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London MET Police investigating Zimbabwe officials for money laundering involving diamond revenues

By Staff Reporter

  • Zanu PF and government officials have been accused of siphoning diamond revenues to offshore accounts
  • The former Mining minister Obert Mpofu allegedly now owns a bank, newspaper house, housing properties and fleet of expensive vehicles
  • It is alleged that $500m has vanished from Mbada Diamond coffers
  • In a report by Parliamentary Committee on Mining in Zimbabwe in June 2013, Mbada diamonds alleged to have remitted $236m to Treasury-http://www.zimbabweelection.com/2013/06/25/diamond-mining-in-zimbabwe-the-chininga-report/#more-3644
  • Then minister of Finance Tendai Biti confirmed only receiving $41m.
  • Current minister of Mines Walter Chidhakwa alleged that  Zimbabwe diamond revenues are being lost to cartels
  • IMF has refused to plug Zimbabwe’s budget deficit because national debt remains outstanding and is not being serviced.
  • Zimbabwe had hoped “look-east” policy would provide the required lending needs but China has poured cold water on any chances of lending to Zimbabwe because of state corruption.

Government and ruling party officials used an intricate offshore syndicate to divert diamond revenue to buy themselves property and amass wealth, according to a leaked document send to the IMF by a group of whistleblowers.

 


Obert Mpofu
Obert Mpofu

The revelations give added weight to recent statements by current Mines Minister Walter Chidhakwa, who said diamond revenue was being lost through cartels.

The document names former Mines and Mineral Development Minister, Obert Mpofu, and the Chairman of Mbada Diamonds, Robert Mhlanga, as some of the players in the diamond revenue scam. Mpofu and Mhlanga are now joint owners of The Zimbabwe Mail, a local daily newspaper that they bought and re-established late last year.

Empire of properties

The paper operated briefly between 2010 and 2011 as the Mail and was reportedly owned by a group of powerful Zanu (PF) officials who abandoned the project due to viability problems. Mpofu, who has also since bought the Allied Bank and an empire of properties across the country, subsequently took over.

But this week he poured scorn on the claims. “That is nonsense. In any case, I am not ready to comment on issues that relate to mining as I am no longer there,” Mpofu, who is now Minister of Transport, told The Zimbabwean. He refused to comment further, despite being advised that some of the claims were personally directed at him.

Mhlanga had not responded to e-mailed questions sent through the Mbada corporate services unit by the time of going to press.

As we reported last week, the document also indicates that the London Metropolitan Police were investigating senior government officials for alleged money laundering and the purchase of top drawer real estate in the UK with money suspected to come from diamonds and other shady deals.

The Metropolitan Police promised to respond to questions from The Zimbabwean, but has not yet done so.

Shopping spree

The document says incredibly valuable mineral resources were handed over without public tender to a web of offshore companies, whose owners remain hidden behind nominee shareholders – pouring cold water on government’s claim that it was using these resources to pay off its debt to the IMF.

“Evidence suggests that Zimbabwe’s natural resources are financing South African real estate shopping sprees and top-end Dubai office space apparently used to carry out covert diamond deals,” states the document.

The group of investigators blamed Zimbabwe’s failure to service its IMF debt on the diversion of diamond proceeds by the cartel of diamond dealers. The IMF Executive Board suspended Zimbabwe’s voting rights in June 2003 due to the country’s failure to service its debt and poor policy implementation.

The report claims Mpofu unlawfully entered into partnership with Mbada Diamonds, allocating 50 percent of the stake in the mining firm to a South Africa-based company called New Reclamation Group (Pvt) Ltd. The company, according to the document, has no experience in gem mining.

No public tender

Reclamation was then partnering with the Zimbabwe Mining Development Corporation (ZMDC), a government establishment that holds 50 percent of the shares in Mbada and was incorporated in October 2009 to become the biggest mining concern at Marange.

The allocation of the shares, according to the report, was done without a public tender as required by the law. Mpofu appointed Mhlanga, President Robert Mugabe’s former pilot, as the Chairman of Mbada Diamonds by merely writing to the ZMDC.

A report compiled by the parliamentary committee on mining, which was headed by the late Edward Chindori-Chininga and presented to Parliament in June 2013, queried this action by Mpofu. Chindori-Chininga died in a car accident, described by many as mysterious, shortly afterwards.

Concession ballooned

The leaked report claims that Grandwell Holdings Limited, a company domiciled in Mauritius, holds Reclamation’s interest in Mbada. It adds that that in 2010, Transfrontier of Hong Kong, reportedly owned by Mhlanga and other shady proprietors, received about 50 percent of the Reclamation stake, a development that preceded the ballooning of the Mbada mining concession sevenfold.

The original Mbada concession area covered approximately 1,100 hectares of land, but, with Transfrontier’s entry, it went up to 7,540 ha, says the document, a development that “substantially further enhanced the life of the mine and expected production levels”.

Mhlanga’s real estate

“Once again, it appears that a privately-held shell company, rather than the Zimbabwe government, reaped a massive windfall at the government’s expense. Under normal commercial circumstances, one would expect the government to increase its own ownership stake in consideration for a substantial transfer of state mineral reserves,” says the report.

The investigators conclude that Mbada “is at least partially owned by none other than (the) government-appointed chairman, Robert Mhlanga” as it was a sister company of another venture called Liparm Corporation which they said the Mhlanga also owned.

“Liparm Corporation…is a South African company owned by Robert Mhlanga. It’s website (since modified to delete this reference) describes Transfrontier and Mbada as “sister companies” of Liparm,” says the report.

It adds that a business card listed one Dr R Mhlanga as the chairperson of Transfrontier International, who “through front companies, went on a South African real estate shopping spree, amassing some $20-25 million…of luxury residential properties within a matter of months” using the proceeds from the Transfrontier 25 percent stake in Mbada which “could be providing hundreds of millions of dollars to Transfrontier on an annual basis”.

“If Transfrontier is either a proxy for the government itself or for government officials, it cannot be permissible that it should continue to indefinitely benefit from such a valuable asset that should, by all rights, benefit the people of Zimbabwe,” reads the document. “This is especially important in the context of the government approaching the IMF and World Bank for new programmes, while potential revenues appear to vanish offshore”.

-The Zimbabwean

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