Chinamasa named as one of those benefitting from Chiadzwa

Justice Minister Patrick Chinamasa was named as one of the senior Zimbabwe African National Union-Patriotic Front officials benefitting from the purchase and sale of diamonds from Chiadzwa.

Chinamasa together with then Women’s Affairs Minister Oppah Muchinguri and President Robert Mugabe’s sister Sabina Mugabe were fingered by ZANU-PF central committee member Manatsawani Mutasa.

Other senior ZANU-PF officials allegedly benefitting from the diamonds from Chiadzwa were named by Andrew Cranswick the chief executive officer of African Consolidated Resources which held the Chiadzwa claims.

Cranswick named:

• Central Bank governor Gideon Gono;
• Grace Mugabe, wife of President Robert Mugabe;
• Vice President Joyce Mujuru;
• Mines and Mining Development Minister Amos Midzi;
• General Constantine Chiwenga and wife Jocelyn;
• CIO Director Happyton Bonyongwe;
• Manicaland Governor Chris Mushowe;
• and several white Zimbabweans, including Ken Sharpe, Greg Scott, and Hendrik O’Neill.
•  

Cranswick has since been sued by Bonyongwe and was ordered to pay $10 million.

Full cable:

Viewing cable 08HARARE1016, REGIME ELITES LOOTING DEADLY DIAMOND FIELD

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FM AMEMBASSY HARARE

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INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

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RUEHGV/USMISSION GENEVA 1690

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C O N F I D E N T I A L SECTION 01 OF 05 HARARE 001016

SIPDIS

AF/S FOR B. WALCH

DRL FOR N. WILETT

ADDIS ABABA FOR USAU

ADDIS ABABA FOR ACSS

STATE PASS TO USAID FOR E. LOKEN AND L. DOBBINS

STATE PASS TO NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN

E.O. 12958: DECL: 11/12/2018

TAGS: PGOV EMIN ASEC PHUM ZI

SUBJECT: REGIME ELITES LOOTING DEADLY DIAMOND FIELD

REF: 2007 HARARE 319

Classified By: Ambassador James D. McGee for reason 1.4 (d)

——-

SUMMARY

——-

¶1. (C) The CEO of a British mining company described to us

how high-ranking Zimbabwean government officials and

well-connected elites are generating millions of dollars in

personal income by hiring teams of diggers to hand-extract

diamonds from the Chiadzwa mine in eastern Zimbabwe. They

are selling the undocumented diamonds to a mix of foreign

buyers including Belgians, Israelis, Lebanese, Russians and

South Africans who smuggle them out of the country for

cutting and resale elsewhere. Despite efforts to control the

diamond site with police, the prospect of accessible diamonds

lying just beneath the soil’s surface has attracted a swarm

of several thousand local and foreign diggers. The police

response has been violent, with a handful of homicides

reported each week, though that number could grow as diggers

arm themselves and attract police and army deserters to their

ranks. END SUMMARY

—————————————

High-Ranking Officials Trading Diamonds

—————————————

¶2. (C) On November 6, poloff met with Andrew Cranswick, the

CEO of African Consolidated Resources (ACR), the

publicly-traded British firm that had its Chiadzwa diamond

claim in the Marange district of Manicaland seized by the

government parastatal Minerals Marketing Corporation of

Zimbabwe (MMCZ) in 2006 (reftel). According to Cranswick,

there is a small group of high-ranking Zimbabwean officials

who have been extracting tremendous diamond profits from

Chiadzwa. Cranswick said that RBZ Governor Gideon Gono,

Grace Mugabe, wife of President Robert Mugabe, Vice President

Joyce Mujuru, Mines and Mining Development Minister Amos

Midzi, General Constantine Chiwenga and wife Jocelyn, CIO

Director Happyton Bonyongwe, Manicaland Governor Chris

Mushowe, and several white Zimbabweans, including Ken Sharpe,

Greg Scott, and Hendrik O,Neill, are all involved in the

Marange diamond trade.

¶3. (C) On October 14, econ specialist traveled to the

periphery of the no-go area around the Chiadzwa diamond site

located about 60 km southwest of Mutare in Manicaland.

Repeated inquiries about who was involved in the diamond

trade elicited many of the same names mentioned by Cranswick.

¶4. (C) Econ specialist also met with Manatsawani Mutasa, a

ZANU-PF Central Committee member and Manicaland resident, who

added that Justice Minister Patrick Chinamasa, Women’s

Affairs Minister Oppah Muchinguri, and Sabina Mugabe–sister

of President Mugabe–have also been profiting from the

purchase and sale of Chiadzwa diamonds.

