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Zimbabwe: Diamonds Fund Parallel Government
AfricaFocus Bulletin
Jul 2, 2012 (120702)
(Reposted from sources cited below)
Editor's Note
A new report from Global Witness reveals that Zimbabwe's
Central Intelligence Organisation (CIO) appears to have
received off budget financing from a Hong Kong-based
businessman as the CIO and other security agencies continue
to prepare to influence elections due to take place sometime
in 2013. Global Witness reports that CIO members exercise
joint control over Sino Zimbabwe Development (Pvt) Ltd, a
diamonds, cotton and property company in Zimbabwe, in
collaboration with businessman Sam Pa, a prominent member of
the Queensway Syndicate, a network of companies with a track
record of negotiating opaque resource for infrastructure
deals across the African continent.
This AfricaFocus Bulletin contains a press release on the
report from Global Witness, the Executive Summary of the
report, and selected additional excerpts. The full report
has extensive additional detail about the companies and
individuals involved. See http://www.globalwitness.org /
direct URL: http://tinyurl.com/73oqy2v
For regular updates on Zimbabwe, see the Zimbabwe Briefings
of the Crisis in Zimbabwe Coalition http://www.crisiszimbabwe.org / direct URL:
http://tinyurl.com/7583qcy
For previous AfricaFocus Bulletins on Zimbabwe, visit
http://www.africafocus.org/country/zimbabwe.php
Previous bulletins on the role of diamonds in Zimbabwe in
particular are "Africa: Dead End for Diamond Monitoring"
http://www.africafocus.org/docs11/dia1109.php and "Zimbabwe:
Whose Diamonds?"
http://www.africafocus.org/docs10/zim1006.php
Update on Petition to Reject "Terrorist" Designation for
Boko Haram
Please sign the AfricaFocus petition at
http://www.signon.org/sign/reject-terrorist-designation
The need is made clear by a news report last week on a
speech by General Carter Ham, the commander of the U.S.
military's Africa Command, hyping the threat to the U.S. of
links between Boko Haram and other Al-Qaida-tied groups
in Africa. (http://www.msnbc.msn.com/id/47957885/ns/world_news-africa/)
This reflects the continuing pressure within the U.S.
government for a military approach to Africa's problems.
More of us must speak up for alternative approaches that are
not counterproductive.
Another recent report by the Charity and Security Network
highlights the damage done by a similar designation in the
case of Al Shabaab in Somalia. "Banks fearful of violating
anti-terrorism financing laws are shutting down money
transfer services many Somali-Americans depend on to send
money to family overseas, witnesses testified before a
Congressional hearing on June 21, 2012."
http://tinyurl.com/7vrzv57
For more background, see
http://www.africafocus.org/docs12/bh1206.php
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Action urgently needed to stop off budget financing to
Mugabe's regime
23rd June 2012
http://www.globalwitness.org / direct URL:
http://tinyurl.com/73oqy2v
Contact: Nick Donovan +44 (0)772 0972 392
The international community must act to prevent off budget
financing of Mugabe's feared secret police, said Global
Witness in a report published today.
The report, Financing a Parallel Government?, reveals that
Zimbabwe's Central Intelligence Organisation (CIO) appears
to have received off budget financing from a Hong Kong-based
businessman at the same time that the CIO is alleged to be
engaging in a campaign to discredit key members of
Zimbabwe's opposition.
CIO members exercise joint control over Sino Zimbabwe
Development (Pvt) Ltd, a diamonds, cotton and property
company in Zimbabwe. Their partner is businessman Sam Pa, a
prominent member of the Queensway Syndicate, a network of
companies with a track record of negotiating opaque resource
for infrastructure deals across the African continent.
The report also exposes how a Zimbabwean military lawyer
owns half of Anjin Investments (Pvt) Ltd, the biggest
diamond company in Zimbabwe's controversial Marange diamond
fields, on behalf of Zimbabwe's Ministry of Defence.
"Given the violent reputation of the CIO and military, we
fear that this money could fund human rights abuses during
the forthcoming election," said Nick Donovan of Global
Witness. "Off-budget financing of the security sector
undermines Zimbabwean democracy by subverting civilian
control over key organs of the state. The international
community should investigate the activities of Sam Pa, Sino
Zimbabwe Development (Pvt) Ltd, and Anjin Investments (Pvt)
Ltd to see whether their actions justify imposing targeted
sanctions such as asset freezes."
Information given to Global Witness by sources within the
CIO suggests that Sam Pa provided funding and material to
the organisation in return for access to Zimbabwe's diamond,
cotton and property sectors. One CIO document put this
support at $100 million and 200 pick-up trucks. Two sources
also told Global Witness that the money has been allocated
by the CIO towards Operation Spiderweb, covert activities
designed to discredit Prime Minister Tsvangarai, Finance
Minister Biti, and Industry Minister Ncube, although Global
Witness cannot confirm the existence of these programmes.
