Dumping Antwerp ‘a costly blunder’

via Dumping Antwerp ‘a costly blunder’ – The Zimbabwe Independent May 9, 2014 by Herbert Moyo

THE lead story dramatically headlined “Chinamasa hunts Arab conmen” that appeared in a local weekly over the last weekend could have come straight out of a Hollywood movie script and certainly made for light-hearted Sunday reading, with the more imaginative movie aficionados perhaps visualising the Finance minister clad in some superman kit fighting Arabian villains.

But the story is no laughing matter as it reflects on the grave real-life scenario involving the non-remittance of US$30 million in proceeds of the sale of Zimbabwean diamonds in Dubai — a mineral touted by the Zanu PF government as holding the key to pulling the country out of a more than decade-long economic meltdown which has resulted in grinding poverty for the majority of Zimbabweans.

According to the newspaper, experts say the delay goes against international law which compels a winning auction bidder to transfer money — usually in no more than three days — soon after closing a deal.

The delay has sent shivers across the diamond companies and government, as the companies grapple with sustaining daily operations due to the payment delays, while government projects earmarked to benefit had stalled.

Finance minister Patrick Chinamasa’s response was, according to the weekly, unequivocal: the Dubai Diamond Exchange (DDE) — the company commissioned to organise the diamond sales in Dubai on behalf of Zimbabwe — had flunked the test.

For a long time Zimbabwe could not sell its precious diamonds “through the front door” on account of sanctions imposed on the country over human rights and rule of law concerns, with some politicians and sections of the international media even declaring them “blood diamonds”.

Given such travails that had to be endured to get certification from the Kimberley Process, it was widely expected that the country would be awash with cash to kick-start various stalled development projects, as government had even trumpeted the diamonds as “sanctions-busting”.

The sceptics were not so easily convinced, as they pointed to the controversy that has continuously dogged diamond mining in the country, which included opacity, non-remittance of proceeds to Treasury, human rights abuses, the shady involvement of the country’s security sector, and failure by companies to plough back in their communities of operation.

Questions are now being asked of government’s decision to dump the more transparent diamond market of Antwerp in the European Union in favour of Dubai, amid claims that the country would realise bigger returns from selling there.

“Here we have the same Third World people with sympathies for us. Together, we are part of the KPC process. You do not have the evil heart of Europe,” said President Robert Mugabe while addressing a Dubai gathering, a part of which has since been hastily downgraded from “partners” to “conmen” in the state media lexicon.

“We want partners who regard us as human beings, partners who share our misfortunes and appreciate that we want to develop also in the same way that we appreciate their own development,” Mugabe said, using emotive language that revealed a sad failure to appreciate that processes such as the sale of diamonds are driven by business rather than emotional or romantic considerations of anti-colonial struggles.

However, that Mugabe’s choice of words reflected an emotive rather than a business disposition was hardly surprising: the country is crying out for the injection of funds to ease a dire liquidity crunch preventing government from meeting its obligations including infrastructural and development projects.

“You cannot be engaging astute and even cunning business people talking about ‘evil, heart and sympathies’ as Mugabe did,” said political commentator Godwin Phiri.

“It is business and nothing else. Hopefully the government has learnt the lesson and move back to the Antwerp market where you can at least be guaranteed prompt payment.”

Unsurprisingly, questions are emerging about the veracity of claims Dubai would provide a more lucrative market, with some analysts even suggesting the decision could have been motivated by the desire to escape the transparency and accountability associated with Antwerp.

Speaking of the decision to try Dubai, Chinamasa said “we were testing the market”, but the general consensus among analysts is that Zimbabwe should dispense with experiments and “third world solidarity”, and take its precious diamonds to the tried and trusted Antwerp market.

Charity Manyeruke, a political scientist at the University of Zimbabwe, queried how government could have been conned.

“I read the article about Chinamasa pursuing diamond conmen and I wondered how does a government get conned? How do they get connected to conmen and do diamond markets need go-betweens?”
Manyeruke cautioned against experimenting with markets saying “we need to fully understand the rules of each sector when trading internationally”.