————————————

How the Chiadzwa Diamond Trade Works

————————————

¶5. (C) The GOZ possesses the diamond mining rights to

Chiadzwa, but the Zimbabwe Mining Development Corporation

(ZMDC) does not do any extraction itself. The ZMDC brought

in some mining equipment in 2006 after seizing the mining

rights from ACR, but their efforts were minimal and soon

halted altogether. According to Cranswick, all extraction is

now being done by hand panners who merely sift the top meter

of soil. Some of these panners operate in teams that sell

HARARE 00001016 002 OF 005

their diamonds to representatives of the above-named

officials and connected elites. Other panners are individual

operators who merely sell to the highest bidder. Often the

panners who are affiliated with a particular regime buyer,

will only sell a portion of their diamonds to that person’s

representative, holding back the remainder to sell for higher

prices to foreign buyers offering hard currency.

¶6. (C) The diamonds that are sold to regime members and

elites are sold for freshly printed Zimbabwean notes issued

by the RBZ. These diamonds are aggregated and resold to

foreign buyers for US dollars or rand in nearby Mutare, in

Harare, over the border in the Mozambican towns of Manica and

Chimoio, or even in South Africa. (NOTE: Econ specialist

reported that Mutare was awash with diamond money. The

Holiday Inn was booked with guests checking in for weeks at a

time. Food prices in shops near Marange were exorbitant, with

meat prices four times higher than in Harare. END NOTE.)

¶7. (C) The diamonds that are not sold to regime members and

elites, but instead are sold directly to foreign buyers,

actually constitute the majority of the diamond trade in

Chiadzwa. Cranswick said that around 85 percent of the

diamonds extracted from Chiadzwa are sold directly to foreign

buyers. Even so, he conservatively estimated that Mujuru,

Gono and the rest were probably each making several hundred

thousand dollars a month.

¶8. (C) Whether bought first by regime members or not,

eventually the diamonds are sold to a mix of Belgians,

Israelis, Lebanese (the largest contingent), Russians, and

South Africans. A well-known buyer named Gonyeti fronts for

Gono, as do two other buyers named Tendai Makurumidze and

Takunda Nyaguze, according to Mutasa. Once sold to

foreigners, the majority of the diamonds are smuggled to

Dubai and sold at the Dubai Multi Commodities Centre

Authority, a dedicated economic free-trade zone created in

2002 for the exchange of metals and commodities, most notably

gold and diamonds. Although Zimbabwe is a participant in the

Kimberley process, the diamonds from Chiadzwa are

undocumented and therefore are not in compliance with

Kimberley, which requires loose uncut diamonds to be

certified.

¶9. (C) The highest quality diamonds are not sent to Dubai,

but are shipped to Belgium, Israel, or South Africa for

cutting. Despite this wide dispersal, Chiadzwa diamonds are

very distinctive because of their age, color, and clarity and

can easily be traced back to the Marange mine, according to

Cranswick. He implicated Ernie Blom, president of South

Africa’s Diamond Merchants Association in the illicit trade

of Chiadzwa diamonds, and said that Blom had been known to

boast of his involvement in illegal Zimbabwean diamonds.

When asked why purportedly reputable diamond dealers would

involve themselves in Chiadzwa, Cranswick said that the site

was “massive” with tremendous profit potential that was

attracting numerous buyers. One such group consisted of

Russians who had recently bought US$500,000 worth of diamonds

at an MMCZ auction, paying US$29/carat. They bought eight to

ten carat rough diamonds, five to ten percent of which were

gem quality.

——————————–

Diamond Trade a Violent Business

——————————–

¶10. (C) The diamond frenzy in Chiadzwa has led to hundreds

and possibly thousands of homicides. Word of easy diamonds

spurred a rush of Zimbabwean and foreign diggers to the area

including Angolans, Congolese, Mozambicans, South Africans

and Zambians, as well as diggers from as far away as Sierra

HARARE 00001016 003 OF 005

Leone and Cote D’Ivoire Cranswick estimated there are

currently around three or four thousand diggers swarming over

the 70 hectare Chiadzwa site. The police have unsuccessfully

tried to prevent the site from becoming overrun, and

routinely use live fire to chase away diggers. Anyone trying

to enter the area has to present a Zimbabwean national

identification card with a registration number that ends in

“75”, signifying the person is a resident of the Mutare

region of Manicaland.

¶11. (C) During the first weekend of November, police killed

at least five panners in Chiadzwa, according to the on-line

newspaper Zimbabwe Times. While usually operating on foot

with attack dogs, this time the police used a helicopter to

shoot at panners. Passmore Nyakureba, a lawyer with the

Zimbabwe Lawyers for Human Rights said, “This has become an

everyday scenario. Up to five people die every week as a

result of being shot at by police or after being bitten by

dogs.” Cranswick said that at the peak of the frenzy in

2007, up to a hundred panners were shot in a week.

¶12. (C) In response to aggressive police action, diggers

began arming themselves with handguns and in some cases

automatic weapons. They also formed loose gangs in an

attempt to protect themselves as well as “claimed” areas.

Cranswick said that some members of the police and army have

deserted in order to join the digging, and they typically

brought their firearms with them. Some former police even

still wear their uniforms as they search for diamonds.

