One of the biggest diamond heists in history has been taking place in slow motion and in plain sight. It’s been widely known for years that political elites in Zimbabwe have been looting the country’s diamonds. Yet because the people stealing the diamonds have covered their tracks, it’s been difficult to prove who they are.
A new piece of detective work by Global Witness, a group that fights natural resource exploitation, offers some clues. In a report issued last month, Global Witness offers the most detailed look to date at the five companies operating in Zimbabwe’s valuable Marange diamond fields. The report describes how political insiders, military leaders, and security officials control the mining companies and use them as personal piggy banks. It also shows the tricks these owners use to shield their businesses from scrutiny and keep their identities a secret.
When the Marange diamond fields were discovered about a decade ago, it was hailed as an event that could change Zimbabwe’s future. Observers predicted that the diamond fields could produce as much as $2 billion in diamonds per year, boosting Zimbabwe’s economy and lifting millions out of poverty. Three quarters of Zimbabwe’s population lives below the poverty line.
Those hopes were dashed. After initially using violence to clear away small-scale miners from the diamond fields, Zimbabwe’s government handed over mining operations to a small group of companies. The country’s people waited for significant diamond revenues to enter the public treasury—and then waited and waited. According to the report, government revenues earned from diamonds since 2010 have amounted to $300 million, far less than the over $2.5 billion in diamonds that Zimbabwe has officially exported.
Secrecy about the ownership of the companies is one reason why the government has been cheated. The companies were each supposed to be at least 50 percent owned by the Zimbabwe Mining Development Corporation (ZMDC), a government-owned company, with 50 percent of the profits going to the treasury. But elites, including military and security officials, have pushed the ZMDC aside. They’ve taken control of the companies, reaped the profits, and used shell companies to hide their identities.
One company, Kusena, is supposed to be entirely owned by the ZMDC. Global Witness has found evidence showing that it is in fact controlled by Zimbabwe’s spy agency, the Central Intelligence Organisation (CIO), and used as a source of off-budget funding. The Zimbabwean military is believed to control two other companies, Anjin and Jinan, having edged out the ZMDC. Global Witness has evidence that the biggest company, Mbada Diamonds, is controlled and partially owned by Robert Mhlanga, an ally of President Robert Mugabe. A final company, the Diamond Mining Corporation, is believed to be a partnership between the ZMDC and an alleged diamond smuggler named Imad Ahmad.
These opaque ownership arrangements have reduced the profits flowing to the ZMDC, and thus back to the people of Zimbabwe. And the companies have used other methods to stiff the government. Global Witness believes that to reduce export taxes, the companies have smuggled diamonds out of the country and underreported the value of the gems they do officially export. The companies have also failed to disclose accurate data on their revenues, costs, or profits. Without this data, the ZMDC is unable to be paid its fair share of profits, and the government has no way to calculate what the companies owe in corporate income taxes.
In 2016, Zimbabwe’s government announced what it pitched as a way forward: it would establish a single new unified company, called the Zimbabwe Consolidated Diamond Company (ZCDC), owned half by the government and half by private investors. But the move is being challenged in court and is unlikely to help, Global Witness says. Many of the same groups, including Zimbabwe’s spy agency, are still stakeholders in the arrangement. In effect, the change looks less like reform and more like a way to redistribute profits among existing players.
Global Witness instead calls for the mining companies, Zimbabwe’s government, and the governments of diamond-consuming countries to commit to transparency and accountability. It also argues that the global diamond industry, together with the Kimberley Process, need to practice due diligence to avoid unethical gems from entering the global supply. The report is blunt about the role of the diamond trade in perpetuating abuses in Zimbabwe: “Rather than encouraging transparency and reforms, international demand has delivered a market for Zimbabwe’s diamonds,” it states.
Zimbabwe’s vast diamond wealth has the potential to transform the lives of its people. Unfortunately, Global Witness’s report has demonstrated that without additional international pressure and regulation, Zimbabwe’s diamonds will continue to benefit only the elite and corrupt and perpetuate human rights abuses. We continue to believe that additional reform, including how the Kimberley Process defines conflict diamonds, is necessary to ensure a responsible and transparent diamond industry.