The United States government, which has imposed stiffer sanctions on Zimbabwe following its disputed presidential elections in July, was made aware of this operation on several occasions but has taken no action. Leading to speculation that this might be one of the tactics Washington had resorted to to oust Mugabe.
African Management Service Company (AMSCO) which is jointly owned by the United Nations Development Programme (UNDP) and the International Finance Corporation (IFC), the private sector arm of the World Bank, has been providing assistance to River Ranch Diamond Mine which is owned by Solomon Mujuru, the former commander of the Zimbabwean army and husband of vice-President Joyce Mujuru, since November 2004.
Mujuru is a member of the ruling party’s politburo and is one of the nearly 130 Zimbabweans on the United States targeted sanctions list. The list also includes more than 30 companies or properties owned by persons linked to Mugabe.
The United States imposed targeted sanctions on Mugabe’s top lieutenants under its Zimbabwe Democracy and Economic Recovery Act (ZIDERA) which was passed in 2001 " to provide for a transition to democracy and to promote economic recovery in Zimbabwe". The sanctions, however, only became effective on March 7, 2003.
ZIDERA was aimed at supporting "the people of Zimbabwe in their struggle to effect peaceful, democratic change, achieve broad-based and equitable economic growth and restore the rule of law".
The sanctions are administered by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury. OFAC says the sanctions prohibit US persons or anyone in the United States from engaging in any transaction with any person, entity or organisation undermining democratic institutions and processes in Zimbabwe, or any persons on the specially designated nationals list or immediate family members of these designated individuals.
It says prohibited transactions include exports, imports, trade brokering, financing and facilitation as well as most financial transactions.
The regulations also define US persons as: "Any United States citizen, permanent resident alien, entity organised under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States."
ZIDERA specifically mentions some of the multilateral development banks that the US has influence over as the World Bank, the IFC, the African Development Bank and the African Development Fund.
AMSCO, which is registered in the Netherlands but has its operational headquarters in Johannesburg, lists the African Development Bank as one of its shareholders. It is also providing management support to Bindura Nickel Mine and Shearwater, a venture tourism company.
Mujuru took over River Ranch Diamond Mine in April 2004 when he was invited to join by Saudi Arabian billionaire Adel Abdul Rahman al Aujan who had taken over the mine from Bubye Minerals, a company owned by Michael and Adele Farquhar. The Farquhars took River Ranch to court but lost the ownership battle in 2006. They have appealed against the ruling but the appeal has so far been blocked.
The mine was discovered in 1971 by Kimberlitic Searches, a subsidiary of De Beers, but it forfeited its rights in 1991 following a wrangle with the Zimbabwe government over the marketing of the gems. It was taken over by Auridiam, an Australian company which entered into a joint venture with a Canadian company, Redaurum.
The mine was officially opened in November 1995 but ceased operations in February 1998 after Redaurum decided to pull out because of poor diamond prices on the world market. It was taken over by Bubye Minerals as a going concern. Bubye Minerals entered into an agreement with Aujan under which Aujan’s Rani International would buy out the Australian and Canadian shareholders.
Aujan took over the mine on 26 April 2004 after falling out with the Farquhars and invited Mujuru and Tirivanhu Mudariki to join as directors through their company Khupukile Resources.
AMSCO started assisting the mine in November 2004 by providing five professionals who included the managing director, the chief financial officer and the chief of security.
AMSCO managing director Ayisi Makatiani says they came in following a request from the mine for assistance but has so far refused to say who from River Ranch invited his organisation.
The man seconded as the managing director of River Ranch was George Kantsouris a South African who was present at the board meeting at which Mujuru and Mudariki were brought into the company. According to the minutes of that meeting Kantsouris was to represent Rani International. Rani International has operations in South Africa and Mozambique.
What has been baffling has been AMSCO’s interest in the mine because it was barred from selling its diamonds, at least up to the end of last year, because of the ownership dispute.
Makatiani and his assistant Eden Brandwein have refused to say how much AMSCO has invested in River Ranch and what it is getting out of the investment since the mine was not trading.
River Ranch legal adviser George Smith said the company had started trading this year but this could not be verified with the Minerals Marketing Corporation of Zimbabwe which is responsible for marketing diamonds.
The mine has officially been operating since June 2006 and employs more than 300 people.
The Farquhars and their lawyer Terrence Hussein have questioned the financial and technical support given to the mine in view of ZIDERA but they have never received any response.
They have written to former United States Ambassador to Zimbabwe Christopher Dell, who left the country last year, as well as Secretary of State Condoleezza Rice.
Bubye wrote to Rice in June last year: "Our complaint is as follows: The World Bank which funds the IFC, which funds AMSCO, is providing funds and assistance to River Ranch Limited in circumstances where the mine was acquired using unlawful means.
"The World Bank is providing financial assistance to River Ranch Limited, whose shareholder is Ret. General Mujuru, a specified person for targeted sanctions in terms of the Zimbabwe Democracy and Economic Recovery Act. This is compounded by the fact that in terms of the said Act, members appointed by the United States Government are to veto any funding to such persons…………..
"We wonder whether the members appointed by the United States are aware that they are breaking your own country’s laws and are also funding the breakdown of law, order and property rights in Zimbabwe."
Bubye never received an official response though its lawter talked on several occasions with a Dan Fogerty from Rice’s office.