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Old Mutual Gems Loose Their Shine

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LONDON, March 27, 2011- Listed Old Mutual has come under heavy attack from exiled Movement for Democratic Change politician Roy Bennett for its indirect investment in the Marange “blood-diamond” fields of Zimbabwe. But the company says the gems and their proceeds are tightly governed by the Kimberley process.

It also acknowledged it had an 18 percent stake in Zimpapers – through Old Mutual Zimbabwe – but said it was a legacy from the past. The investment was made in the newspapers in pre-independence Rhodesia. The newspapers include the Daily Herald in Harare and the Bulawayo Chronicle, which are mouthpieces of President Robert Mugabe’s Zanu-PF, which co-governs the country with the MDC.

On the issue of the “blood diamonds” – as Bennett dubbed them at a recent fund managers’ conference in Cape Town – Old Mutual corporate affairs director Crispin Sonn said Mining Minister Obert Mpofu and Finance Minister Tendai Biti had agreed the Kimberley process should apply to this state business venture.
Old Mutual confirmed its involvement in the mining – albeit indirectly. Old Mutual Investment Group said Old Mutual “has an indirect interest in Mbada Diamonds of 1.5 percent via the South African recycling group New Reclamation”.

It explained Mbada Diamonds was a joint venture with the Zimbabwe government “that has less than 10 percent” of the Chiadzwa – a municipal district into which Marange falls – diamond fields. Sonn noted that in terms of the Kimberley process, it had been agreed revenue should flow to the Zimbabwean fiscus – effectively through the Treasury, over which Biti, who is an MDC politician allied to Prime Minister Morgan Tsvangirai, has political charge.
 
Omigsa spokeswoman Lynn Bolin pointed out Tsvangirai had praised the mining minister – who is a member of the Zanu-PF contingent in the cabinet.
He did so at the diamond auction in August last year, pointing out the positive impact the diamond industry would have on the country.
She also said Old Mutual had been advised KPMG had recently independently certified all flows from Mbada had been paid “in accordance with all legal agreements”.
 
Old Mutual said it would not comment further on the Bennett broadside – that Old Mutual was implicated by its association with the mining and “from massacres by the army and air force of Zimbabwe” at Marange – and said it would speak to Bennett directly.
But Bennett said no contact had been made with him since his remarks in Cape Town two weeks ago.
Yesterday Bennett left the country for South Africa in September and is now heading an international campaign in London to highlight the growing crisis in Zimbabwe.

He denied there was a schism in MDC ranks over the Marange diamonds.
He said although Tsvangirai and Biti initially welcomed the flow of diamonds and revenue, the proceeds were now feeding the troughs of Zanu-PF in contravention to the Kimberley process. This revenue was fuelling Zanu-PF-inspired violence in the country.
He pointed out that Biti’s finance ministry had been besieged by a rowdy demonstration of guerrilla war veterans – allied to Mugabe. They charged the gates of the new government complex in Harare on Thursday. Pro Zanu-PF newspapers said Biti had to cave in to demands to raise their monthly pensions from around $118 (R813) to $200 a month.

This followed reports in independent newspaper NewsDay, quoting Biti as challenging Mugabe’s Zanu-PF to come clean on diamond revenue – from Marange – and stop politicking over sensitive issues, like civil servants’ salaries. Bennett said there was now “a total abuse of the Kimberley process… there is, in fact, a total lack of due process, people taking autocratic decisions.

“Tendai has had his life threatened (by war veterans) on the basis of those diamonds.”
Asked if he had a particular axe to grind with Old Mutual, Bennett said his old constituency in Chimanimani in the lowlands of Manicaland province was being ravaged by violence unleashed by Zanu-PF militia.

They were being paid for by the blood diamonds from Marange.
“The whole thing stinks. Old Mutual, a listed company, should not be involved with the illegal dealing of diamonds.”
At the fund managers conference, Bennett described “the shame” of Old Mutual as being “compounded by the fact that the proceeds from the sales of these blood diamonds are being used by Zanu-PF to unleash another bout of political violence on ordinary Zimbabweans”.

He said the Kimberley process was “in complete disarray. Within the inclusive government, the MDC cannot exercise the control needed to ensure these (mining) activities are properly subject to credible scrutiny, so it is incumbent on responsible corporates to heed our advice”.
Noting the MDC had urged Old Mutual “quietly behind closed doors” to “quit its blood-stained investment… the firm has not listened, so we now air our grievances publicly. Old Mutual and its partners have benefited from the daylight robbery of mining rights”.

Responding to arguments Old Mutual was having difficulties to “sell down” its stake in Zimpapers – as it did not have a buyer – Bennett suggested the company “should cut its losses and get out”. By remaining part of the shareholding, it was associated on a daily basis with “the daily spewing of hate speech”.
Asked if he would return to the country for elections – which were expected either this or next year – Bennett said that after he left an arrest warrant was placed on his head.
 
He would not return until the situation was under control and the rule of law had been restored. Bennett was in solitary confinement for much of 2009 and 2010, facing charges of treason against Mugabe – which were later dropped.
Zanu PF lost the 2008 national election to the MDC, but retains control of the security ministries and, significantly, the mining ministry, in a unity government agreement. - Donwald Pressly



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