Peter Hain Speech on Zimbabwe Diamond trade 2012

In December 2000 the UN General Assembly adopted Resolution A/RES/55/56, supporting the creation of an international certification scheme for rough diamonds.

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This led to the ‘Kimberley Process’, a mechanism for negotiations, and then the international treaty banning ‘blood diamonds’ established under United Nations Security Council Resolution 1459 in January 2003. 

I put a great deal of effort into achieving this when I was British Minister for Africa because illegally traded ‘blood diamonds’ were paying for arms which fuelled conflicts in Angola and the Democratic Republic of Congo, and also in Sierra Leone where these very arms were used against British troops by terrorists. Now we are seeing a different kind of ‘blood diamond’ from Marange in Zimbabwe and it is high time that the Kimberley Process and the World Diamond Council stopped turning a blind eye to serious abuse with an anti-democratic, violent purpose. 

The history of Zimbabwe has been punctuated with violence. 

Cecil Rhodes’ exercise of colonial power in southern Africa was built on a monopoly of violence. 

Ian Smith’s racist Rhodesian regime used violence against opponents demanding democracy until it was swept away by the liberation war which I supported as a British anti apartheid leader at the time. 

Killings, torture and beatings of ZANU-PF opponents, and massive human rights abuses, accompanied the elections of 2000, 2002 and 2008. Mugabe’s regime specialised in stealing these elections by violence. 

My fear is that Zimbabwe’s forthcoming election, due by June next year, may be no different despite the Government of National Unity which has given some relief to its beleaguered, suffering nation. 

In that Government the Movement for Democratic Change has been given the Ministries of Finance, Education, and Health among others. ZANU-PF retained the Ministry of Defence, the Ministry of Mines, and the Office of the President, home of Zimbabwe’s feared secret police – the Central Intelligence Organisation (or CIO). 

But, since the MDC took control of the Ministry of Finance and clipped the wings of the Reserve Bank, the security mafia loyal to President Mugabe has been on a hunt for sources of off-budget finance. 

They have now found these sources: thanks to an accident of geology and the failures of the international community. In 2006 diamonds were found in the Marange fields in eastern Zimbabwe. The area holds one of the world’s richest deposits of alluvial diamonds. The gems lie close to the surface of the ground, making them easy to collect by hand. During 2008 the military deployed soldiers and helicopter gunships during the clearance of thousands of small scale miners from these Marange diamond fields, killing and wounding many in the process. 

Nearly every soldier in Marange is involved in one way or the other in illegal mining. Soldiers have formed syndicates of diamond panners whom they then protect and escort. Many of the diamonds are smuggled into Mozambique, to the town of Vila de Manica only twelve miles from the Zimbabwe border. It is crawling with illegal dealers from countries like Lebanon, Sierra Leone, Guinea, DRC, Nigeria and Israel, most living in smart houses bristling with barbed wire and CCTV cameras, and guarded by armed men. Zimbabweans arrive daily in Vila de Manica to sell their stolen stones, admitting they do so with the help of army syndicates and senior ZANU-PF politicians. 

Global Witness deserves our thanks for its impressive report, Financing a Parallel Government?, which has unearthed devastating evidence on Zimbabwe’s blood diamond trade. 

In Zimbabwe, mineral rights are vested, not in the state, but with the President. So Robert Mugabe then granted a series of mining concessions. 

One was to Canadile, a company which has since collapsed amid allegations of corruption, including against Obert Mpofu, the ZANU-PF Minister of Mines. Mpofu is a man on a £1200 monthly salary but is now rich enough to spend over £13 million on buying a bank. 

Another was to Mbada Diamonds. Its Chief Executive Officer, Robert Mhlanga, a Mugabe crony, is developing a £20 million mansion in Ballito, Kwa Zulu Natal. 

Behind Mbada Diamonds and up to its neck in its shady start up is a South African scrap metal company, New Reclamation and its former Chief Executive Officer, South African businessman David Kassell. 

