US firms in sanctions busting?

Two United States companies were alleged to be doing business with the Zimbabwean government but it was not clear whether they were busting the sanctions introduced by Washington under its Zimbabwe Democracy and Economic Recovery Act or not.

One of the companies, Sentry Financial, was reported to have entered into a US$700 million deal with the Grain Marketing Board.

Movement for Democratic Change national executive member Eddie Cross sent a letter to Sentry Financial executive Vice President Kirk Heaton in which he wrote: “As a US company you are also violating the wishes of your government and cannot expect any succor from that quarter.”

Agriculture Minister Joseph Made denied there was any such deal saying the country had sufficient maize.

The GMB itself was not on the sanctions list.

Another company, Mashonaland Tobacco Company, a subsidiary of US firm Dimon, was reported to have guaranteed a line of credit in return for tobacco supplies with some of the tobacco allegedly coming from farms occupied by Zimbabwe Defence Industries.

ZDI was on sanctions list.

The United States embassy in Harare said it had been unable to substantiate whether the alleged deals existed or not and requested the Department of State refer the matter to the Department of Treasury’s sanctions implementers for further investigation.

Full cable:

Viewing cable 04HARARE1519, Possible Financial Sanctions Violation

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This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS HARARE 001519

SIPDIS

STATE FOR AF/S

SENSITIVE

¶E. O. 12958: N/A

TAGS: ECON ETRD EINV PGOV ZI

SUBJECT: Possible Financial Sanctions Violation

——-

Summary

——-

¶1. (SBU) Various news reports over the past several

months have alleged that a possible grain deal between a

GOZ parastatal and U.S. firm Sentry Financial, aspects of

which may have violated Executive Order 13288 of March 7,

2003, which restricts financial transactions between U.S.

entities and 77 Zimbabweans connected to the GOZ and

ruling Zanu-PF party. An opposition Movement of

Democratic Change (MDC) activist has pressed the issue,

including writing directly to Sentry. We have not been

able to substantiate these reports in Harare and request

that the Department of State pass to the Department of

Treasury’s Office of Foreign Asset Control (OFAC) for

further investigation (see paragraph 6).

——————

Alleged Grain Deal

——————

¶2. (SBU) In late-May, Africa Confidential – a bimonthly,

London-based newsletter about African politics and

economics – first reported an alleged grain deal between

the Zimbabwean parastatal Grain Marketing Board (GMB) and

Sentry Financial of Salt Lake City, UT. The article

cited as its source a memorandum between Jewel Bank

(owned by Central Bank head Gideon Gono) and the GMB in

which Sentry Financial is alleged to have offered a

US$700 million loan facility to the GOZ for grain

purchases.

¶3. (SBU) Zimbabwe’s opposition subsequently picked up on

the reported deal. MDC National Executive Member Eddie

Cross sent a letter to Sentry Financial Executive Vice

President Kirk Heaton on May 22. Cross subsequently made

the letter public. In it he asserts: “As a U.S. company

you are also violating the wishes of your government and

cannot expect any succor from that quarter.” Cross does

not refer specifically to financial sanctions (and the

GMB is not a sanctioned entity), rather his objection is

that the GOZ would use the grain as a political weapon.

¶4. (SBU) For its part, the GOZ has denied that any deal

exists. On May 16, Agriculture Minister Joseph Made said

publicly that Zimbabwe did not require grain imports due

to the success of fast-track land reform. Made

reiterated GOZ forecasts of a banner maize harvest of 2.4

million tons, far exceeding the country’s 1.8 million ton

consumption needs.

¶5. (SBU) Subsequent Africa Confidential articles have

further alleged that Mashonaland Tobacco Company – a part-

subsidiary of U.S. firm Dimon of Danville, VA –

guaranteed the line of credit in return for tobacco

supplies. Africa Confidential and the local opposition

press also asserted that some of the tobacco Mashonaland

Tobacco Company purchased could have originated on farms

occupied by Zimbabwe Defense Industries (ZDI). ZDI is on

the Department of Treasury’s Office of Foreign Asset

Control’s designated sanctions list and were this

allegation substantiated, it could constitute a violation

of EO 13288. (Note: Central Bank Governor Gono is on the

travel ban but not on the financial sanctions list.) By

early-June, several U.S. media outlets, including the

L.A. Times on June 9, ran articles reporting the deal and

alleging that it violated U.S. sanctions on Zimbabwe.

————————–

Comment and Action Request

————————–

¶65. (SBU) The Embassy has not succeeded in substantiating

whether a alleged deal exists between the GMB and the two

U.S. firms. Nor are we able to track the origins of the

tobacco cited in the media. Post requests that the

Department of State refer the matter to the Department of

Treasury’s OFAC for further investigation. The

Department should alert OFAC that Senator Russell

Feingold has also requested information about the

purported transactions.

Dell

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