We gave Mr Pa an opportunity to comment on our findings but
he has not responded.
Anjin Investments claims to be the world's biggest diamond
miner. Previous research by Global Witness revealed how
Anjin's Executive Board members include senior serving and
retired military and police officers, and the Permanent
Secretary at the Ministry of Defence. In the report
published today, Global Witness reveals that 50% of Anjin's
shares are owned by Brigadier General Charles Tarumbwa, the
Judge Advocate General at the Ministry of Defence, acting
through Matt Bronze (Pvt) Ltd, a front for the Zimbabwean
military.
"Since ZANU PF lost control of the Ministry of Finance, they
appear to have engaged on a hunt for off-budget financing
for the military and secret police," said Donovan.
"Zimbabwe's civilian government must exercise democratic
control over the budgets of security forces. If not, there
is a real danger of a shadow security state emerging, with
both a monopoly on violence and secret sources of funding."
Contact: Nick Donovan +44 (0)772 0972 392
Notes to editors:
- Prime Minister Morgan Tsvangarai, and Finance Minister
Tendai Biti are leaders of the Movement for Democratic
Change ??" Tsvangarai (MDC-T). Industry minister Weshman
Ncube is leader of the MDC-N.
- The Southern Africa Development Community (SADC)
facilitated the Global Political Agreement in Zimbabwe in
2008, leading to the formation of the Government of National
Unity between ZANU PF and the MDC. ZANU PF retained control
of key security ministries such as the President's Office
(responsible for the Central Intelligence Organisation),
Defence, Home Affairs (with co-ministers from ZANU PF and
the MDC) and the Ministry of Mines and Mining Development.
The MDC took control of the Prime Minister's office and the
Ministry of Finance, among other ministries.
- The Zimbabwean members of Anjin's Executive Board are:
- Mr. Martin Rushwaya, the permanent secretary in the
Ministry of Defense;
- Mr. Oliver Chibage, a commissioner in the Zimbabwe
Republic Police (ZRP);
- Ms. Nonkosi M. Ncube, a commissioner in the ZRP;
- Mr. Munyaradzi Machacha, a ZANU PF director of
publications;
- Mr. Mabasa Temba Hawadi, a director of Marange Resources
(Pvt) Ltd, a subsidiary of the ZMDC;
- Mr. Morris Masunungure, a current or retired officer in
Zimbabwe Defence Forces;
- Mr. Romeo Daniel Mutsvunguma, a retired Colonel in the ZDF
alleged by Human Rights Watch to have participated in
violence in 2008.
- Please see Global Witness' previous report on Anjin
Investments: 'Diamonds: A Good Deal for Zimbabwe?'
- Please see the Economist, The Queensway syndicate and the
Africa trade, 11 August 2011 for more information on Sam Pa
and the Queensway syndicate.
Financing a Parallel Government?
The involvement of the secret police and military in
Zimbabwe's diamond, cotton and property sectors
Global Witness - June 2012
[Executive Summary and selected excerpts only. For full text
see http://www.globalwitness.org]
Executive Summary
This report reveals how Zimbabwe's feared secret police, the
Central Intelligence Organisation (CIO), appears to have
received off-budget financing from Sam Pa, a businessman
based in Hong Kong; and how members of the CIO are directors
of a group of companies, Sino Zimbabwe Development*,
registered in Zimbabwe, Singapore and the British Virgin
Islands.
Several well informed sources have told Global Witness Sam
Pa (AKA Antonio Famtosonghiu Sampo Menezes, Xu Jinghua and
Sam King) holds leadership positions in a network of
companies known as the Queensway syndicate. The syndicate
was the subject of a detailed study by the Economist in
2011. This study concluded that syndicate has a track record
of opaque 'resources for infrastructure' deals across subSaharan
Africa. Despite the official sounding names of its
companies, such as China International Fund and Africa
Development Corporation, the syndicate is largely owned by
private Hong Kong business interests.
Until recently some of the key companies, such as China
Sonangol International Ltd, were also partly controlled by a
leading Angolan politician, Manuel Vicente, the former head
of Angola's state oil company Sonangol. Finally, the
Economist highlighted that two companies in the syndicate,
China Sonangol International (S) Pte Ltd and CIF Singapore
Pte Ltd, are noted for an ethically dubious deal with the
Guinean military junta in 2009, signed just weeks after
security forces killed over 150 protestors and raped over
100 women in a stadium.
