Zimbabwe sanction busters

HARARE – Mining companies accused of using elaborate underground networks to transfers diamond revenue to evade US, EU

Zimbabwe’s state-owned mining companies are clandestinely involved in sanction-busting measures to receive controversial diamond revenue, as the United States keeps tabs and tightens screws on financial transactions linked to the embargoed local entities.

Companies involved include the Zimbabwe Mining Development Corporation (ZMDC) and the Mineral Marketing Corporation of Zimbabwe (MMCZ).

The companies have become more secretive in their shady diamond sales and movement of money after about $2-million deposited in South African-owned Stanbic Bank, which operates locally, was recently frozen by the US Federal Reserve working in collaboration with the country’s Office of Foreign Assets Control (OFAC).

The US imposed sanctions on Zimbabwe in 2001.

The European Union also has sanctions on Zimbabwe, which recently launched an anti-sanctions campaign.

The US recently froze Stanbic Bank accounts held by ZMDC and MMCZ, forcing Zimbabwe further into the underworld.

A letter written by ZMDC chairman Godwills Masimirembwa to Mines Minister Obert Mpofu, dated February 7 and marked "private and confidential", reveals that government is experiencing problems in receiving its diamond revenue and has resorted to gangland transfers through an elaborate sanctions-busting network.

The letter, titled Inflows to the Fiscus from Mbada Diamonds and Marange Resources for the January 2010 to February 2011, says it has been difficult for Zimbabwe to "move, transfer and receive" its diamonds proceeds due to US sanctions. It says serious bottlenecks are experienced during to use of long-winded sanctions-busting channels.

"Delays in receiving payments are being caused by the illegal sanctions imposed by the US against Zimbabwe. For no payment can be made direct to MMCZ, ZMDC and/or their subsidiaries due to the sanctions. If this is done America will confiscate the money through its OFAC. So ZMDC and MMCZ have to use circuitous methods to secure payment," Masimirembwa wrote to Mpofu.

"How is this confiscation effected? All USD (US dollar) payments by telegraphic transfer are routed through New York, America. ZMDC, MMCZ and their subsidiaries are under sanctions. So any telegraphic transfer to any of these entities will be blocked and retained by the US."

Masimirembwa said the US measures were wreaking havoc with Zimbabwe’s diamond sales and payment system. "Where it not for the delays caused by the illegal sanctions, ZMDC, MMCZ and their subsidiaries would receive payments within 48 hours of the conclusion of sales."

British-owned Standard Chartered Bank in Harare recently refused to process financial transactions involving ZMDC and China Uranium Corporation, saying the local company was on the sanctions list. The companies wanted to embark on uranium mining project, but the US thwarted the deal by blocking the transfers of capital.

The sanctions-busting issue came as the Sunday Times established that President Robert Mugabe and his cabinet continue to fight over the whereabouts of the $313-million which government has failed to account for. Mpofu claims he gave Finance Minister Tendai Biti $174- million in diamond revenue, but the Treasury boss denies this.

Senior ministers told Sunday Times there was a serious confrontation over this issue in the cabinet on Tuesday.

After a cabinet directive to reconcile the diamond revenue, Mugabe’s office and the cabinet met recently to resolve the dispute on the unaccounted for $174 223 814.88 from gross sales of $313 504 567.17.

Mpofu said the money was accounted. Biti said that was misleading. Biti ordered an audit, amid fears that Zanu-PF officials are salting the funds away in offshore bank accounts. – TimesLive