“Gatekeepers should not cost the government to this extent. Let us do due diligence when it comes to international trade for any products,” she said, concluding “Antwerp is a better and more transparent market therefore”.

There are doubts Dubai pays more than Antwerp with some raising the possibility that Zimbabwe may have taken inferior quality diamonds to Antwerp so that it can justify the move to the “murky underworld of Dubai”.

“The question is whether there is a match in the footprints of the diamonds taken to Antwerp and to Dubai,” said Mukasiri Sibanda of the Zimbabwe Environmental Law Association (Zela), an organisation which champions transparency and accountability in natural resource extraction.

“There were claims that some of the diamonds taken to Antwerp were of lower quality to those taken to Dubai hence the lower price fetched at Antwerp,” Sibanda said, adding that if this were the case then it could have been because some individuals wanted to justify the move to a less transparent market where they could engage in murky deals.

Even EU’s head of delegation to Zimbabwe, Ambassador Aldo Dell’Ariccia, suggested that the move from Antwerp to Dubai could have been down to the highly transparent nature of proceedings associated with the Antwerp auction.

“In the two auction sales of diamonds that took place in Antwerp, there was full information about the quality and quantity of the stones, the price fetched and therefore the amount of funds that will go to Zimbabwean coffers,” Dell’Ariccia told the Zimbabwe Independent last month soon after the switch to Dubai.

“Dubai is a fiscal paradise; there is certain opacity in the transactions. It is possible the auction can be transparent, but it is also possible that it may not be,” he said while expressing the hope Zimbabwe would continue selling its diamonds in Europe.

The speculation that something was amiss was also fuelled by the fact that Mugabe had a rather small entourage for the Dubai trip which even excluded journalists from the state media which are always in tow.

He was accompanied by his wife Grace, his daughter Bona and her husband Simba, Mbada Diamonds chairman Robert Mhlanga, Abu-Ali Imad of Diamond Mining Company and Foreign Affairs secretary Joey Bimha.

Chinamasa is wondering “why it has taken this long for us to receive our money,” adding, “we could have used that money to fund some of the projects awaiting completion.”

While government continues to wait and wonder, the nation continues in the vice-grip of the economic tribulations which include over 80% unemployment, alarming company closures and consequential poverty.

 

COMMENTS

WORDPRESS: 15
  • comment-avatar

    I do not trust all these guys in the ministry. I would not be surprised if these funds turned up in one of their accounts overseas. After more than 5 years of production from these mines with no proceeds going into the government coffers all of a sudden one of the first sales and lo and behold no funds arriving. They bleat and cry but no real action is taken. It does not add up!!

  • comment-avatar
    African 7 years ago

    LIARS !

  • comment-avatar
    mandy 7 years ago

    This was a deal for which someone was going to get a kickback. Due diligence was not done because someone stood to benefit. I think the only Jury that is still out is how much was the promised kick back for this deal.

  • comment-avatar
    roving ambassador. 7 years ago

    Looters all of them. With Bob as chief director. Zanu is the looters club. Isolate the Zanoids.

  • comment-avatar
    Little dorrit 7 years ago

    We can reasonably infer what has happened to the questionable sum of money earned from the
    Dubai sale. EU’s fawning is driven by Antwerp’s desire for Zim diamonds. Belgium prostitutes its morality for some stones that can be synthetically produced. Pathetic.

    • comment-avatar
      Parangeta 7 years ago

      Zimbabwe diamonds are the cheapest, least valuable,
      most flawed and tiniest of all the major producers.

      To such an extent that de Beers won’t even consider
      purchasing the rubbish. Their carat worth is 1/10th of
      the South African/Botswana gems – so don’t get excited.

      Dubai, Antwerp, Hong Kong or elsewhere, Zim stones are
      the world’s least sought after, certainly not de Beers quality.