This briefing extends the Economist's analysis of the
Queensway syndicate's activities in Zimbabwe. Several
reliable sources within the secret police have passed
information to Global Witness demonstrating how Sam Pa
appears to have provided a significant sum of money, said by
one CIO document seen by Global Witness to be $100 million,
to the CIO. The same sources, corroborated by another source
with firsthand knowledge of the deal, also describe how Sam
Pa provided 200 Nissan pick-up trucks to the CIO. In return,
Sam Pa received diamonds and accessed business opportunities
in the cotton and property development sectors. As figure 1
shows we also use company registry records and sources
within the secret police to identify three Zimbabwean
directors (Gift Kalisto Machengete, Pritchard Zhou and
Masimba Ignatius Kamba) of Sino Zimbabwe Development in
Zimbabwe, Singapore and the British Virgin Islands who are
members of the CIO, and which we therefore believe to be
companies which are controlled in part by members of the
Zimbabwean secret police. Global Witness invited Sam Pa and
the directors of Sino Zimbabwe Development to comment on our
findings, and they have not done so.
There are three reasons why these developments are of
concern.
First, by its very nature any off budget financing for the
secret police undermines democratic processes and
institutions in Zimbabwe. Off budget funding subverts
civilian and democratic control of the CIO, and allows the
secret police to set, and fund, its own agenda. Second, Sam
Pa's likely financial support for the CIO may undermine
Zimbabwean democracy more directly.
According to two sources, one senior Zimbabwean government
official and one source within the CIO, the secret police is
engaged in 'Operation Spiderweb', covert activities designed
to discredit senior figures from the opposition Movement for
Democratic Change (MDC) including Prime Minister Morgan
Tsvangarai, Finance Minister Tendai Biti, and Industry
Minister Welshman Ncube. According to the single source
within the CIO Sam Pa's money was allocated specifically to
Operation Spiderweb. However, by their very nature, such
claims about secret intelligence agencies are difficult to
verify and should be treated with caution. Third, members of
the CIO have been repeatedly identified as perpetrators of
violence in the recent past, and therefore Sam Pa's apparent
material assistance may fund future human rights abuses in
the run up to the forthcoming election.
Anjin is likely part-owned and partcontrolled by the
Ministry of Defence
This report also revisits earlier Global Witness research
into a large diamond mining company, Anjin Investments (Pvt)
Ltd. Our last report established the partial control
exercised by figures from the Zimbabwean military, police
and Ministry of Defence over the firm's executive board.
This current briefing reports the results of research into
Anjin's ownership. Zimbabwean company records reveal that a
senior military lawyer in the Ministry of Defence holds 50
per cent of Anjin's shares. Together with factors such as
the presence of the Permanent Secretary of the Ministry of
Defence on Anjin's executive board, these company records
have led Global Witness to conclude that half of a large
diamond mining company is likely part-owned and partcontrolled
by the Zimbabwean Ministry of Defence, military
and police.
The MDC Finance Minister has stated that the Treasury has
not received any revenues from Anjin. Global Witness has
received copies of receipts from Anjin for payments to other
government bodies but not the Zimbabwe Revenue Authority and
we conclude that the Finance Minister's claim is plausible.
This leaves two possibilities: that Anjin has used revenues
earned so far to recoup significant capital expenditure, or
that revenues have been diverted to the company's part
owners in the military and police. Anjin is a large diamond
mining company. It claims to be the world's largest, and a
well informed industry observer has told us that, in terms
of size, Anjin could be "the next De Beers". If these claims
are true, then one explanation is that significant sums of
money could flow to the Zimbabwean military.
Key Recommendations
Global Witness believes that the activities of Sam Pa, Sino
Zimbabwe Development (Pvt) Ltd and Anjin Investments (Pvt)
Ltd should be investigated by relevant authorities to see if
their actions undermine Zimbabwean democratic institutions
or risk funding future human rights abuses and therefore
meet the threshold for being placed on targeted sanctions
lists.
The MDC Finance Minister, when discussing Anjin, feared that
"there might be a parallel government somewhere in respect
of where these revenues are going." This is a serious
accusation, with profound consequences for Zimbabwe's
Government of National Unity. The Southern African
Development Community (SADC) plays an active role in
mediating the political process in Zimbabwe. SADC
facilitators should give the problem of off-budget financing
of security forces a high priority in forthcoming
negotiations, with the aim of securing democratic, civilian
control over the budgets for the security services. It may
also be necessary for SADC to appoint an expert panel to
investigate these claims.
Reform of Zimbabwe's partisan security forces requires
democratic and civilian control of their budgets. Zimbabwe's
Government of National Unity (GNU) should pass legislation
banning serving and recently retired members of the
military, police, the CIO and other members of the security
services from control over, or beneficial ownership of,
mining companies.
