Did Mujuru have a stake in ACR?

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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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

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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

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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

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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)