      So, Little Dorrit, get over the diamond excitement, we need
      farmers, machinists, industrialists, capitalists, bankers, realtors,
      tourists and investors, & not fool with cheap diamonds at $80/carat!

      Zimbabwe was The Jewel of Africa because of her farmers,
      everything else followed the agricultural phenomenon…….

  • comment-avatar
    Chaka 7 years ago

    So the whole Mugabe family working hard for the country. Sounds interesting. They negotiated the deal. Poor Chinamasa does not know the payment arrangement of the deal

  • comment-avatar
    John Thomas 7 years ago

    The money has been paid, just not to the correct parties. The Arabs are usually honest in business, after all they can lose their right hands for stealing. It is our Zimbo rulers who make things disappear.

  • comment-avatar
    Justice 7 years ago

    A repeat of the Hong Kong house fiasco,smarter thieves are expoiting Bob and ZANU’s illegal activities and taking them to the cleaners! Pity it is all Zim taxpayers dollars that are being lost.

  • comment-avatar

    Izvi hazvinei nenyika izvi. Baba vakatora mukadzi wavo, mwanasikana nemukwasha kuenda kunoshuzha. Ko handiti Bimha uyu ihama ya amai here? Apa vaingoda ivo vacho vanonzwisisa zvema diamonds acho vavepo. Nyika inopinda papi? Chinamasa ngaavhunze mhuri iyi kuti mari vakaisepi kwete kuda kuswero pedza nguva yedu.

  • comment-avatar
    Mseyamwa 7 years ago

    Has Mugabe said anything about the disappearance of this money. Since he shouted loudest in praise of the Dubai sale and went there personally to negotiate the sale, he should be more forthcoming on what went on. Did he give the money to his daughter and son-in-law? Was an entire president taken in by the Arabs? Is our president a dumb-ass who is easily conned? I think so, who wouldn’t con a president who comes in the first time around and bares all his trials and tribulations to people he has just met? He sounded might desperate and ripe for a con.

    Do these people study their prospective business partners before they take suicidal action like this? Could someone enlighten these goons that the Arabs have such low esteem for Africans and have great respect for the westerners, whom mugabe sees as enemies. There is more segregation based on skin color and place of origin in the Arab world than in the West. Also check where the Arabs have been investing their vast oil revenues in the recent past through their sovereign wealth funds and understand that minions like mugabe and Zimbabwe are not on their radar.

    Until government begins to realize that there is no solution in any foreign country, there will be losses to be endured as every other country only undertakes transactions that benefit them. There are no selfless nations in the world. When the Chinese supported the liberation struggle ZANU mistakenly took it for sheer friendship yet the Chinese merely intended to grow their network of socialist states to counter capitalism from the west and especially for times like these, when China needs resources that are not within its borders and they have been hugely successful and damn the countries bleeding the resources. Who cares?

    • comment-avatar
      Parangeta 7 years ago

      China has a population that is exploding, by 2020
      they will have 1.6 BILLION citizens.
      They need ‘Colonies’, for minerals, labor, food and
      financial blackmail – Zimbabwe is ripe for the picking,.

      They, with India, Brazil, Nigeria and Indonesia will
      comprise HALF the world’s population!

      They need to expand, they are too polluted, crowded,
      lacking in clean water (population centers) and air.

      I’m happy to say I don’t live in any of those hell holes!

  • comment-avatar
    furedi 7 years ago

    People, people, please stop wasting time talking about money we will never see.If you go back in comments on this site I said at the time Mugabe went to Dubai that he had gone to get his portion of the money. Obviously nobody took note so there you are now. In 1983 I was almost torn to pieces by friends for telling them that this PM was not a good man.My friends seemed to think it was his ministers who were bad and he did not know what they were doing. Now they know better.Too late.

  • comment-avatar
    Mlimo 7 years ago

    Hey terrorists have no respect so why have any for them?
    As Mugabe said the west can go ” hang” . Big words from a very small small man.
    Hey when we change govt we are coming for you and your relatives for pay back. Soon zanupf so be afraid very afraid. Like all those people you terrorised through the years.