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Thu Oct 23 07:54:26 SAST 2014

Zim in gems warfare

MARK SCOFIELD | 01 April, 2012 00:42
FED UP: Tendai Biti says Obert Mpofu is running a clandestine operation to divert diamond revenue from Treasury
Image by: Avusa / Avusa

The discovery of diamonds in June 2006 by villagers in the Marange area in rural Chiadzwa, 90km southwest of Mutare, has been a mixed blessing for Zimbabwe.

The Marange diamond fields - hailed as "the greatest find of the century" and said to hold 25% of global rough diamonds by Israeli diamond watchdog, Tacy Ltd - have courted both controversy and fame.

The diamonds, which were banned in October 2008 for being "blood diamonds" following allegations of human rights abuses by the military, have drawn in big Chinese and South African mining companies.

These have transformed the diamond fields into a large-scale commercial production centre, ending the primitive artisanal mining (using shovels and picks) once used by diamond panners. Estimates suggest that Zimbabwe can earn up to $2-billion a year from the Marange diamonds, but coalition partners in the fragile unity government find themselves nowhere close to realising that revenue, and instead have been sucked into an endless fight to control diamond revenue.

As Zanu-PF and the Movement for Democratic Change (MDC) prepare to square off in a new election, there is tacit agreement among observers that unlike the March 2008 poll when the diamonds had not yet taken centre-stage, this time the gems will be at the heart of the election.

The Sunday Times this week takes a look at the political drama sparked by the Marange diamonds involving Tendai Biti and Obert Mpofu - the faces of the MDC-T and Zanu-PF, respectively. Both realise that the diamonds are Zimbabwe's best hope to lift the country out of the economic doldrums.

TENDAI BITI, FINANCE MINISTER

The MDC-T's greatest undoing is that it jumped onto the Marange diamonds gravy train late, and has continued to pay dearly for its mistake.

Biti presides over Treasury, but pays nearly 70% of monthly revenue to civil servants in salaries. Treasury is left with very little to finance anything else - something observers see as a vicious cycle.

Political analyst Charles Mangongera said: "It is unheard of in public administration that you can have a finance minister who has no control over revenue from such a key sector of the economy as mining. It is an awkward situation."

Promised $600-million from diamonds for this year's $4-billion budget, Biti has so far only received $19-million. Biti said: "Diamonds have to deliver ... we are being crippled by their underperformance."

Biti has accused Zanu-PF of running a parallel government that is financed by Marange diamonds, blaming Mpofu for being behind the clandestine move to sideline Treasury.

When MDC-T leader Morgan Tsvangirai entered into the unity government in February 2009, he promised to overhaul the economy - and seek funds from the international community to kick-start the economy.

But he paid little attention to the Marange diamonds' potential. His insistence on donor funding was mocked by Zanu-PF hawks who accused him of carrying a "begging bowl" to source funds. In the meantime, Zanu-PF strengthened its grip on the Marange diamond fields where it has the sole discretion on who comes and goes. Tsvangirai was only "authorised" to visit Marange last month.

OBERT MPOFU, MINES MINISTER

Mpofu has been the face of resistance to Western sanctions imposed on local diamonds, boasting that Zimbabwe "will never beg again". Yet diamond revenue continues to be shrouded in secrecy, with Mpofu revealing that the low revenue ($19-million) submitted to Treasury in February was because there have been no diamond auctions this year.

This was his mildest response to Biti. Mpofu has been involved in a string of public spats with the MDC-T strongman, whom he has accused of "lying" and "playing cheap politics". He has insisted his ministry's dealings with Treasury on diamond revenue were above board.

Clifford Mashiri, a London-based political analyst, said: "If Treasury received only $122-million last year, what has convinced it that it will get $600-million in 2012? Does it mean the loopholes in the diamond mining sector have ended and the country can now expect more revenue? I foresee the MDC being taken for yet another ride by Zanu-PF."

Meanwhile, Mpofu is likely to continue being the de facto finance minister, pulling the purse strings by virtue of control of the mining companies in Marange . Reports suggest Mpofu gave the green light last year for $300-million to be paid to civil servants as bonuses , despite the MDC-T' s protests.

A Harare-based political commentator said: "Some Zanu-PF barons have become extremely wealthy over the last few years. I am convinced they will pull out all the stops to ensure Zanu-PF wins the next election. Never mind the factions in the party.

"Their group interests will force them to unite and put together a bloody campaign that will be funded from diamond money."

Mpofu's personal wealth has also attracted intense speculation. He boasts of being the "single largest cattle rancher in the country" and owns buildings and a supermarket chain in Bulawayo and safari operations in Victoria Falls.

Last year Lovemore Kurotwi, the disgraced former executive at Canadile Miners ejected from Marange, accused Mpofu of soliciting a $10-million bribe in order to get a mining licence.

A Harare judge recently ruled that Mpofu had to respond to the allegations as his "name was being dragged through the mud".

In their own words . . .

OBERT MPOFU

"We are not and we will not be shaken by his [Biti's] sentiments for we now know his double-dealing. We have been remitting all the diamond proceeds accordingly and we have records to prove it. He is trying to play cheap politics. Remember, these are the same guys who have been calling the diamonds body to block the certification process. He and his party are agents of imperialists who thrive on the people's poverty and never wished the country well." - In response to Tendai Biti's allegations in the Mid-Term Fiscal Policy Review on August 1 2011 of diamond revenue not reaching Treasury.

"With the [Kimberley Process Certification Scheme] certification, the country is going to realise substantial income. Zimbabwe will not beg for anything from anybody again. We're actually going to be a world market leader in terms of diamonds. There is huge demand for our diamonds." - November 1 2011 after Zimbabwe is given permission to sell its diamonds by the KPCS.

"That is the most idiotic statement that an organisation like De Beers would make. I mean, they were here for 15 years so when did they realise that our diamonds are not of any quality?" - On November 14 2011 in response to De Beers's statement that it would shun Zimbabwe's Marange diamonds.

"The country's mining companies are on the sanctions list. Marange Resources, Mbada and ZMDC are all under sanctions. We will do business with friendly countries but if we start telling people who we have sold the diamonds to and at how much, then what do you expect to happen to our companies? They [the West] will freeze their money and as I speak, ZMDC has its money frozen by the US." - On March 15 2012 in an interview with CNN.

TENDAI BITI

"The reality of Zimbabwe's situation is that there is no connection between Zimbabwe's income from diamonds, its output and international prices." - On July 29 2011, presenting the Mid-Term Fiscal Policy Review.

"There is a parallel government being run by Zanu-PF and as finance minister I am also in the dark." - On November 20 2011 while addressing a Movement for Democratic Change rally in Chitungwiza.

"Your decision will not stop the mining. That is a sovereign issue covered by international law. More importantly, it will not stop the sale of diamonds. All it does is encourage more opaqueness and underwriting of the diamond industry." - In a letter to the US treasury on December 19 2011 slamming the diamond sanctions imposed on two Zimbabwe companies.

"Revenue from proceeds from diamonds has not been received by Treasury for the months of January and February 2012. Diamonds have to deliver... We are being crippled by their underperformance." - On March 15 2012 in a state of the economy address press briefing.

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