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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

++++++++++++++++++++++end editor's note+++++++++++++++++

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:

  1. 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.
  2. 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.
  3. 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.
  4. Please see Global Witness' previous report on Anjin Investments: 'Diamonds: A Good Deal for Zimbabwe?'
  5. 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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