From The Financial Gazette, 3 February
By: Dumisani Ndlela

Caymen Islands-incorporated Oryx Natural Resources has taken over a US$2 billion, 800-square-kilometre diamond concession in the Democratic Republic of the Congo (DRC) under a mysterious transaction in which original owners are said to have received no payment. The Sengamines diamond concession south of Mbuji Mayi in the DRC was originally owned by a Zimbabwe-incorporated company, Operation Sovereign Legitimacy (Osleg), Comiex and MIBA ” the latter two representing the interests of the DRC government. While Osleg has been reported as a Zimbabwe Defence Forces (ZDF) company, a three-month investigation by The Financial Gazette revealed that the real owner of the shadowy military company is not the ZDF, but four prominent citizens, two of them key figures in the defence forces during Zimbabwe™s military intervention in the diamond-rich country to prop up the late DRC leader Laurent Kabila™s regime.

During the investigations, questions on the ownership of Osleg where flatly denied by the individuals associated with the company, while the ZDF refused to entertain the newspaper™s questions on the activities of the group and its shareholders. The Financial Gazette also encountered an intricate web of companies representing the interests of either key members of the military or those in the government. The concession was allegedly given to the ZDF as compensation for its participation in the war against insurgents funded by Uganda and Rwanda since the DRC did not have the cash resources to prop up the war. Geoffrey White, a spokesman for Oryx and chief executive officer for African Mining Management Company (AMMCO), told The Financial Gazette that the current ownership structure of Sengamines since January 2003, confirmed by a presidential decree, is 80 percent Oryx and 20 percent MIBA. Osleg, White said in written responses to The Financial Gazette™s questions, was no longer a shareholder in Sengamines. “There was no payment by Oryx to Osleg or individuals related to Osleg when the new Sengamines was formed and Osleg departed,” White said.

During a follow-up to White™s responses, The Financial Gazette spoke to Rob Scott, an executive with the South Africa-based AMMCO headed by White, on telephone. Asked how it had been possible for Oryx to take over the Sengamines concession without paying a cent to the original owners, Scott said the decision had been made at a political level between the governments of Zimbabwe and the DRC. “Originally, Osleg was involved, with Oryx as the major funder (of the Sengamines). The two states decided that they would not be involved (in the Sengamines business) and took a back seat,” Scott said. Scott said the International Monetary Fund and the World Bank had insisted that states should never be involved in the running of businesses, prompting the decision to have Osleg on the “back seat”. Both the DRC™s Comiex and Zimbabwe™s Osleg were involved in the project through a vehicle called Cosleg, jointly owned by the two companies. Oryx owned 49 percent of Sengamines, Comiex had a 35 percent stake in the large diamond concession, while MIBA held a 16 percent shareholding.

After a foiled listing on the London Stock Exchange in June 2000, Sengamines claimed that it had restructured its equity, and that Oryx owned 49 percent under the new shareholding structure, with Comiex and MIBA owning 35 percent and 16 percent respectively. But a United Nations (UN) panel tasked to investigate the plunder of mineral resources in the DRC in 2000 said in its report that the ZDF, through Osleg, still owned 49 percent of Sengamines that was being claimed by Oryx. “In the course of a meeting held on 1 August 2000, Osleg nominated Oryx to hold its 49 percent interest in Sengamines; 35 percent is held by Comiex-Congo, and 16 percent has been allocated to MIBA,” the panel™s report to the UN Secretary-General, Koffi Annan, said. The UN panel said this had been done to “disguise the close association between Sengamines and ZDF, and to deceive international investors”. Oryx executives vigorously denied the panel™s report, challenging it to make the claims at an open forum outside the UN to enable them to challenge the claims in a court of law.

