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Lost hopes: Inside Zimbabwe’s multi-billion dollar diamond looting racket

Director General of the CIO.HappytonBonyongwe (left), Constantine Chiwenga, Commander of the Defence Forces (centre), and President Robert Mugabe (right). Zimbabwe’s security forces are notoriously politically partisan. PHOTO/GLOBAL WITNESS

Global Witness has uncovered new evidence linking Zimbabwe’s state and partisan security forces to a decade of disappearing diamond wealth.
Despite offering early promise and hope, diamonds have failed to benefit the Zimbabwean people. Instead, they have provided secret off-budget funding for state security forces consistently implicated in their oppression.
As elections and a divisive presidential succession struggle loom, this has serious implications for Zimbabwe’s democratic future, and casts serious doubt on President Mugabe’s claim that private investors are solely to blame for billions of dollars of missing diamond revenues.
Mismanagement of the diamond sector has also had devastating consequences for Zimbabwe’s development. With nearly three quarters of the population living beneath the poverty line and an estimated four million people in need of food aid in 2017, the need for a complete overhaul of the industry has never been greater.
An Inside Job’ examines five of the major mining companies that have recently operated in the Marange diamond fields and so continue to hold a stake in its future: Kusena, Anjin, Jinan, Diamond Mining Corporation (DMC), and Mbada.

It details the steps companies have taken, in some cases, to conceal their finances, shield their operations from public scrutiny, and hide their ultimate beneficiaries and owners.
In 2006 one of the largest diamond finds in recent history was made in eastern Zimbabwe’s rural Marange. A find of this scale could have gone a long way towards alleviating the country’s serious economic woes.
Instead, Zimbabwe’s precious stones were left to the mercy of the country’s highly partisan security services and political elites, to the ultimate detriment of Zimbabwe’s development and democracy.
Deep cavernous holes in the diamond-rich ground are matched only by holes in government budgets and company accounts.
A decade later, in 2016, Zimbabwe’s Minister of Mines and Mining Development ordered all diamond mining companies to cease their operations with immediate effect.

As 2018 elections draw closer and an increasingly divisive presidential succession struggle unfolds, this shock announcement marked the culmination of a decade-long diamond debacle and the government’s most dramatic step towards tightening its grip on dwindling diamond revenues.

The future of Zimbabwe’s diamonds now hangs in the balance. Dwindling reserves are demanding greater investment from an industry shaped by state-sponsored looting and short-term thinking, while driving competition for what remains of Zimbabwe’s diamonds.
President Mugabe has finally admitted that billions have vanished before ever reaching the Zimbabwean Treasury, with government efforts to centralise the diamond industry billed as a response to calls for reform.
But the government’s effort to amalgamate the industry into a single new Zimbabwe Consolidated Diamond Company (ZCDC) is stuttering. Several Marange companies have taken to the Courts following the government’s refusal to renew their licences, while the ZCDC’s own legal basis, operations, and oversight mechanisms are being questioned.
The ZCDC’s operations have also been beset by the same secrecy that has grown endemic to Zimbabwe’s diamond industry, while some of its proposed shareholders appear drawn from the very same cast of characters that have charted Marange’s history to date.
Despite thegovernment’s promised reforms, the stage looks set for a repeat performance. President Mugabe has pointed the finger of blame squarely at private diamond companies.

“We have not received much from the diamond industry at all (…) I don’t think we’ve exceeded US$2 billion or so, and yet we think that well over US$15 billion has been earned in that area. (…) There has been quite a lot of secrecy (…) and lots of swindling, smuggling (…). The companies that have been mining have virtually robbed us, I want to say, of our wealth (…). You cannot trust a private company in that area. None at all.–“ President Robert Mugabe, in an interview with Zimbabwe Broadcasting Corporation on the occasion of his 92nd birthday.

But this is only half the story. The Government of Zimbabwe owns at least 50 per cent of each of the companies that were licenced to mine Marange, and was responsible for selecting and overseeing each of their private partners. With billions missing, any heist — it is clear — started closer to home.
Global Witness has uncovered new evidence that reveals how Zimbabwe’s feared Central Intelligence Organisation (CIO), the military, notorious smugglers, and well-heeled political elites, all gained control or ownership of companies operating in Zimbabwe’s diamond fields.
Despite the role the security forces have played in subverting Zimbabwe’s democracy and perpetrating serious human rights abuses, Zimbabwean diamonds are traded freely on international markets with the Kimberley Process’ seal of approval. Rather than encouraging transparency and reforms, international demand has delivered a market for Zimbabwe’s diamonds.
This report has followed Zimbabwe’s diamond millions from the mines of Marange to scrapyards in South Africa; the skyscrapers of Dubai and Hong Kong; and to the anonymous companies of secrecy jurisdictions from Mauritius to the British Virgin Islands. Some even appear to have passed through a small motel off a highway in Mozambique — an unlikely headquarters for an international diamond smuggling ring.
Read the full report HERE.


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