Distributed by Parliamentary Monitoring Trust Zimbabwe

PARLIAMENTARY COMMITTEE ON MINES AND ENERGY ON THE KPCS PROCESS AND THE DIAMOND EXPORT FINANCIAL TRANSACTION SANCTION BY THE UNITED STATES AGAINST FOUR DIAMOND MINES MBADA, DMC, MARANGE RESOURCES AND ANJIN OPERATING IN MARANGE/CHIADZWA WHICH ARE KPCS COMPLIANT AND APPROVED

Presented by Hon. Edward T. Chindori-Chininga Chairman Parliamentary Committee on Mines and Energy In the 2013 Budget Presentation the Minister of Finance stated that all forms of sanctions against the marketing of Zimbabwe diam onds be lifted. The Zimbabwe Parliamentary Committee on Mines and Energy concurs with the Minister of Finance and call upon the United States to lift all sanctions and financial measures that are subjected to the export of Zimbabwean diamonds from Marange fields exclusively exported by the four KPSC complaint mining companies Mbada, DMC, Marange Resources and Anjin. It is our view that the United States as a member of KPCS and current Chair of KPCS which played a major role to make sure Marange diamond mining and exports are complaint with KPCS rules. Should not at the same time create an environment that promotes illegality and insecurity through financial sanctions that force companies mining diamond in Marange to circomvent following normal channels for international export diamond proceeds financial bank and transmission flow. These financial restrictions and sanctions create loopholes for illegality, fiscal leakages and loss of revenues to the people of Zimbabwe for social and economic growth. It obviously makes the job of the Minister of Finance difficulties to raise the required financial resources for the national budget requirements. These financial restriction and sanctions promote corruption, illegality, fiscal leages and national insecurity and retard growth and securitization of diamond mining operations in Marange. Infact the United States through financial restrictions and financial sanction is promoting against what all members of KPCS and the international legal mandate of KPCS member states and parties strived to achieve when it was founds. Zimbabwe is a founding member of KPCS and must be treated equal like all other parties to the international treaty. Below is the background: 1. In November 2011, at the Kinshasa Plenary, all diamond exports from the existing mines in Marange,were approved as KPCS compliant with the consensus

of all participant countries present and that any new mines would be verified as compliant by the KP monitoring team of Mark Van Bokstael and Abbey Chikane . 1. Following the Kinshasa Plenary, the US announced unilaterally that it had abstained from the consensus approving the Marange Exports at the Plenary in Kinshasa and further explained that this was consistent with its foreign policy on Zimbabwe and the sanctions imposed and maintained on certain persons and entities of the government of Zimbabwe. 2. This was the first time the Zimbabwe and other Members in the KPCS, were made aware of this abstention, as it was not communicated at the time the decision was taken. What is however clear is that within the framework of the KPCS, there is no scope for abstentions at all, its either one objects or they are part of the consensus, moreso given that decisions are not taken by vote. So it is clear that the US was part of the Kinshasa consensus. 3. There was however a sinister motive behind the so called US, abstention in Kinshasa; in the last week on November 2011, the US announced it had added on to the list of sanctioned entities in Zimbabwe, Mbada and Marange Diamond Mines. 4. No reasons were furnished to these mines nor were these mines afforded an opportunity to comment on the allegations made against them in particular that they where involved in undemocratic practices aimed at undermining democracy and human rights in Zimbabwe. 5. At the time of their designation these two mines already employed more that, 1500 people. They had been committed to support a national budgetary position of about 600 million dollars in the 2012 budget which to date has not been achieved. Their principal currency of trade is the US dollar. Their shareholders and directors were equally affected by the designation. More so the operation of a bank account with international banks and the raising of capital from financial institutions.

Conflict of Interest and the call for the removal of Sanctions

6. The US is the current KPCS Chair. It accepts that the diamond mining operations in Marange are KPCS compliant. It accepts that these diamonds are legitimate within the Kimberly Process.The US however condemns these diamonds on the basis of its foreign policy on Zimbabwe, as illegitimate as they are produced by entities listed on the US, sanctions list. 7. It follows therefore that, the US is conflicted in its Chairmanship in that, on the one hand the KP Chair, within the KPCS must advance her countrysforeign policy and on the other she must advance the common interest of the KPCS, which permits compliant diamonds such as those from Marange to be freely traded as such. 8. This is the reality, which the KPCS Chair was confronted with at the Diamond Conference in Victoria Falls. What has now since been agreed to, by all the progressive participants who attended the Diamond Conference is that, the KPCS, must call for the removal of sanctions imposed on compliant diamond mining operations. This call must be made for the KPCS own good and the preservation of its integrity as an international certification scheme founded on the principles of the UN Charter. 9. The call must again be made to prevent the creation of a new species of conflict diamonds, which are diamonds subject to sanctions and therefore not protected from unequal treatment in the world market.

10. The prejudice currently being suffered by the country as a result of the sanctions is huge; diamonds are being traded at about 25% below market. International courier companies such as Brinks have refused to transport Marange diamond because of sanctions, so traders have to hire private jets or use commercial airlines. International Insurance companies do not accept Marange diamonds for insurance because of sanctions. Payment for these diamonds can only be made in Rands or Hong Kong dollars with massive exchange rate costs and margins because of the size of the transactions. This however does not apply to Murowa diamonds owned by RioTinto as it is not facing an United States financial restrictions or financial sanctions on its diamond exports. 11. The Minister of Finance, Hon Tendai Biti, sometime in December 2011 wrote to the US, Treasury Department, where OFAC is based. In his letter he registered his disappointment with the unilateral imposition of sanctions

without due process, let alone a justified basis for so doing. It however appears that nothing was achieved by this letter. The United States government has not positively acted to his letter by lifting the diamond export financial restrictions and financial sanctions against Mbada Diamonds, DMC, Marange Resaources and Anjin. 12. As momentum builds within the KPCS, the World Diamond Council (WDC), has now called for the removal of sanctions on diamond mining operations from Marange. This call was made at the just ended Diamond Conference in Victoria Falls. In making this call, the WDC, has accepted that the issue of sanctions is a KPCS matter and the WDC, as the representative body of the diamond industry mustrally the entire diamond industry behind this call. The Zimbabwe Parliamentary Committee on Mines and Energy concurs and support the call by the Minister of Finance in his budget statement that all forms of sanctions against the marketing of Zimbabwean diamonds be lifted. Zimbabwean need these resource to develop their country for social and economic growth.