————————————-

Police Corrupted; Community Destroyed

————————————-

¶13. (C) Cranswick said that the police were rotated into the

area on two-week shifts to control the mining and keep

unauthorized diggers out, but they were immediately

corrupted. Police officers routinely charged 100 rand or

US$10 a person for a day’s digging in Chiadzwa. The military

has largely avoided the area out of fear that commanding

officers would lose control of their troops, according to

Cranswick.

¶14. (C) Cranswick maintained that local chiefs were on ACR’s

side in its pending court battle to win back its claim. They

realized that the “curse” of diamonds had wreaked havoc in

the community. Children were no longer attending school, the

environmental degradation was severe, lawlessness and

violence reigned, and the community was not benefiting from

the resource. According to an independent weekly newspaper,

three quarters of the schools in Marange, Buhera, and

Chimanimani districts failed to open this term because

teachers and students alike were digging for diamonds.

—————-

What’s At Stake?

—————-

¶15. (C) Chiadzwa has the potential of being a major source

of industrial and gem quality diamonds. What makes it so

commercially valuable is that it possesses a diverse mix of

different size and color stones, all within just a few meters

of the surface. It also has a high carat per hundred tons

(CPHT) ratio, a measure the industry uses to characterize the

diamond concentration. Cranswick told us he was

confidentially shown a report prepared for the De Beers

Corporation by noted geologist John Ward. The report

estimated that Chiadzwa had a CPHT of over 1,000. By

comparison, the Rio Tinto/Rio Zimbabwe-owned Murowa diamond

mine near Zvishavane in Midlands province has a CPHT of 120.

HARARE 00001016 004 OF 005

¶16. (C) Eye witnesses and panners told us that they were

extracting both industrial and gem quality stones, but

predominantly the former. Cranswick believed that the site

had 30 to 40 percent industrial diamonds and the rest gem

quality, including very good quality five to 30 carat colored

diamonds. In his view, the area could be commercially

exploited for five to 25 years, including excavation of

diamond yielding hard rock that ran deeper than the one meter

depth currently being worked. Econ specialist also was told

that another diamond field was discovered this year within

five km of Chiadzwa at the village of Chirasika. Panners had

begun working the site and it had not yet become a

police-restricted area. We have no estimates for the

potential of this new diamond discovery.

¶17. (C) On October 27, Gono publicly declared that the

Zimbabwean economy could be turned around by stemming losses

caused by illegal mining at Chiadzwa. According to Gono, “A

reliable estimate shows that US$1.2 billion per month would

be realized from diamond sales in the country, enough to

solve the economic challenges the country is currently

facing.” Cranswick said that while the estimate is probably

exaggerated, Gono may be looking for a large one time

dividend by selling a share of the mine or the mining rights

to an outside investor. This would dwarf the relatively

small profits he is now accruing from the mine.

¶18. (C) ACR has offered the government a deal in which ACR

would take a 49 percent share of all diamond proceeds and

give the rest to the GOZ, but Cranswick did not seem

optimistic that the government would accept the deal.

—————————–

Two Other Major Diamond Mines

—————————–

¶19. (U) Murowa is a well-regulated mine operated by the

British multinational mining giant Rio Tinto, which since

2004 has held a 78 percent share in the open-pit Murowa

diamond mine in Zvishavane district, in southern Masvingo

province. Murowa is a deep kimberlitic deposit that requires

heavy machinery to extract the soil and rock.

¶20. (U) River Ranch is partially owned by retired General

Solomon Mujuru (husband of Vice President Joyce Mujuru) and

is located in Beitbridge in Matabeleland South. Mujuru

gained a 20 percent stake in the mine at the expense of a

local company, Bubye Minerals, which was pushed out to

Mujuru’s benefit. Bubye Minerals contested the ownership

change, but was thwarted by the Zimbabwean courts. It is

unclear if Mujuru purchased his stake.

——-

COMMENT

——-

¶21. (C) In a country filled with corrupt schemes, the

diamond business in Zimbabwe is one of the dirtiest. Mining

in general remains the largest single source of foreign

exchange, but the potential of Chiadzwa is being lost to

Zimbabwean corruption. While Gono talks about using diamonds

to stabilize the Zimbabwean economy, he would only do so if

he thought he could personally make more in the process. At

present, police trying to bring order to Chiadzwa are

benefiting Zimbabwean officials who see the diamond field as

a new source of illegitimate income; the people of Zimbabwe

are seeing little return.

¶22. (C) It is also clear that Cranswick is a businessman

trying to find any pressure point he can through which to

leverage his own claim. At the same time, he sheds light on

HARARE 00001016 005 OF 005

an industry that is enriching many of the same old corrupt

Zimbabwean elite–and causing violence and deaths that so far

have received little attention. END COMMENT.

MCGEE

(39 VIEWS)