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Concerns over diamond smuggling in Zimbabwe

Diamonds could undermine justice, democracy and development in Zimbabwe argues the Centre for Research and Development.

Three years after the commencement of commercial diamond mining in Marange and five months after the Kimberly Process Certification Scheme removed an international ban on Marange diamonds; there are fears that diamond mining operations in Marange could undermine the work of the Inclusive Government, democratic transition and sustainable economic development in Zimbabwe.

Mugabe, Zanu PF and the Chinese are busy looting diamonds from Marange
Mugabe, Zanu PF and the Chinese are busy looting diamonds from Marange

Whilst there is no doubt that all the four mining companies doing business in Marange have brought in state of the art mining equipment and have established infrastructure that meets the KP minimum standards, fears abound that Marange diamonds could be used to undermine democracy in Zimbabwe through opaque business deals involving the country’s political elites and their business-cum-political allies in Asia and the Middle East.

Diamonds may also be retarding genuine economic development by over-reliance on one commodity and through failure to invest diamond revenues wisely in other sectors of the economy. All the four mining companies in Marange, namely Anjin Investments, Marange Resources, Mbada Diamonds and Pure Diamonds have now been certified compliant by the Kimberly Process Certification Scheme.

Following the KP green light, the Ministry of Finance announced that it is anticipating USD600 million from diamonds in 2012 whilst the Minister of Mines, Dr. Obert Mpofu said Zimbabwe can earn as high as USD2 billion from diamonds annually. However events unfolding on the ground suggest that a sizable percentage of diamonds coming out of Marange is smuggled out of the country by syndicates.

On 17 March 2012, an Israeli pilot was arrested at Harare International Airport whilst trying to smuggle out of Zimbabwe 1300 pieces of diamonds estimated to be worth USD$2.43 million. According to the state controlled Herald Newspaper, Mr Shmuel Kainan Klein is employed by CAL Airlines of Israel as a pilot and has a house in Borrowdale, Harare.

“The diamonds in question were taken to the Minerals Marketing Corporation of Zimbabwe for assay and weighed 1,7 kilogrammes with a caratage of 8486,66 valued at $2, 437 708.24”, added the Herald. Mr Klein (58) was immediately granted $5000 bail and remanded out of custody.

The volume of diamonds Mr Klein was trying to smuggle could not have been obtained from artisanal miners who are now finding it hard to continue their operations in Marange. A recent visit to Marange by civil society groups and the media proved that security in Marange is water tight with hands free security cameras and high perimeter fences around all the mining concessions.

Chances of anyone tempering with the security cameras in place are very slim given that there are several security cameras which are monitored through CCTV. Various systems are in place to ensure that everyone is under some sort of surveillance. From Marange diamonds are flown to company headquarters in Harare where the diamonds are stored in a vault before being auctioned.

Security at the storage centers is also reportedly water tight It is therefore baffling that diamonds of large quantities continue to evade the Kimberly Process Certification Scheme despite the certification of all diamond mining companies in Zimbabwe. The attempted smuggling of diamonds by Mr. Klein raises a lot of questions on the implementation of the Kimberly Process minimum standards in Zimbabwe.

It is also crucial to evaluate the implementation of the Kinshasa agreement reached between Zimbabwe and the Kimberly Process in Kinshasa in November 2011 in light of the continuation of massive smuggling of diamonds.

Proponents of the Kinshasa agreement argued then that if Zimbabwe was allowed to export her diamonds, there will be improved accountability and a reduction in illicit trade involving Marange diamonds, blamed by civil society and progressive governments within the KP for undermining the scheme.

However, questions still abound whether government continues to smuggle diamonds in spite of the KP approval for exports. Others argue that as long as state diamond regulator, Zimbabwe Mining Development Corporation and its sister company Minerals Marketing Corporation of Zimbabwe remain on EU and US sanctions, there is no way diamond smuggling from Zimbabwe can end.

However the manner in which the diamonds were being smuggled and the fact that the suspect was searched, arrested and brought to court suggests that it was most likely a criminal adventure involving untouchable individuals and entities and has nothing to do with the operations of central government.

But given the sensitivity of diamonds, not only in Zimbabwe, but also in other diamond producing countries mainly due to the potential revenue they contribute to the fiscus and as a way of protecting the image and integrity of the Kimberly Process, one would have expected Mr. Klein to be remanded in custody whilst full investigations are taking place.