South African business interests were heavily involved in mining diamonds in Marange or profiting from their irregular sale in what the South African Broadcasting Company last October reported as a: ‘blatant disregard for the rule of law and continued plundering of the diamond fields in Eastern Zimbabwe. New evidence suggests that South African firms have muscled in, and are mining there illegally.’ In 2011 twenty five per cent of the shares of Mbada were transferred to a mysterious network of shell companies based in Mauritius, Hong Kong and the British Virgin Islands. These companies are connected to Robert Mhlanga, a retired Air Vice-Marshal in the Zimbabwean Air Force. The use of secrecy jurisdictions and tax havens should raise a red flag for any legitimate businesses trading with Mbada. They should be asking the question – who are the real beneficial owners of Mbada? We’ve seen with Libya’s Colonel Gadaffi how banks, lawyers and businesses colluded in illicit financial outflows of national wealth – I fear that this is being repeated in Zimbabwe. 

A third mining concession was to Sino Zimbabwe Development and a fourth to Anjin Investments. Sino Zimbabwe Development purports to be a joint venture between the state-owned Zimbabwe Minerals Development Corporation and an investor, Sam Pa, a businessman from the Queensway syndicate, a network of companies based in Hong Kong, Singapore and Angola. 

Sam Pa and the Queensway syndicate were the subject of a recent feature in the Economist which raised two issues in particular. First, the Queensway syndicate’s amoral deal in Guinea. Just one month after security forces massacred 150 protestors in a stadium the syndicate, signed a multi-billion dollar deal with the Guinea junta – effectively providing a financial lifeline to that pariah regime. Second, the Economist alleged that the syndicate was buying Angolan oil ridiculously cheaply and selling it on at market prices to Chinese oil companies – suggesting the Angolan people may have been cheated out of billions of dollars. 

In Zimbabwe several sources suggest that Sam Pa gave the secret police (the CIO) a large sum of money – which one CIO document places at 100 million US dollars – and over 200 Nissan pick-up trucks. In return for this apparent assistance, Sino Zimbabwe Development was granted opportunities in Zimbabwe’s diamond and cotton sectors. 

Sino Zimbabwe Development was set up and registered in Zimbabwe and Singapore. The Singaporean company is in turn part-owned by Strong Achieve Holdings, a company registered in the British Virgin Islands, which is controlled by someone believed to be a member of the Zimbabwean secret police. This again illustrates the highly disreputable role of the British Virgin Islands in facilitating murky dealings. 

Sino Zimbabwe Development is ostensibly a legitimate business. Yet its three Zimbabwean directors – Gift Kallisto Machengete, Masimba Ignatius Kamba and Pritchard Zhou – are all believed to be members of the CIO and the firm is in reality a front company for the Zimbabwean secret police. 

Anjin Investments purports to be a joint venture between a previously unknown Zimbabwean firm Matt Bronze and a Chinese construction company. In reality Anjin’s company secretary is Brigadier Charles 

Tarumbwa – who is also the judge advocate general at the Ministry of Defence, and a man on the EU sanctions list for orchestrating violence. Anjin’s executive board includes Martin Rushawaya, the Permanent Secretary of the Ministry of Defence, and serving and retired military and police officers. 

Anjin claims to be the biggest diamond mining company in the world and has been described by informed observers as having the potential to be the ‘next De Beers’. In reality, Anjin is a front for the Zimbabwean military. 

Nor does this shadowy activity involve only diamonds. On 27 June 2012 the Russian business newspaper Kommersant reported that Zimbabwean officials had approached Russian companies with a prospective platinum deal in exchange for attack-helicopters. A Russian joint venture, named by Kommersant as involved in the deal, is called Russ Zim and Rushchrome. The deal is ostensibly with the parastatal Zimbabwe Minerals Development Corporation. However, Anjin’s Brigadier Charles Tarumbwa is company secretary of the Russian joint venture, and the chairman of its executive board is Martin Rushawaya, Permanent Secretary at the Ministry of Defence who is on the board of Anjin. Again, the planned deal seems to have been cooked up by the Zimbabwean military-industrial complex. 

