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Mugabe sucked into diamond saga
Dumisani Muleya, The Independent (Zimbabwe)
February 26, 2010

http://allafrica.com/stories/201002260585.html

President Robert Mugabe is caught in a sticky situation over the raging diamonds conflict, facing an explosive confrontation with the Reserve Bank and the Supreme Court. Official sources said Mugabe is sailing close to the wind on the volatile diamonds dispute after he went along with Mines minister Obert Mpofu's "unlawful" explanation that gemstones extracted from the contested Chiadzwa diamonds fields must be kept at the Minerals Marketing Corporation of Zimbabwe (MMCZ), not the Reserve Bank. The sources said Mpofu and officials at his ministry informed the president that the Kimberley Process Certification Scheme requires that diamonds be kept at the MMCZ as opposed to the central bank. Mugabe seems to have bought into this line which the Reserve Bank considers illegal in view of the recent Supreme Court ruling on the matter. The owners of the contested diamonds, Africa Consolidated Resources (ACR) plc, also say keeping the diamonds at MMCZ is "illegal" as it brazenly defies the Supreme Court ruling.

Chief Justice Godfrey Chidyausiku on January 25 ruled that the 129 400 carats of diamonds initially seized from ACR in January 2007 by MMCZ must be kept at the Reserve Bank until the finalisation of the appeal on the issue. ACR is fighting in the courts over the seizure of its diamond claims and gemstones and the issue is on appeal. The battle over the diamonds dramatically escalated last week after Mugabe, in an interview with ZBC on the eve of his birthday, entered the fray, defending Mpofu's actions considered "unlawful" by the Reserve Bank, ACR and the Supreme Court. Mugabe came out publicly suggesting Mpofu's position to keep the diamonds at the MMCZ is correct even though the Supreme Court has ruled that the diamonds must be surrendered to the central bank for safekeeping. Sources said this has angered Reserve Bank officials who are mostly Mugabe loyalists. It is also said the Supreme Court is anxious about the issue which has rule-of-law and contempt-of-court implications.

Mugabe in his birthday interview last week revealed that a significant number of diamonds were stocked at the MMCZ, an act which the Supreme Court and Reserve Bank consider unlawful. "I understand we have quite a number of diamonds piled up in the Minerals Marketing Corporation of Zimbabwe offices. They are the ones approved by the Kimberley Process, not the Reserve Bank," Mugabe said. ACR is upset by the latest snatching of its gemstones. The London Stock Exchange-listed miner has written a letter to the Reserve Bank complaining about the recent confiscation of its diamonds by police. ACR accused Mpofu in the letter dated February 15 of being involved in the seizure. It said Mpofu has been claiming that the Kimberley Process Certification Scheme requires that the diamonds must be kept at MMCZ and that keeping them anywhere else, including at the Reserve Bank, would be a breach of the Kimberley Process. "This is completely false," ACR charges in its letter to the Reserve Bank. "It is only documentation from the MMCZ that is required."

Following the Supreme Court ruling, the Deputy Sheriff attached diamonds from MMCZ and took them to the Reserve Bank. According to the Notice of Seizure and Attachment, the deputy sheriff delivered the diamonds to the Reserve Bank for safekeeping in line with the court ruling, but Assistant Commissioner Freedom Gumbo, accompanied by armed police officers, went to the central bank earlier this month and "illegally" seized the diamonds. "The actions of the police were clearly in contempt of court and unlawful," ACR wrote to the Reserve Bank. The company said it had complained to Commissioner-General Augustine Chihuri and other ministers over the issue. The Supreme Court said last week said the seizure of diamonds was illegal and in contempt of court. "If anyone has removed the diamonds from the Reserve Bank, he has done so unlawfully and in contempt of court," it said. "The diamonds must be returned to the Reserve Bank immediately in order to purge the contempt. Failure to do so should attract serious consequences." This leaves Mugabe and Mpofu in a tight spot.

The central bank on Monday told ACR lawyers dealing with the case that if the diamonds were to be returned to it for safekeeping, it would demand "total transparency" and would want the diamond valuation committee comprising the police, MMCZ, Ministry of Mines, ACR, deputy sheriff and itself to be involved in monitoring the return of the gemstones. It said it wanted this process because the diamonds which had been valued and sealed, but confiscated by police could have been tampered with. The fight over the ACR diamonds has compounded an already complicated situation sparked by the controversial granting of mining to Mbada Diamond Mining Company, which is a 50/50 joint venture deal between Zanu PF-linked tycoons and government. Mugabe has come out supporting Mbada in its fight with ACR, setting himself up against powerful colleagues in government who support ACR. Mbada, registered as Condurango Investments (Pvt) Ltd, was formed last year after the state-owned Zimbabwe Mining Development Corporation (ZMDC)'s wholly owned Marange Resources (Pvt) Ltd signed an agreement with South Africa's New Reclamation Group (Pty) Ltd. ZMC also signed another agreement with South Africa's Core Mining and Minerals (Pty) Ltd to extract gems in Marange diamonds fields. Mbada recently failed to sell 300 000 carats of diamonds due to the current storm over diamonds.

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