Diamond Bosses Build Empires from Looted Marange Gems

• The Diamond Report
A NOW DAILY INVESTIGATION
By John Chimunhu
When Obert Dube, the now-suspended Marange Resources CEO, built the Red Parrot Bar and Grill in his Zvishavane home town, eye brows were raised.
The speed with which the construction was done by a professional company, the futuristic interior wall to wall glass paneling accompanied by dazzling lighting, uniformed waiters and the price of drinks – five dollars a shot of whiskey and double the price for beer, left many wondering about the business sense of such a venture. The whole idea of setting up a trendy joint in an impoverished but mineral-rich town with only a few mining executives and the occasional gold panner as customers sounded obscene.
Two weeks ago, government investigators visited this bar, looking for evidence of graft amid allegations that Dube, like other Marange diamond mining executives had used the construction of this bar and other business ventures to launder the proceeds of diamonds looted from Marange.
Dube himself could not be reached for comment on allegations that he teamed up with other executives to loot diamonds from Marange and used investments such as these to launder the money.
However, a new report by diamond researchers Centre for Research and Development (CRD) in Manicaland has concluded that most of the senior officials involved in mining diamonds in Marange have set up business empires to hide the money realized from illegal deals in gemstones, or from the “outrageous” salaries and perks they have allegedly been awarding themselves.
“Unconfirmed reports estimate that more than $2 billion realised out of Marange diamond sales between 2012 and 2013 has disappeared amid outrageous salaries and benefits for executive officers running diamond mining ventures in Marange,” says the CRD report. “Reliable sources indicate that there has been massive accumulation of wealth by executives of these mining ventures in recent years and some of them are suspected to have channeled huge financial resources realised from Marange diamond sales to multiple private business investments.”
Lukewarm Response
The researchers said the response by government to the scandals has been “lukewarm”, with no evidence that any serious or structured investigation was taking place.
“The year 2013 saw the new minister of mines (Walter Chidhakwa) making stop gap measures to improve the governance of the mining sector by dissolving the board of ZMDC and MMCZ and temporarily mandating the office of the permanent secretary of mines to assume the work of these boards. However, no investigations have since been conducted in order for the country to recover millions of dollars that are suspected to have been lost at the care of these state functionaries who also hold influential positions in Zanu PF,” the CRD report says.
The researchers also took issue with the “paltry” $10 million realized from the state sale of 300 000 carats of Zimbabwe gems by five companies on the Antwerp Diamond Exchange late in 2013. They expressed fears that low-grade stones were submitted for official sale while quality gems were smuggled and sold clandestinely by officials.
“The startling statistics that 89 % of the diamonds sold at Antwerp were low quality industrial goods demonstrates that quality gems from Marange are disappearing at the hands of strategically positioned individuals working in the diamond supply chain in Zimbabwe,” CRD said. “Incidences of foreigners nabbed at various international airports with uncertified diamond packages from Marange have been reported with little commitment shown by government in investigating the supply chain of these diamonds.”
The report called for a suspension of all diamond mining contracts in Marange while investigations were carried out.
On Thursday, finance minister Patrick Chinamasa told the National Assembly that government planned to cancel some of the contracts as remittances were not being made to the treasury. In 2012 the then minister of finance, Tendai Biti, was forced to reduce the national budget from US $4 billion to $3.4 billion after receiving $41 million against the anticipated $600 million from Marange diamond sales. In November, Chinamasa told legislators that the government had not received anything from an anticipated $40 million.
The researchers, however, believe that the problem of leakages and corruption in Marange diamond mining will not be resolved unless there is a change in the country’s laws and mining policies to ensure transparency.
“The mining industry in Zimbabwe is saddled with archaic laws and policy inconsistencies that are fuelling corruption in government and aiding plundering of mineral resources by foreign companies. The failure by government over the years to overhaul the mining sector and introduce policies that guarantee revenue inflows to fiscus in order to sustain the country’s developmental needs, has impacted negatively on the economy and increased the vulnerability of communities living in resource rich areas,” the CRD said.
In his budget statement for 2014 Chinamasa also highlighted that there were no legal and standard operational guidelines to regulate operations of diamond mining companies. In his bid to stop leakages in the sector the minister proposed unlimited access for (ZMRA) to monitor the flow of diamonds across the value chain and the channeling of diamond revenue direct to treasury and not through ZMDC as previously practiced.
“However, these measures are of no consequence without a new functional piece of legislation to govern the operations of the mining sector. The delays by government in coming out with new mining laws in the past years is regrettable. It remains to be seen in 2014 whether the ministry of mines will come up with a new legal framework that embraces best practices that promote community rights, accountability and transparency in the governance of the entire mining industry,” the researchers said.
The disappearance of large sums of money in the Marange fields has also riled Parliament.
“Of notable interest was the realisation that out of $263 million remitted to government by Mbada Diamonds between 2011 and 2012 only $82 million had been remitted to treasury.” – Now Daily.

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