Why is this important? 

First, the Zimbabwean military and secret police are known for their uncompromising support for ZANU-PF. It has even been alleged that money from Sam Pa has been allocated towards a CIO smear campaign against MDC Prime Minister Tsvangirai called Operation Spiderweb. If the secret police have access to off-budget sources of funding they can set, and finance, their own agenda in flagrant breach of democratic and civilian control of the security forces budget. 

Second, Zimbabwe desperately needs tax revenues. Life expectancy at birth in Zimbabwe is 47 for a man, 50 for a woman. The Government is slowly rebuilding the education and health infrastructure after the devastation wrought by years of misrule and the hyperinflation of 2008. Out of a budget of 4 billion US dollars the MDC Finance Minister Tendai Biti was promised US$600 million in diamond revenues by the Ministry of Mines. Yet he recently stated that Anjin had not paid one cent to the 

Zimbabwean treasury, adding that Anjin’s failure to remit diamond proceeds to the Consolidated Revenue Fund was in breach of the Constitution. Anjin claim that they paid some money to the ZANU-PF controlled Zimbabwe Minerals Development Corporation – yet none of this has yet reached the Finance Ministry’s consolidated revenue fund. Diamond revenues are being siphoned off when Zimbabwe needs teachers and nurses, not attack helicopters and secret police thugs. 

Third, there is a real risk that any money given by Sam Pa, Anjin and Sino Zimbabwe Development to the security forces will fund human rights abuses in the run-up to next year’s election. Let us remember that in order to cling on to power in the 2008 election soldiers, ZANU supporters, secret policemen and so-called ‘war veterans’ (a pseudonym for Mugabe thugs) killed 200 people, tortured and assaulted 5,000, and forced 36,000 more to flee their homes. 

What can the British government do? 

I urge the British government to engage with the Southern Africa Development Community facilitators to push the issue of security sector reform – and democratic and civilian control of their budgets – up the agenda in forthcoming negotiations. 

In the long term much more must be done to regulate the diamond industry properly. I feel very strongly that the Kimberley Process certification scheme – designed to stop the trade in blood diamonds – has failed to deliver on the original objectives we designed for it during my time as a Foreign Office Minister between 2000 and 2002. 

It has three weaknesses which have not been addressed. It does not cover polished gems, only rough diamonds. It only applies to crimes committed by rebel groups, not human rights abuses committed by governments like Zimbabwe’s. And it does not enforce its own rules properly – with the scheme found wanting when confronted with problems in Venezuela, Côte d’Ivoire and Zimbabwe. 

The Kimberley Process report on Anjin praises the modern security procedures of the company; it makes small recommendations to reduce the risk of theft and smuggling; and it thanks the Minister of Mines for his cooperation. Yet not once does it ask who owns Anjin! This is wilful blindness on the part of the Kimberley Process – a blindness that led member states, including the UK, acting through the EU – to authorize exports of Anjin diamonds. Let us be clear: Zimbabwean military controlled blood diamonds are now sold within the EU and almost certainly within the UK, appearing on wedding rings. 

It is time for jewellery companies to stop hiding behind the façade of the Kimberley Process and take responsibility for their own supply chains. Each company must ask: where do my diamonds come from, under what conditions are they mined and traded, and who benefits from their sale? This system, known in the jargon as ‘supply chain due diligence’, was first developed for the trade in conflict minerals sourced from the Democratic Republic of Congo. 

It should be adapted for the trade in diamonds and other gems, so that these resources can play a constructive role in the development of other countries at risk such as Zimbabwe, Afghanistan and Burma. I urge the British government to commission the OECD – which has played an important role in working out the details of such a scheme for the trade in gold, tin, tungsten and tantalum – to examine how it could be applied to precious stones such as diamonds. 

