Wikileaks on Grace Mugabe and blood diamonds

The illicit diamond trade in Zimbabwe has led to the murder of thousands, enriched those close to President Robert Mugabe and been financed in part by the central bank, according to US documents on WikiLeaks

“In a country filled with corrupt schemes, the diamond business in Zimbabwe is one of the dirtiest,” according to a classified document dated in November 2008 from the US embassy in the country, released this week on WikiLeaks.

Mugabe was forced into a unity government with long-time rivals nearly two years ago and the state has been trying to boost the economy by winning approval for diamond sales through the Kimberly Process, a world monitor of the diamond trade.

In the classified documents that date from before the unity government came to power, US diplomats cite a well established British mining executive as saying those close to Mugabe, including his wife, “have been extracting tremendous profits” from the Chiadzwa mine in the eastern part of the country.

“The diamonds that are sold to regime members and elites are sold for freshly printed Zimbabwean notes issued by the RBZ (Reserve Bank of Zimbabwe),” one document from late 2008 cited British mining executive Andrew Cranswick as saying.

The stones dubbed “blood diamonds” because of the human rights abuses associated with their extraction, were then resold to foreign buyers, earning each of the members of the powerful group hundreds of thousands of dollars a month, it said.

Rights groups have accused Zimbabwe’s military of widespread atrocities in the diamond fields in 2008 as Mugabe’s previous government moved to stop thousands of illegal miners on the poorly secured fields in the east of the country.

Mugabe has accused Western countries of working to stop Zimbabwe from benefiting from its mineral resources.

Ministry of Mines secretary Thankful Musukutwa told a parliamentary committee earlier this year the government was complying with demands from diamond trade regulator Kimberly Process.

A separate document from January 2009 said that as the local currency became essentially worthless, the Zimbabwe military stepped more deeply into the diamonds trade, using hard cash from abroad to finance operations.

“This has not deterred the continued brisk diamond trade involving foreign buyers, including most prominently the Lebanese,” said a document from January 2009 citing a classified report from an unnamed US political officer.

Just before the power sharing government was installed, the military intensified its control over the diamond fields, aiming to gain as much money as possible, it said.

The government deployed soldiers at the diamond fields in Marange in 2008 to seal off the area and clamp down on illegal mining, but rights activists say this resulted in serious rights abuses by the army.

Villagers were uprooted and murders increased, the classified US documents said.

A classified document cited a village chief as saying the government had relocated as many as 25,000 villagers in an attempt to secure more money.

Zimbabwe is now struggling to sell its Marange diamonds after the Kimberley Process barred its members from dealing in the stones, saying their certification by global regulators did not guarantee they were free from human rights abuses. (Read Full leaked document below)

document

C O N F I D E N T I A L SECTION 01 OF 05 HARARE 001016

SIPDIS

AF/S FOR B. WALCH
DRL FOR N. WILETT
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
STATE PASS TO USAID FOR E. LOKEN AND L. DOBBINS
STATE PASS TO NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN

E.O. 12958: DECL: 11/12/2018
TAGS: PGOV EMIN ASEC PHUM ZI

SUBJECT: REGIME ELITES LOOTING DEADLY DIAMOND FIELD

REF: 2007 HARARE 319

Classified By: Ambassador James D. McGee for reason 1.4 (d)

1. (C) The CEO of a British mining company described to us how high-ranking Zimbabwean government officials and well-connected elites are generating millions of dollars in personal income by hiring teams of diggers to hand-extract diamonds from the Chiadzwa mine in eastern Zimbabwe. They are selling the undocumented diamonds to a mix of foreign buyers including Belgians, Israelis, Lebanese, Russians and South Africans who smuggle them out of the country for cutting and resale elsewhere. Despite efforts to control the diamond site with police, the prospect of accessible diamonds lying just beneath the soil’s surface has attracted a swarm of several thousand local and foreign diggers. The police response has been violent, with a handful of homicides reported each week, though that number could grow as diggers arm themselves and attract police and army deserters to their ranks. END SUMMARY