The current restructured Sengamines is therefore the second since the one allegedly undertaken in 2000. Oryx planned a reverse listing through South Africa™s Petra Diamonds but its links to President Robert Mugabe™s government, and claims that the company was dealing in conflict diamonds, led to the resignation of its British financial adviser Grant Thornton. This immediately scuppered the company™s listing on the London bourse. “Oryx assumed the responsibility for the management and financing of the project following the creation of the new Sengamines,” White said. “The total development costs of Sengamines have been invested by Oryx Natural Resources, which has invested in the project by way of a repayable, interest bearing, foreign direct investment loan.” During its investigations, The Financial Gazette established that four individuals, not the ZDF, were listed as the core owners of Osleg. The four are retired ZDF general Vitalis Zvinavashe; Job Whabira, a former Ministry of Defence permanent secretary recently appointed to the Delimitation Commission ahead of this year™s parliamentary election; Onesimo Moyo, the Minerals Marketing Corporation of Zimbabwe general manager; and Isiah Ruzengwe, a former Zimbabwe Mining Development Corpo-ration (ZMDC) general manager.

Zvinavashe, who was commander of the ZDF – which incorporates the Zimbabwe National Army and the Airforce of Zimbabwe – until 2003, presided over the ZDF™s military intervention in the DRC to prop up Kabila senior™s regime in 1997. Zvinavashe denied when interviewed last November that he had any shareholding in Osleg, maintaining that he was no longer a director in the company as he was “now no longer in the system”. “Phone the Zimbabwe Defence Forces and they will tell you who is running that company. I am no longer in the system,” said the retired army commander. Asked about his shareholding in the company, he said: “What do you mean? I am not a shareholder. The papers are with the Ministry of Defence.” But The Financial Gazette can reveal that the ZDF never officially held the stake since the four individuals own Osleg. The four individuals are also the only listed directors in Osleg, in accordance with Zimbabwe™s Companies Act. Defence Minister Sydney Sekeramayi denied in an interview with The Financial Gazette in October that the ZDF had any commercial interests in the DRC. Moyo also denied that he was a shareholder in Osleg. “I was never a shareholder and I am also no longer a director,” Moyo said. Ruzengwe claimed that he did not have any interests in Osleg, saying he had signed a document of incorporation entitling him to a stake in the company as a representative of a mining parastatal, ZMDC, as its head at the time.

According to a document of incorporation shown to The Financial Gazette during its investigations, the four directors own 2 500 shares each in Osleg. A statement of incorporation reads in part: “We, the several persons whose names, addresses and occupations are subscribed, are desirous of being formed into a company in pursuance of this memorandum of association, and we respectively agree to take the number of shares in the capital of the company set opposite our respective names.” The ZDF refused to comment on the ownership structure of Osleg. A military spokesman, Squadron Leader Mukotekwa, said in a terse statement responding to The Financial Gazette™s questions: “The permanent secretary has said we cannot respond to your questions.” Information gathered during the investigation indicates that Oryx was invited by Zimcon (Zimbabwe-Congo), a Zimbabwean military-led diamond company, which was in partnership with the DRC military, to come in as a financier to the Sengamines project. Zimcon either transmuted into Cosleg, the investment vehicle jointly owned by Comiex and Osleg, or was simply replaced by Cosleg.

The ruling party™s diversified investment vehicle, the Zimbabwe Development Company (Zidco), then purchased a 0.24 percent stake in Oryx valued at 120 000 pounds in 2000. But White said about Zidco™s investment in Oryx: “Zidco is no longer a shareholder on Oryx Natural Resources and has not been one since November 2000.” White did not say how Zidco had lost its shareholding in Oryx. He said Oryx had been restructured in July 2004 following a cash-raising exercise to continue the development of the company. “At this restructure, Dr Issa Al Kawari and the office he represents injected further funds into the company to further its development, and in so doing diluted the original shareholders in Oryx. Africa Mining Investments (AMIL), a company 100 percent owned by Dr Issa Al Kawari and the office he represents, during the restructure, took over equity and board control of Oryx. They ceded the management rights of Sengamines to AMIL, who now operates the company,” said White

Source: WWW.ZwNews.Com