October 24, 2014

ZIMBABWE: Zimbabwe Sends Legal Team To Belgium Over Diamond Revenue Seizure To Recover A $500m Debt Owed By The President Robert Mugabe-Ruled Government.

Business Day Live News
written by Ray Ndlovu
September 19, 2014

Zimbabwe has dispatched a legal team to Brussels, Belgium to intervene after the European country last week allowed South African firm Amari Platinum Holdings to seize $45m earned in diamond revenue, in order to recover a $500m debt owed by the President Robert Mugabe-led government.

The seizure of the diamond revenue is the first of its kind and is likely to sour relations between Harare and Brussels, reversing whatever efforts had been made by Belgium to court Zimbabwe for a supply of its Marange gems for its diamond dealers in Antwerp.

Zimbabwe is in the world’s top 10 diamond producing nations and its diamonds have been sold in Belgium, Dubai and India. Walter Chidhakwa, the mines and mining development minister, told Business Day on Wednesday that there would be "sober discussions’’ in government circles about whether to continue holding diamond auctions in Belgium.

"A team left to go to Belgium on Tuesday and we have a team of legal experts that we have also engaged in Belgium to deal with this matter", said Mr Chidhakwa in an interview.

The cash-strapped Zimbabwe government has been faced with several cases of the attachment of its properties in order to recover debt, which it has either fallen behind in servicing or has not been servicing at all. But never have funds been directly intercepted.

In 2012, Air Zimbabwe planes were grounded at airports in the United Kingdom and Johannesburg over unpaid debts owed to suppliers that ran into millions of dollars.

Mr Chidhakwa said it was the right of aggrieved persons to attach property in order to recover funds owed to them, but the courts had to make a final ruling on the way forward.

Cancelled agreement

The clash stems from Amari’s position that former mines and mining development minister Obert Mpofu’s move in 2010 to unilaterally cancel the company’s memorandum of agreement with the Zimbabwe Mining Development Corporation (ZMDC) was wrongful, especially after it had invested well over $4.5m in key exploration work.

The government cancelled its right to operate its Serui platinum concession on the Great Dyke, a range of hills that runs down the center of the country, after the company had spent millions of dollars exploring it and identifying an economically viable resource of 18-million ounces of platinum group metals, the company said.

Amari’s project "did not succeed because of many reasons including non-performance," Chidakwa said. The cancellation was unwarranted, according to Amari.

Diamond industry sources indicated that the Zimbabwe government would in its defence argue that Amari had to target the state-owned ZMDC, which runs joint venture partnerships with all mining companies in Marange and in doing so must not target or affect the operations of other mining companies in Marange.

"This case is actually being heard by a Zambian judge and there was no need for the action that the SA firm took to seize the funds in Belgium when the case is before the courts", said a source who has intimate knowledge of the events who asked not to be identified.

"ZMDC does not mine diamonds, it has shares in several companies with operations in Marange and these companies cannot be punished for any sins committed by the ZMDC and we will defend the issue on that basis", said Mr Chidakwha.

"We cannot allow a situation where the diamonds attached belong to other mining companies and they must now suffer for the sins of ZMDC".

The ZMDC remains on the sanctions list from the West, despite the lifting of most sanctions targeted at state-linked companies.

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