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High-Ranking Officials Trading Diamonds
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2. (C) On November 6, poloff met with Andrew Cranswick, the CEO of African Consolidated Resources (ACR), the publicly-traded British firm that had its Chiadzwa diamond claim in the Marange district of Manicaland seized by the government parastatal Minerals Marketing Corporation of Zimbabwe (MMCZ) in 2006 (reftel). According to Cranswick, there is a small group of high-ranking Zimbabwean officials who have been extracting tremendous diamond profits from Chiadzwa. Cranswick said that RBZ Governor Gideon Gono, Grace Mugabe, wife of President Robert Mugabe, Vice President Joyce Mujuru, Mines and Mining Development Minister Amos Midzi, General Constantine Chiwenga and wife Jocelyn, CIO Director Happyton Bonyongwe, Manicaland Governor Chris Mushowe, and several white Zimbabweans, including Ken Sharpe, Greg Scott, and Hendrik O,Neill, are all involved in the Marange diamond trade.

4. (C) Econ specialist also met with Manatsawani Mutasa, a ZANU-PF Central Committee member and Manicaland resident, who added that Justice Minister Patrick Chinamasa, Women’s Affairs Minister Oppah Muchinguri, and Sabina Mugabe-sister of President Mugabe–have also been profiting from the purchase and sale of Chiadzwa diamonds.

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How the Chiadzwa Diamond Trade Works
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5. (C) The GOZ possesses the diamond mining rights to Chiadzwa, but the Zimbabwe Mining Development Corporation (ZMDC) does not do any extraction itself. The ZMDC brought in some mining equipment in 2006 after seizing the mining rights from ACR, but their efforts were minimal and soon halted altogether. According to Cranswick, all extraction is now being done by hand panners who merely sift the top meter of soil. Some of these panners operate in teams that sell

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their diamonds to representatives of the above-named officials and connected elites. Other panners are individual operators who merely sell to the highest bidder. Often the panners who are affiliated with a particular regime buyer, will only sell a portion of their diamonds to that person’s representative, holding back the remainder to sell for higher prices to foreign buyers offering hard currency.

7. (C) The diamonds that are not sold to regime members and elites, but instead are sold directly to foreign buyers, actually constitute the majority of the diamond trade in Chiadzwa. Cranswick said that around 85 percent of the diamonds extracted from Chiadzwa are sold directly to foreign buyers. Even so, he conservatively estimated that Mujuru, Gono and the rest were probably each making several hundred thousand dollars a month.

8. (C) Whether bought first by regime members or not, eventually the diamonds are sold to a mix of Belgians, Israelis, Lebanese (the largest contingent), Russians, and South Africans. A well-known buyer named Gonyeti fronts for Gono, as do two other buyers named Tendai Makurumidze and Takunda Nyaguze, according to Mutasa. Once sold to foreigners, the majority of the diamonds are smuggled to Dubai and sold at the Dubai Multi Commodities Centre Authority, a dedicated economic free-trade zone created in 2002 for the exchange of metals and commodities, most notably gold and diamonds. Although Zimbabwe is a participant in the Kimberley process, the diamonds from Chiadzwa are undocumented and therefore are not in compliance with Kimberley, which requires loose uncut diamonds to be certified.

He implicated Ernie Blom, president of South Africa’s Diamond Merchants Association in the illicit trade of Chiadzwa diamonds, and said that Blom had been known to boast of his involvement in illegal Zimbabwean diamonds. When asked why purportedly reputable diamond dealers would involve themselves in Chiadzwa, Cranswick said that the site was "massive" with tremendous profit potential that was attracting numerous buyers. One such group consisted of Russians who had recently bought US$500,000 worth of diamonds at an MMCZ auction, paying US$29/carat. They bought eight to ten carat rough diamonds, five to ten percent of which were gem quality.

