MUGABE’S MILLIONS

In August, the Sunday Times revealed that, far from preparing to leave Zimbabwe, Robert Mugabe is building himself an amazing new R40m palace in the countryside. Now a book is about to appear which explains how it is possible for Zimbabwe’s elite to be quite so rich while their country’s economy falls apart, and most of their people are unemployed and starving.



In ‘The Battle for Zimbabwe’, Washington Times correspondent and author Geoff Hill unravels the deals that have enriched the rulers of Zimbabwe and left the country in ruins. Here’s a short extract from an extensive chapter in the book devoted to the Zanu-PF leadership’s dirty financial wheelings and dealings





WHEN ZIMBABWE GETS a truly democratic government, one of the hardest jobs will be tracking down the millions – some say billions – embezzled by the current regime.In February 2002, the London Financial Times estimated that Mugabe alone could be worth R700m. However much the president has pocketed, his ruling Zanu-PF party and his colleagues in the party have taken more, according to documents now in the hands of the United Nations (UN).



In a UN report that documents the plunder of resources in the Democratic Republic of the Congo, it is claimed that more than R35bn has slipped into well connected pockets in both Harare and Kinshasa. The documents reveal an elaborate network of companies and trusts set up by Zanu-PF men in order to siphon off and hide their share of the loot.So, where did the money come from and where is it now?



When the first Mugabe government came to power in 1980, it was not overtly corrupt though there were some noticeable changes to the way things had been done before.A system of patronage developed. Major contracts were awarded to friends or to companies in which ministers and party chiefs held shares and government funds were siphoned into Zanu-PF to help build the party office block which stands next to the Harare Sheraton hotel.



But, once the press had been nationalised in 1982 and there was no one to monitor those in power, it rapidly turned into a free-for-all.In no time Zanu-PF had an interest in more than 100 local companies. But the Zimbabwe economy was small pickings compared with the wealth locked up in the region.



In 1982 Mugabe sent troops to Mozambique to prevent the ruling Frelimo party – led by his close friend President Samora Machel – from being toppled by South African backed Renamo guerrillas.



The next year, the government in Harare set up a company called Zimbabwe Defence Industries (ZDI) whose purpose would be to procure supplies for the army. Through ZDI, goods could be purchased from companies owned by ministers and their families.



By 1985 the war in Mozambique was costing Zimbabwe R7m a day, and was eating into funds that should have been used to build infrastructure, create jobs and pay for land redistribution.



Instead the money was spent on rifles, bullets, landmines and jet fuel – sourced largely through ZDI.



But when war ended in 1992 and investment dollars poured into Mozambique, it was South African and Portuguese firms that snapped up the deals in tourism, construction and farming.



The Zimbabweans learned from that mistake and, in 1996, when a request for help came from Congo’s rebel leader Laurent Kabila, they were prepared.The Cold War and US support for Congolese dictator Mobutu Sese Seko had ended and Kabila saw his chance. With luck and some good backers, it would be possible to take the capital, Kinshasa.



Mugabe allegedly provided R35m towards the assault, and military intelligence in Harare helped plan it.  



In May 1997 what was left of Mobutu’s army deserted, the aging dictator went into exile, and Laurent-Desire Kabila was sworn in as president. In the same month Zimbabwe Defence Industries was given a contract to supply R350m-worth of dried fish, corn meal, uniforms and boots to the new government.



Zvinavashe Transport, owned by Mugabe’s army chief, General Vitalis Zvinavashe, was commissioned to carry the goods from Harare to Kinshasa.It was the start of a multi-billion rand venture that would bankrupt Zimbabwe and enrich the ruling elite to a degree even they had never thought possible.



In 1998 a new company, Congo-Duka was formed in Harare and established a joint venture with ZDI and a Congolese firm to supply consumer goods to Kinshasa. The directors of the new enterprise included Charles Kuwasa, permanent secretary in Mugabe’s ministry of finance, Zvinavashe, and Air Marshall Perence Shiri.Shiri was already notorious for leading the massacres in the southern province of Matabeleland in the mid-1980s when Mugabe dispatched the Fifth Brigade to stamp out political and military opposition in the region.



In the Congo deal, the main liaison between Kinshasa and Harare was the then minister of justice [and Tony Yengeni’s friend] Emerson Mnangagwa.



The government underwrote guarantees of Z$1.6 billion (then R630m) against political risk, and Zimbabwe became the Congo’s major supplier with the majority of goods being sourced from companies in Harare that were owned by well-placed business people, ministers or the military.



In 1999, when the Congo slipped back into civil war, Mugabe sent more than 10,000 troops and military advisors to shore up Kabila’s position and protect Zanu-PF’s investments.



Kabila agreed to pay the bill, but the DRC was bankrupt so, instead, he offered an equivalent value in farms and concessions to exploit timber, cobalt and the Congo’s extensive diamond reserves. Within three years of Kabila taking power, the Belgian Diamond Office which monitors international trade in the stones estimated nearly 85% of the Congo’s annual diamond production – worth more than a R7bn – was being smuggled out of the country with some of the gems going via Harare.



In Zimbabwe, another company, Osleg Pvt Ltd, was formed with a board that included Zvinavashe, Job Whabara (who was permanent secretary in the defence ministry) and Onesimo Moto, director of the Minerals Marketing Corporation of Zimbabwe.



