THE Chiadzwa Community Share Ownership Trust (CCSOT) has demanded the dissolution of the Zimbabwe Consolidated Diamond Company (ZCDC)’s board for its role in sanctioning a request by Kuvimba Mining House (KMH) that the state outfit buys 33% shareholding in its platinum unit, Great Dyke Investments (GDI).
Should the deal sail through, ZCDC will pay US$400 million for the stake.
The gems producer took over diamond fields previously controlled by seven firms in Chiadzwa about six years ago, as government moved to ‘protect’ public interest in the area.
ZCDC works with CCSOT under a broad strategy initiated by government to ensure that communities benefit from their resources. In a petition to parliament obtained by the Zimbabwe Independent this week, CCSOT also demanded a seat on the state-run ZCDC board to protect its interests. GDI is in the process of setting up a US$3 billion platinum operation in Darwendale, Mashonaland West.
KMH snapped 50% shareholding in the platinum firm after Russian headquartered Vi Holding NV exited the firm last year.
But people knowledgeable about the deal have told the Independent that there has been discontentment within ZCDC over conflict-of-interest issues surrounding its chairperson, Munashe Shava, who is also chief operating officer at GDI.
“In all earnestness…we boldly…object to the ZCDC/GDI purchase of shares agreement,” excerpts from the March 14 letter reads.
“We petition Parliament to stop the ZCDC/GDI transaction unless and until the Marange community concession is fully funded and operationalised as our community was promised by President Emmerson Mnangagwa who gave this concession to our (us) in 2019. We petition Parliament to cause the dissolution of the ZCDC board with immediate effect pending investigations of the inconsistencies raised by us and pending investigations of the matter by Zimbabwe Anti-Corruption Commission (Zacc).
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“Further to that, this board is trying in a subtle way, to use the ZCDC/GDI deal to incite our community against the legitimate government of the Republic of Zimbabwe, more so as we are on the eve of a harmonised national elections," the trust said.
Last week, the trust submitted letters to international resource campaigners and State agencies protesting against the transaction.
It warned in its March 5 letter to the Office of the President and Cabinet (OPC) that the deal could end up with Zimbabwe’s diamonds blacklisted on the international markets. The Independent reported two weeks ago that the recent suspension of ZCDC chief executive officer Mark Mabhudhu came after weeks of deadlock over the deal, which could give impetus to GDI’s long cherished ambition to kick off operations.
Mabhudhu was suspended after being accused of throwing spanners into the works, as he raised the red flag, querying a US$24 million bill submitted by African Banking Corporation (ABC) for its role as transaction advisors.
Petitions were submitted to the Reserve Bank of Zimbabwe, anti-graft watchdog Zacc, the Kimberley Process Certification Scheme (KPCS) and the World Diamond Council (WDC). The trust wants ZCDC to spend the US$400 million on agreed community projects, instead of undertaking a share buying spree.
“The Marange diamond community objects to the transaction and calls upon you to abandon it forthwith,” the trust’s letter to OPC said.
“As a result of this, your referenced transaction is in danger of causing the Marange diamonds to be classified as Kimberley Process Certification Scheme non-compliant and Zimbabwe’s African Diamond Producers (ADPA) and KPCS chairmanship to be suspended.”
Zacc was also requested to probe the deal, according to correspondence seen by the Independent.
“The community is engaging Zacc to carry out investigations into the cited inconsistencies and the matter as a whole,” the letter reads. It fired the broadside as “unprocedural engagement” of ABC as transaction advisors.
The bank was initially due to earn US$24 million in the role, before Mabhudhu red flagged it, forcing it to revise fees down to US$300 000.
Meanwhile, the CCSOT has accused a senior manager from the ZCDC of trying to coerce and bribe Chief Marange so that the traditional leader could distance himself from letters the Trust board members wrote to Zacc objecting to the ZCDC-GDI agreement.
The official (name supplied) is alleged to have produced documents for Chief Marange to sign while professing ignorance about the objections being raised.
According to a report by the CCSOT chief executive Hardwork Mukwada to the trust’s board gleaned by the Independent, the ZCDC official allegedly told Chief Marange to sign the documents so that ZCDC would consider him for some benefits.
“Chief Marange went on to refuse to sign the documents and insisted that if he had a genuine case to present, the manager was supposed to call for a meeting between Dr Mukwada, himself and Chief Marange to deliberate on the matter contrary to what he had done, namely, approaching the Chief behind the back of Dr Mukwada," reads the report in part.
“Chief Marange pointed out to the manager that it was not within his interest to receive personal benefits from ZCDC whilst his entire community was suffering.”
It further indicated that the ZCDC manager also informed Chief Marange that he would assist in the formation of a Marange-based CCSOT, which would be called Marange Community Share Ownership Trust. From 2020 until now, KMH has also acquired gold assets namely Shamva Mine, Freda Rebecca, and mines previously held by Zimbabwe Mining Development Corporation (ZMDC) namely Elvington, Jena, Golden Kopje.
KMH’s shareholding in state owned companies has increased significantly since 2020 resulting in the resource firm being nominated by government as an investment partner for the revival of defunct Ziscosteel. During that same year, Finance minister Mthuli Ncube stated that government held 65% shares in KMH, while 35% is reportedly owned by Ziwa Investments, a Zimbabwean subsidiary of the Mauritius-registered Quorus Management Services.