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Diamond Trade a Violent Business
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10. (C) The diamond frenzy in Chiadzwa has led to hundreds and possibly thousands of homicides. Word of easy diamonds spurred a rush of Zimbabwean and foreign diggers to the area including Angolans, Congolese, Mozambicans, South Africans and Zambians, as well as diggers from as far away as Sierra

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Leone and Cote D’Ivoire Cranswick estimated there are currently around three or four thousand diggers swarming over the 70 hectare Chiadzwa site. The police have unsuccessfully tried to prevent the site from becoming overrun, and routinely use live fire to chase away diggers. Anyone trying to enter the area has to present a Zimbabwean national identification card with a registration number that ends in "75", signifying the person is a resident of the Mutare region of Manicaland.

WikiLeaks Document on Marange Diamond Fields

11. (C) During the first weekend of November, police killed at least five panners in Chiadzwa, according to the on-line newspaper Zimbabwe Times. While usually operating on foot with attack dogs, this time the police used a helicopter to shoot at panners. Passmore Nyakureba, a lawyer with the Zimbabwe Lawyers for Human Rights said, "This has become an everyday scenario. Up to five people die every week as a result of being shot at by police or after being bitten by dogs." Cranswick said that at the peak of the frenzy in 2007, up to a hundred panners were shot in a week.

12. (C) In response to aggressive police action, diggers began arming themselves with handguns and in some cases automatic weapons. They also formed loose gangs in an attempt to protect themselves as well as "claimed" areas. Cranswick said that some members of the police and army have deserted in order to join the digging, and they typically brought their firearms with them. Some former police even still wear their uniforms as they search for diamonds.

Police Corrupted; Community Destroyed
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14. (C) Cranswick maintained that local chiefs were on ACR’s side in its pending court battle to win back its claim. They realized that the "curse" of diamonds had wreaked havoc in the community. Children were no longer attending school, the environmental degradation was severe, lawlessness and
violence reigned, and the community was not benefiting from the resource. According to an independent weekly newspaper, three quarters of the schools in Marange, Buhera, and Chimanimani districts failed to open this term because teachers and students alike were digging for diamonds.

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What’s At Stake?
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17. (C) On October 27, Gono publicly declared that the Zimbabwean economy could be turned around by stemming losses caused by illegal mining at Chiadzwa. According to Gono, "A reliable estimate shows that US$1.2 billion per month would be realized from diamond sales in the country, enough to solve the economic challenges the country is currently facing." Cranswick said that while the estimate is probably exaggerated, Gono may be looking for a large one time dividend by selling a share of the mine or the mining rights to an outside investor. This would dwarf the relatively small profits he is now accruing from the mine.

18. (C) ACR has offered the government a deal in which ACR would take a 49 percent share of all diamond proceeds and give the rest to the GOZ, but Cranswick did not seem optimistic that the government would accept the deal.

19. (U) Murowa is a well-regulated mine operated by the British multinational mining giant Rio Tinto, which since 2004 has held a 78 percent share in the open-pit Murowa diamond mine in Zvishavane district, in southern Masvingo province. Murowa is a deep kimberlitic deposit that requires heavy machinery to extract the soil and rock.

20. (U) River Ranch is partially owned by retired General Solomon Mujuru (husband of Vice President Joyce Mujuru) and is located in Beitbridge in Matabeleland South. Mujuru gained a 20 percent stake in the mine at the expense of a local company, Bubye Minerals, which was pushed out to Mujuru’s benefit. Bubye Minerals contested the ownership change, but was thwarted by the Zimbabwean courts. It is unclear if Mujuru purchased his stake.

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COMMENT
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21. (C) In a country filled with corrupt schemes, the diamond business in Zimbabwe is one of the dirtiest. Mining in general remains the largest single source of foreign exchange, but the potential of Chiadzwa is being lost to Zimbabwean corruption. While Gono talks about using diamonds to stabilize the Zimbabwean economy, he would only do so if he thought he could personally make more in the process. At present, police trying to bring order to Chiadzwa are benefiting Zimbabwean officials who see the diamond field as a new source of illegitimate income; the people of Zimbabwe are seeing little return.

22. (C) It is also clear that Cranswick is a businessman trying to find any pressure point he can through which to leverage his own claim. At the same time, he sheds light on

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an industry that is enriching many of the same old corrupt Zimbabwean elite–and causing violence and deaths that so far have received little attention. END COMMENT.

MCGEE