Blom tried to rope in Mbada Diamonds’ Robert Mhlanga but deal flopped

South African diamond executive Ernest Blom tried to rope in Robert Mhlanga, a former Air-Vice- Marshall who is widely reported to have been President Robert Mugabe’s personal pilot and is now chairman of Mbada Diamonds, in his quest to secure exclusive mining rights for Marange diamonds.

The deal, however, flopped in less than a month forcing Blom to apologise to Mhlanga, in an email copied to Mines Minister Obert Mpofu, that he was not trying to double-cross him by negotiating to set up a diamond mining company with another partner.

Blom’s quest to exploit the Marange diamonds was detailed in an affidavit by Federal Bureau of Investigations Special Agent Steven Noldin which was used as the main evidence against two Chicago men, Prince Asiel Ben Israel and C. Gregory Turner, who were accused of illegally trying to lobby for the lifting of sanctions against Mugabe and former Central Bank governor Gideon Gono.

Turner and Ben Israel were both convicted this year. Ben Israel pleaded guilty and was sentenced to seven months in jail in August. Turner is still to be sentenced.

Ben Israel and Turner signed a US$3.4 million deal to lobby for the lifting of sanctions in November 2008 but Turner seemed to be interested in the Marange diamonds which he described in his email to Ben Israel at one time as a 75 sq km area which the Zimbabwe Mining Development Corporation was ill equipped to mine as it did not have the required expertise.

Turner sought the expertise of a South African diamond executive Ernest Blom whose family has been in the diamond industry for four generations and they planned to set up a company called Edenic Diamond Resources.

Blom met Mines Minister Obert Mpofu on 9 April 2009 and submitted a proposal to him on 15 April to approve his project by 24 April with a memorandum of understanding being signed on 4 May.

The proposal said the partners in the joint venture would be Blom and Turner and the Zimbabwean government through the ZMDC and the Minerals Marketing Corporation of Zimbabwe.

But, on 5 May, a day after the deadline Blom had set elapsed, Turner wrote Ben Israel that Edenic Diamond Resources would now be owned by four entities- The Zimbabwe government with 25 percent, Turner and Ben Israel with another 25 percent, with Blom and the owner of Johannesburg-based company, Liparm Corporation, holding the remaining 50 percent.

It is not clear how Liparm Corporation suddenly came into the picture less than three weeks after Blom had submitted his initial proposal to Mpofu.

A search of the South African company registry shows that there is no company called Liparm Corporation. There are, however, three associated companies, Liparm Consultancy, Liparm Investment Holdings and Liparm Trading. All had the same directors: Robert Mhlanga, Christian Gouws, Pumla Matshaya and Katawere Nyari, but the three other directors resigned from all three entities leaving only Mhlanga.

A day after Turner’s email, on 6 May, Blom emailed Liparm Corporation and Turner a draft memorandum of understanding between ZMDC,  Liparm Corporation’s CEO, Turner and himself.

The MOU said that the joint venture’s name would remain Edenic Diamond Resources but according to the email, the ZMDC was to:

• Provide monthly figures of rough diamond production,
• Ensure legislation is amended to allow Edenic Diamond Resources to participate in the mining,
• Grant Edenic Diamond Resources mining rights,
• Grant the company sole agency over all diamond production in the Marange area, and
• Provide security to the company’s rights, minerals and assets.

It is not clear whether Liparm turned down this proposal or not but on 13 May, Blom emailed Liparm and Turner another draft calling on the government of Zimbabwe and Edenic Diamond Resources to form a partnership for mining and marketing rough diamonds from Marange. The proposal did not give the percentages for ownership but the two principal partners were to be the government and the consortium comprising Liparm, Turner and Blom.

Nine days later, the deal was off the rails. Blom wrote Liparm and Mpofu that he had tried to phone Mhlanga about the “unfortunate misinformation” that he was going behind Liparm’s back to work with another company and the ZMDC.

Blom said he had never entered into negotiations with anyone but Mhlanga. “I am committed to the process and (am) firmly of the opinion that this will be beneficial to all concerned.”

That appeared to be the end of the deal, as it was never mentioned again in the affidavit.

The Insider has so far been unable to contact Mhlanga though it sent its request through Mbada Diamonds.

Tomorrow: Blom had an interest in Marange Diamonds long before the Turner-deal.

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