Millions From Diamonds Go to Mugabe, Observers Say – by John Eligon (New York Time – December 16, 2011)

JOHANNESBURG — Tens of millions of dollars in diamond profits — perhaps more — are being secretly extracted from state-owned mines in eastern Zimbabwe, bypassing the nation’s treasury and raising fears that President Robert Mugabe is amassing wealth to help extend his 31-year reign, according to monitoring groups, diplomats, lawmakers and analysts.

Even if Mr. Mugabe’s allies in the mining ministry are telling the truth about the number of diamonds produced, the treasury was still shortchanged by at least $60 million last year, according to a budget report by the finance minister, one of the president’s chief opponents.

But the amount of money being withheld from the nation’s coffers may be much larger than that. Experts, and even some members of Mr. Mugabe’s own party, say the president’s allies are lowballing the nation’s diamond figures by millions of dollars, hoping to hide the fact that profits are being diverted for personal and political ends.

“The benefits of the diamond sales go primarily to allies of the president,” said Mike Davis, a specialist at Global Witness, a group that has extensively researched the contested mines in eastern Zimbabwe, known as the Marange fields. The strategy, Mr. Davis added, was “part of a wider attempt by people around Mugabe to seize the diamond wealth for their own political purposes, which in the short term means beating and cheating their way to another election.”

Now that Mr. Mugabe no longer controls the Finance Ministry — the result of a tenuous power-sharing arrangement to end the rampant state-sponsored violence during the 2008 presidential election — analysts say he needs outside income to finance his political operations. Diamonds offer him a rare opportunity to do that, especially now that international monitors have agreed to let Zimbabwe sell vast quantities of them, despite repeated warnings that it would enable Mr. Mugabe to tighten his grip on the nation.

Recent expenditures by Mr. Mugabe and his security forces have worried observers that unaccounted money from Marange, estimated to be one of the world’s richest troves because of its volume of diamonds, is financing his party’s groundwork for the early elections he is seeking next year.

The country’s defense forces, which answer to Mr. Mugabe and helped secure his victory in the last election by force, recently bought a large shipment of weapons and equipment from China, local news media reported. The mining ministry has paid millions of dollars in salary increases for civil servants outside its ranks, a form of patronage intended to win votes, according to some lawmakers and watchdog groups. And Anjin — a Chinese mining company in Marange that local and Western officials say the Zimbabwean military has a direct ownership stake in — is financing a new military academy.

“It’s quite clear that there’s much more money floating around than is justified by the level of economic activity,” said Eddie Cross, a Mugabe opponent in Parliament. He told the legislature in October that, based on information from geologists and production records, one company alone mined $1.4 billion in diamonds in Marange last year, far more than the $300 million the mining ministry had reported for all its operations there.

Questions about the diamonds have even caused some splintering within Mr. Mugabe’s party, ZANU-PF, as some benefit personally while others get cut out.

“I personally don’t think the numbers tally at all,” said a former senior ZANU-PF official, speaking anonymously to maintain relationships within the party. “When you look at the fields they are mining and how rich they are and what they later declare, you see that there must be a huge difference.”

“People are asking, ‘Where is the diamond money?’ ” the official added, “and the answers don’t seem to be coming out.”

While Mugabe officials deny any sleight of hand, other members of his party acknowledge that the nation’s mineral wealth does not always make it into the public treasury.

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