Consumers should not buy diamonds originating from
Zimbabwe's Marange mines until they can be certain they will
not fund the Zimbabwean secret police, military and police.
Companies should conduct due diligence investigations into
the source of their rough diamonds. OECD member states
should ask the OECD to work with industry and other
interested parties to draw up supplementary guidance on how
supply chain due diligence could operate in the diamonds
sector.
1. Background
ZANU PF may use violence to win Zimbabwe;s next election,
due by 2013 ZANU PF, which for many years has been the
governing party in Zimbabwe, has repeatedly used violence as
a political strategy. The fear of dissent, whether real or imagined, lay
behind the government's 'Gukurahundi' campaign from 1982 to
1987, which killed an estimated 10,000 to 20,000 people.
During the last dozen years partisan security forces and
ZANU PF supporters used intimidation and abuses in the 2000,
2002 and 2008 elections.
The violence in 2008 used against civil society and
supporters of the opposition Movement for Democratic Change
(MDC) was particularly intense. The organized campaign
involved widespread and systematic abuses, which "led to the
killing of up to 200 people, the beating and torture of
5,000 more, and the displacement of about 36,000 people,"
and was perpetrated by, among others, members of the ZANU
PF-controlled security forces.
Security forces sought off-budget sources of funding after
the MDC took control of the Ministry of Finance
After the 2008 election, and following mediation by the
Southern African Development Community (SADC), a Government
of National Unity was formed. ZANU PF retained control of
key security ministries such as the President's Office
(responsible for the Central Intelligence Organisation),
Defence, and the Ministry of Mines and Mining Development.
The MDC took control of the Prime Minister's office and the
Ministry of Finance. The loss of control of the Ministry of
Finance set the stage for a behind-the-scenes struggle for
sources of off-budget financing for partisan security
forces, loyal to President Mugabe and ZANU PF.
For example, as can be seen from the letter below, in 2010
the Commissioner General of the Zimbabwe Republic Police
(ZRP), using the name of Security Self Reliance Enterprises
(Pvt) Ltd, applied for a concession in the diamond mining
fields of Marange. While this particular request was not
granted, two other joint venture companies were established:
- Sino Zimbabwe Development (Pvt) Ltd, with interests in
diamonds, cotton and property, was established in 2009.
Section 2 of this report sets out evidence to support our
belief that this company was set up to provide offbudget
financing for Zimbabwe's secret police, the Central
Intelligence Organisation (CIO).
- Anjin Investments (Pvt) Ltd, a large joint venture diamond
mining company, was established in December 2009. Although
Anjin was the subject of Global Witness' last briefing on
Zimbabwe, in section 3 we expand our analysis of the company
and set out evidence to support our belief that Anjin was
set up to provide off-budget funding for the Zimbabwean
military and police.
Box 1: The Queensway syndicate
The Queensway syndicate is a network of over sixty companies
led by private business interests in Hong Kong, many of
which have their company address registered at 10/F Two
Pacific Place, 88 Queensway, Hong Kong. The primary
shareholders of the syndicate are two individuals: Ms. Lo
Fong Hung and Ms. Veronica Fung Yuen. Mr. Sam Pa (AKA
Antonio Famtosonghiu Sampo Menezes, Xu Jinghua and Sam King)
is also widely reported to hold leadership positions in a
number of the companies within the Queensway syndicate.
Together these individuals and companies have collaborated
with a number of different governments and entities across
Africa and elsewhere, including most prominently, with the
Angolan national oil company Sonangol.
The syndicate is known both for its opacity and, on
occasion, its ethically dubious approach to doing business.
In Guinea, China Sonangol International (S) Pte Ltd and CIF
Singapore Pte Ltd, signed a multi-billion dollar resourcefor
-infrastructure11 deal with the military junta on 10
October 2009, just weeks after government forces had killed
over 150 protestors, and raped over 100 women, in a sports
stadium. While the contract had been in negotiation before
the massacre, the signing of the deal, which the Economist
reported included the subsequent transfer of US $100 million
to the junta, had the effect of giving material aid to a
pariah regime which shortly afterwards was placed under
African Union and European Union sanctions.
The syndicate specializes in resource-for-infrastructure
deals in which the right to exploit natural resources are
granted in exchange for the building of railways, housing,
roads and public utilities. While much of its revenue comes
from Angolan oil contracts, the syndicate has been known to
operate in a number of other countries, including Argentina,
Congo-Brazzaville, Guinea, Singapore, Tanzania, the United
States of America, Venezuela and Zimbabwe.
AfricaFocus Bulletin is an independent electronic
publication providing reposted commentary and analysis on
African issues, with a particular focus on U.S. and
international policies. AfricaFocus Bulletin is edited by
William Minter.
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