Does Zimbabwe Qualify for Acceptance by the Kimberly Process?

When I asked the Minister of Mines to declare to the Parliament of Zimbabwe the production and sales of diamonds from the Marange Diamond fields over the past 5 years he reported on the 27th July that these had reached over 11 million carats and had been worth just over US$200 million, of which US$174 million had been paid to the Treasury.

As these numbers were so patently false, I set out to find out for myself, just what the situation actually was. After three months of investigation I came to the conclusion that production and sales from Marange in 2010 had been worth up to US$4 billion and that the figures given to the House of Assembly represented just 5 per cent of that and that this was for 5 years production and sales!

I discovered that not only had the Minister failed to declare the number of carats actually mined but also that he had understated their value which had actually been nearly $70 a carat instead of $18.

When these facts were presented to the House in the subsequent debate, no-one inside the House or outside questioned my estimates. They attacked the proposal that we nationalise the diamond fields to gain control and to achieve transparency and accountability, they attacked the allegations of gross human rights abuse, but no-one, attacked the estimates.

In fact, last week at a pre budget workshop for Parliamentarians, the Minister admitted that production and sales could reach $2 billion a year, admitting for the first time the scope and size of real production and sales. This compares to the figures he gave in an earlier workshop which were quoted by a fellow Member of Parliament as being up to 600 000 carats a day. ACR gave a figure of 160 000 carats purchased in one day on the site in 2006 from vendors on the side of the road.

To my own satisfaction this indicates that Marange is one of the largest diamond discoveries in the history of the industry. Geologists who have studied the field intensively estimate that they contain between 2 and 7 billion carats of raw diamonds. These have a face value, if properly accounted for and sold in world markets of US$200 to $1400 billion dollars. Compare that to our national budget this year of just US$2,7 billion, national debt of US$9 billion and GDP of US$10 billion, or the national civil service wage bill of US$2 billion.

In any country, these numbers are so large that they would be significant; in Zimbabwe they are simply astounding. If properly accounted for and sold in open markets at world market prices, the fields could yield to the exchequer sufficient revenue for the Minister of Finance to repair all our hospitals, schools and roads. We could negotiate and pay our civil servants a liveable wage and retain scarce skills in all sectors. It would wipe out our current account deficit and enable us to service our debt obligations.

Over the past weekend the Minister was able to persuade the Countries involved in the supervision of the world markets for raw diamonds that Zimbabwe should qualify for membership of the Kimberly Club. They got a response that said 'yes' if you can comply with our standards for transparency and accountability.

My own view is that this qualified approval of membership of the Kimberly Club is premature. Not only is the above ample evidence that on both counts we fall far short of the standards required, but in addition there is the issue of whether or not we comply with all the other criteria laid down for membership. Forget the allegations about human rights abuse and slave labour, those sorts of issues play little role in the Club. Itís the possible use of these massive resources to undermine democratic States and the democratic basis of the Zimbabwe State that is critical.

There is now ample evidence that the people who control the diamond fields in Marange are linked to four main groups - senior figures in Zanu PF, senior figures in the Zimbabwe security establishment and a shadowy group of mafia style figures who operate on the edge of global diamond and illegal gun running substructures. The fourth shadowy group about which nothing is known are the Chinese Government related agencies operating on the fields using Chinese labour; this last group is also tied in with the Zimbabwe security establishment.

The existence of a 'parallel government' in Zimbabwe since the GPA was signed and the present transitional government was sworn in has been often suggested. The mystery is how the Zanu PF controlled Ministries in the present government are funding their activities? The allocation to the military in the present budget was a paltry $165 million, given the manpower levels in these security establishments (over 45 000 men and women) this is not enough to do much else but pay basic salaries at a very low level.

But if you travel about our towns and cities there is ample evidence of large luxury homes being built by officers linked to the local security establishment. Many of these would do Sandton proud. Then there is the obvious lavish lifestyles of those individuals linked to the mines - the Minister of Mines is known to have spent many millions of dollars on the acquisition of businesses, property and vehicles in recent months. He does not do that on a Ministers salary of $2000 a month. The lavish lifestyles of the Heads of the Army, Police and Air Force, even the Prisons Service and CIO Chiefs also go unaccounted for even by the Tax Authorities.

But it does not end there - this is enough money to destabilise regional governments that differ with the Zanu PF leadership who control the flow of diamonds and the revenues that emanates from them. It is a real threat to the whole of the GPA process into which the region has put so much time and other resources in the hope that they might resolve our ongoing and interminable crisis. Itís enough money to destabilise South Africa.

In my view, that is the main reason why we should be denied access to the Kimberly Club and in the process it should be made quite clear, that until we put our house in order, every carat we try to sell will be regarded as an illegal gemstone in the eyes of the world. Remember that if we put our house in order, it would restore stability to global markets for diamonds and would raise revenues from sales by a third or more. In addition, this is enough money to put Zimbabwe back on its feet and to transform the lives of every Zimbabwean. This is the goal that the Kimberly Club should be dedicated to achieve.

Eddie Cross
Bulawayo, 7th November 2011