6 held for Marange diamond fraud

2010-11-04 12:26

Harare - Six top officials of two diamond-mining firms have been arrested for fraudulently obtaining a licence to mine the gems in Zimbabwe's controversial Marange fields, their lawyer said Thursday.

The state-run Herald newspaper said the officials included Dominic Mubaiwa, chief executive of the government mining firm Zimbabwe Mining Development Corporation (ZMDC), and Lovemore Kurotwi the local head of Canadile Miners, a joint Zimbabwe-South African venture.

"I can confirm the arrests and that they are still in custody," their lawyer Lewis Uriri told AFP.

The Marange fields, touted as Africa's richest diamond find of the decade, have been at the centre of a years-long controversy over mining rights and abuses by the military.

The Kimberley Process, a global certification scheme meant to prevent trade in "blood diamonds", has limited sales from Marange after its investigation found soldiers were beating villagers to force them to mine the gems.

Kimberley, which groups major nations involved in the diamond trade, is meeting in Jerusalem this week to review Zimbabwe's efforts to curb the abuses.

To meet Kimberley rules, Zimbabwe contracted three firms to take over the mining from the military - South Africa's New Reclamation Group, China's Anjin and Canadile Miners.

A different partnership

But the Herald said Canadile Miners was a fraud, created when the government was duped into believing that a non-existent South African firm, BSGR, was ready to invest $2bn in Zimbabwe.

Five of the suspects travelled to South Africa ostensibly to determine BSGR's capacity to operate a mine.

"They knew that the company did not exist but travelled to make it look like everything was above board," the newspaper quoted an unnamed source as saying.

"When they came back they gave the mines ministry a report in which they claimed BSGR was fully operational and a suitable investor in the sector."

ZMDC got a licence for a joint venture with BSGR, but then created a different partnership with a South African-registered firm called Core and Mineral Resources and a Zimbabwe-based firm called Marange Resources.

Those companies formed Canadile Miners to operate in Marange.

Sources quoted by The Herald said the joint mining company had no money and borrowed $1.5m from a local bank to start its operations.