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Zim diamond money laundering suspected in SA property buying spree

25 july 2012

A property buying spree in South Africa by a top crony of Robert Mugabe’s is suspected to be part of a money laundering exercise, to process the illicit profits of Zimbabwe’s still controversial diamond trade.

An investigation by South Africa’s Mail & Guardian has followed the multi million rand spending spree by Robert Mhlanga, a reported close friend of the Mugabe family and Robert Mugabe’s former personal pilot, Alex Bell writes on Mhlanga is also the Chairman of the Mbada diamond firm operating at the Chiadzwa diamond fields, where reports of smuggling and illegal dealings are still surfacing.

The Mail & Guardian report states that Mhlanga has been on R185-million property-buying spree in the past year, acquiring prime real estate on the Durban north coast and in one of the plushest areas of Sandton in Johannesburg.

“Mhlanga's property dealings have raised eyebrows, not least because he appears content to pay up to six times the going rate for the properties he buys. Speculation is rife in Zimbabwe that Mhlanga represents the Mugabe family's interests in Marange and has been buying properties on their behalf, although his role as a proxy for the Mugabes could not be proved by the Mail & Guardian,” the newspaper reported.

The paper explained that Mhlanga's modus operandi is to buy a “shelf company with an obscure name”, which he would then use as a vehicle through which to buy property. Mhlanga is traceable as the sole director of these companies and, through the company names, to records of property sales at deeds offices.

The report also quotes an economic analyst who says the inflated rate at which Mhlanga is buying the properties is cause for suspicion.

“There could be money laundering happening, where basically you're paying a lot more than it's worth but there is some other agreement with the guy who's selling it to you where a percentage of the transaction flows back to you later in some other transaction down the line,” the analyst was quoted as saying.

The Mail & Guardian report has come on the back of international warnings that Zimbabwe’s diamond trade was illicitly funding a parallel government.

Last month, a report by international human rights group Global Witness turned the spotlight on these suspicions, detailing that the CIO and army are securing off-budget support from China in exchange for diamond profits.

The report also singled out Mbada Diamonds and its actions, including a suspicious 25% handover of the company’s shares to other companies that have been linked back to Mhlanga himself. Nick Donovan from Global Witness told SW Radio Africa on Friday [July 20] that although they have no evidence of money laundering, there is room for suspicion.

“We know there is some kind of connection. So he’s probably benefiting in some way,” Donovan explained.

He added: “Ever since the government of national unity was formed, there has been a search for off-budget funding by the security forces and some members of ZANU PF. As soon as the MDC got control of the Treasury and clipped the wings of the reserve bank, ZANU PF had to find another source of funding, other than printing money.”

Zimbabwe’s Finance Minister Tendai Biti meanwhile has also been forced to slash the national budget and induce higher taxes, blaming a “worrying” shortfall in the diamond revenue once expected to reach the national coffers. Last year Biti said about US$600 million in diamond revenue was expected after the lifting of an international trade suspension.

But since then, Biti has admitted that this has not happened and recently revealed that absolutely no money was coming from at least one of the firms operating there.

"We thought by June about half of the amount would have been achieved. I am very worried about the amount coming from diamond sales which is way below what we anticipated,” Biti said this week [July 16-22].