“Shamuel Kainan Klein was not formally charged when he appeared before regional magistrate Mr Clever Tsikwa” and was remanded out of custody to March 28 on USD5000, added the Herald.

The swiftness with which the Israeli diamond dealer was granted bail is troubling in the extreme. In light of the large consignment involved, it cannot be ruled out the suspect will take the opportunity granted by the courts to interfere with accessories and or witnesses to the case. It is also likely the assistance may be provided by the same cartels for the smuggler to leave the country to avoid trial.

This is not the first time pilots have been implicated in smuggling Marange diamonds. In 2009, the Centre for Research and Development did research in Mozambique which revealed that pilots of passenger planes flying out of Mozambique were part of the syndicates involved in smuggling Marange diamonds.

This was not surprising at all given that there was a thriving market for diamonds smuggled from Marange in the town of Vila De Manica in Mozambique, less than 30KM from the Zimbabwean border. The diamonds were bound to leave Mozambique anyway since Mozambique does not have cutting and polishing factories.

The existence of a thriving illicit diamond market in Mozambique was enough sign that Mozambique was a safe haven for cartels, including pilots, involved in illicit diamond deals. Pilots flying out of Harare to the Middle East and Asia have also been implicated in diamond smuggling syndicates.

In the case of Mr. Klein he is said to have intended to leave for South Africa on a South African Airways flight number SA23. “It is alleged he was clad in a pilot’s uniform when he presented himself to the passenger screening point which was manned by a Civil Aviation Authority security officer Wendy Gomo”, reports the herald.

He is also said to have arrived aboard a South African flight as a passenger but did not have his passport stamped as he disguised himself as a crewmember. It is not clear whether the SA crew knew of Mr. Klein’s mission and whether they assisted him to misrepresent himself to the Zimbabwean authorities.

In April 2011 two Indians were arrested in possession of 9.7KGs of diamonds which they claimed had been smuggled from Zimbabwe. These sad developments cast a dark shadow on efforts by the Inclusive government to maximize revenue collection from diamonds.

Finance Minister Tendai Biti presented a budget of USD4 billion for 2012 of which USD600 million is expected to come from diamonds. However, with the current level of opaque deals involving Zimbabwean diamonds it is less likely that the target of USD600 will be reached.

More so, the fact that an individual can arrive in Zimbabwe and smuggle diamonds worth USD2.43million within a few hours leaves several unanswered questions on how much is Zimbabwe losing to cartels and dealers monthly and how much difference this lost revenue can make in the lives of ordinary Zimbabweans whose life expectancy is at 33.5 for women, the lowest in the world.

The low life expectancy is attributed to a poorly funded health delivery system, high unemployment rate estimated at above 70% and widespread poverty.

The continued theft of large quantities of diamonds by dealers and cartels is a threat to national security and may undermine the work of the inclusive government in Zimbabwe. There is concern that powerful quasi state institutions may be clandestinely selling diamonds to starve the Ministry of Finance whose plea for diamond revenue transparency has so far not been heeded.

In its report on the involvement of the security sector in diamond mining in Zimbabwe, Global Witness expressed concern that this may undermine democracy by enabling ‘securocrats to set and fund their own agenda, with little control or scrutiny exercised by elected politicians’.

Towards a Diamond Act

Zimbabwe is in the process of crafting a Diamond Act to address the existing loopholes. However, much depends on the political will to ensure that every diamond is accounted for and that diamond contracts are negotiated in a transparent manner which involves several stakeholders such as Parliament, Cabinet and civil society. Mining licenses that are obtained corruptly will always lead to opaque business practices that do not benefit the ordinary citizen.

Center for Research and Development believes the proposed Diamond Act should address the following

• Clearly defined rules of investor identification and contract negotiations

• A well defined, transparent and accountable system of marketing diamonds

• Harmonization of government ministries and departments dealing with diamonds

• Eligibility of persons to serve on the mining boards

• Consultation with affected communities and compensation of families in cases where relocation is to take place with special reference to the Vancouver Declaration on Human Settlements

• Clearly defined obligations of mining companies to the communities where they operate

• A legal framework for artisanal / small scale miners to curb both human rights abuses and illicit diamond deals that do not benefit the fiscus

• Upholding the rule of law and respect for human rights in the diamond supply chain

• Beneficiation / value addition

• Establishment of the School of Diamonds to develop local expertise in diamond mining, cutting and polishing

• Minimum and maximum sentences for people caught in illegal possession of diamonds

• Environmental protection

Centre for Research and Development

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