Osleg proposed a joint venture with Comiex-Congo, a company in which Laurent Kabila was the majority shareholder. According to the documents in which the Zimbabwean firm made the offer, Osleg would “protect and defend, support logistically, and assist generally in the development of commercial ventures to explore, research, exploit and market the mineral, timber, and other resources held by the state of the Democratic Republic of the Congo”. 



The bonding of Osleg and Comiex-Congo produced a firm called Cosleg which was granted mining rights to a state-owned diamond deposit in Kabila’s home region of Katanga.A forestry arm of Cosleg was established on 6 January, 2000 and named Socebo, an abbreviation for Societe Congolaise d’exploitation du bois with its headquarters in Kinshasa.



In January 2000 Zimbabwe’s finance minister, Dr Simba Makoni, admitted in parliament that the country’s military costs in the Congo had exceeded Z$10bn (then about R1.7bn). But Michael Quintana of the Africa Defence Journal disputed Makoni’s figures and estimated that a further Z$14 billion (R2bn) had been poured into maintaining a virtual airbridge to ferry supplies between Harare and Kinshasa, pushing the total figure to more than R3.5bn. This at a time when Zimbabwe’s health budget had been slashed to the point where hospitals and clinics had run out of all but the most basic drugs.On 16 January 2001 Laurent Kabila was assassinated and his 30-year-old son, Joseph, took over.



The change did not stop the rebels backed by Uganda and Rwanda, who redoubled their efforts to  take the country. As a result the new president found himself hostage to military help from Zimbabwe.



Kabila asked South Africa’s President Thabo Mbeki to broker a peace deal with the rebels and, after repeated attempts, an agreement was hammered out in which all foreign troops would withdraw from the Congo.



And, as efforts to build lasting peace intensified, international agencies began to unravel the activities of Osleg, Cosleg, Socebo and a dozen other companies that had been set up to cover the money trail.



At the end of 2002, the United Nations published a report on the looting that had taken place in the DRC. The document alleges that, between them, politicians and their cohorts in Uganda, Rwanda, Zimbabwe and the DRC itself had stolen billions-worth of diamonds, minerals and timber. The UN report claims that, on the Zimbabwe side alone, ministers and their allies in Harare and Kinshasa, had set up a string of companies that virtually controlled the extraction of diamonds, cobalt, copper and germanium.



According to the report; “This network has transferred ownership of at least US$5bn [R35bn] of assets from the state mining sector to private companies under its control in the past three years with no compensation or benefit for the state treasury of the Democratic Republic of the Congo.” The UN claims, the key strategist in the network is Zimbabwe’s speaker of parliament, Emerson Mnangagwa – the man widely tipped to take over as president when Mugabe retires. His partners in the venture include General Vitalis Zvinavashe, executive chairman of Cosleg; Air Marshal Perence Shiri; and, on the mining side, prominent businessman John Bredenkamp. The UN dossier alleges that Tremalt Ltd (see noses9, 13 & 30), a company represented by Bredenkamp, holds the rights to exploit six mining concessions containing over 2.7 million tons of copper and 325,000 tons of cobalt. Tremalt paid the Congo government about R3bn, but the estimated worth of the six concessions exceeds R7bn.



Bredenkamp insists that Tremalt’s operations are not linked to the government of Zimbabwe, but the authors of the UN report say they hold a copy of a confidential profit-sharing agreement under which Tremalt retains 32% of net profits, and undertakes to pay 34% to the Democratic Republic of the Congo and 34% to Zimbabwe. The plunder of the Congo extends beyond its mineral wealth. According to the British-based NGO, Global Witness, Cosleg and Socebo now control “the world’s largest logging concession by gaining rights to exploit 33 million hectares of forests in the DRC”.



The UN and Global Witness reports also claim that Harare International Airport has become a transit zone for smuggled loot, creating a potential conduit for the movement of other goods from sources beyond the DRC. In November 2002, South African police discovered a racket in which perlemoen, poached off the coast near Cape Town, was trucked to Manzini in Swaziland and then flown to Harare from where the seafood was freighted to clients in the Far East. The racket was exposed when a light plane en-route from Manzini to Harare crashed on the South African side of the Limpopo River. The aircraft had been overloaded with 800kg of the shellfish, worth close to R1.5 million.



Further investigations led to a spate of arrests in South Africa, but some analysts believe the movement of perlemoen is only one part of a regional smuggling racket that operates out of Harare.





The ultimate question: where are the Zimbabwean elite banking their ill-gotten fortunes?



Last year, the European Union imposed financial sanctions on leading members of Zanu-PF and British banks located and froze a total of 28 accounts held by named leaders of the Zimbabwe government, but the total sum identified comes to less than a million pounds. Mugabe is a regular visitor to Malaysia and there have been rumours that both he and other senior members of Zanu-PF keep their wealth in government-owned banks in Kuala Lumpur.



Senior party figures make regular shopping trips to Johannesburg and some pay their bills with money transferred from accounts in Windhoek. (Namibian President Sam Nujoma is Mugabe’s staunchest ally in the region.)



The UN and other agencies have collected substantial evidence and a new Zimbabwean government will have a lot to go on if they decide to investigate the crimes, prosecute the culprits and recover the money. Just one more reason why Mugabe and his Zanu-PF party [and their friends in SA? – Ed] are determined not to risk a free election that could see them toppled from power. n



Geoff Hill is southern Africa correspondent for The Washington Times. His book, The Battle for Zimbabwe (Zebra-New Holland), is released in South Africa this month and, globally, in November.