked their website but Kantsouris’s name was not listed.
Musiitwa refused to discuss anything about these revelations. When asked how even if he was a qualified estate agent, Kantsouris could be described as an “expert” capable of managing a diamond mine Musiitwa issued a terse statement saying: “We have nothing further to say regarding this project, as AMSCO exited the project more than a year ago.”
The recruitment of Kantsouris by AMSCO does not seem to be the only irregularity in the closely guarded contract. It now also appears that River Ranch was not properly constituted when it entered into the contract with AMSCO. This was also brought to the attention of Musiitwa but he declined to comment on this.
Evidence heard in court showed that River Ranch had not submitted its annual returns to the registrar of companies from 1998 to 2003. The annual returns for those years were all filed one day on 5 May 2004 and were signed by Tirivanhu Mudariki who only became a director in April 2004.
The returns also showed throughout that the company secretary was Grant Gore when evidence heard in court was that Gore joined the company on 29 October 1997 and resigned on 30 January 1998.
Smith, River Ranch’s legal adviser and a former judge, admitted that no returns were indeed filed during that period but added that failure to file company returns did not mean that a company automatically ceased to be registered.
“It was only after Mr. Aujan resumed control of the mine that, as the major shareholder, he appointed a new Board of Directors. Mr. Mudariki was appointed as a director in 2004 and therefore was qualified to sign the returns in respect of previous years,” he argued.
“The new Board of Directors appointed Ernst and Young as Company Secretary. It filed the returns for the period during which returns had not been filed. There was nothing illegal about that. It was known that the previous directors and the company secretary, Grant Gore, had resigned but the new directors did not know when they had resigned. That is probably why Ernst and Young said that they had resigned in 2004. Putting the wrong dates does not mean that the returns are fraudulent,” Smith said.
During her testimony, Martha Chakanyuka from the Registrar of Companies’ office said the annual returns had to be filed by one of the current directors.
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