The European Union has placed many individuals and entities on restrictive measures: travel bans and asset freezes. One such entity is the Zimbabwe Minerals Development Corporation and its subsidiaries and joint ventures. Bizarrely, Anjin is not on the sanctions list – despite there being a more compelling case for its inclusion than other mining firms who are sanctioned by virtue of their association with the Zimbabwe Minerals Development Corporation. Recently, the Zimbabwean Deputy Minister of Mines stated that in Parliament that “Anjin is owned by the Chinese and the Government of Zimbabwe where ZMDC owns 10% and Zimbabwe Defence Industries owns 40% shareholding”. Given that both the Zimbabwe Defence Industries, wholly owned by the Ministry of Defence, and the ZMDC are already on sanctions lists, it seems to me that Anjin should be listed – not least on the grounds that it is a subsidiary of listed entities. 

Even stranger, in my view, is the news that at its Foreign Ministers Council on Monday the EU is proposing removing or suspending some or all targeted sanctions. To do this less than a year before Zimbabwe’s next election could be very damaging. I ask the Minister – are EU and UK officials really suggesting removing an asset freeze on someone like Didymus Mutasa – former State Security minister and accused by the EU of being “involved in murders in Manicaland”? Or lifting the EU travel ban on our old friend Brigadier Charles Tarumbwa who’s accused by the EU of being “directly involved in the terror campaign waged before and during the elections” and of being “in charge of torture base in Makoni West, Mutasa Central in 2007/2008” ? 

Instead of suspending sanctions at the behest of ZANU-PF, Monday’s EU Foreign Ministers meeting and the British government should argue for Sam Pa, Anjin and Sino Zimbabwe Development to be placed on the EU’s targeted sanctions list, and for the Zimbabwe Minerals Development Corporation to remain on the list. This should remain the case at least until the election – probably less than twelve months away – has passed off peacefully. 

By all means, if the intention is to wave a carrot and not just a stick, then suspend sanctions against some lower down the ZANU-PF command list – or examine the more calibrated strategy recommended by the International Crisis Group and being considered by Southern African countries. But make sure that substantive sanctions such as asset freezes on Anjin and Sam Pa are imposed so the security forces cannot build a war chest before the election. 

If off-budget financing of the security forces is not addressed immediately, then – regardless of what happens to Robert Mugabe – Zimbabwe could soon be ruled by a free-floating securocrat elite: unaccountable, unelectable and unstoppable. 

More than enough damage has been done already to the wonderful people of Zimbabwe, as a once-prosperous country has been reduced to penury. Let us ensure we do not perpetuate that terrible damage by premature suspensions of these highly targeted sanctions, especially on those responsible for the Marange blood diamonds, when the imperative is to impose more not less. 

The World Diamond Council and governments with a substantial diamond trade must also act to block blood diamonds from Marange or the whole diamond trade could well find itself tarnished and targeted by boycotts and protesters just as was threatened until it acted in 2000. – Peter Hain Blog

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Peter Gerald Hain is a British Labour Party politician, who has been the Member of Parliament (MP) for Neath since 1991, and served in the Cabinets of both Tony Blair and Gordon Brown. He was the Leader of the House of Commons from 2003 to 2005 and Secretary of State for Northern Ireland from 2005 to 2007 under Blair, and as Secretary of State for Work and Pensions and Secretary of State for Wales from 2007 to 2008 under Brown. In 2007, he ran for the Deputy Leadership of the Labour Party, coming fifth out of six candidates, although his failure to declare donations during this contest led to his resignation in 2008. He later returned to the Cabinet from 2009 to 2010 as Welsh Secretary, before becoming Shadow Welsh Secretary in Ed Miliband’s Shadow Cabinet from 2010 until 2012, when he announced his retirement from front-line politics.

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