News Africa Mugabe man cashes in on diamond fields

07 SEP 2012 00:00 - MAIL & GUARDIAN REPORTERS Mega-rich Zimbabwean businessman Robert Mhlanga stands at the centre of an opaque network of companies set up to cash in on Marange diamond fields. OUR COVERAGE Mugabe's man shells out R185m for prime SA property Murky world of Marange mining firms Mhlanga, a retired air vice-marshall, is widely regarded as a close associate of President Robert Mugabe and a business representative of the Mugabe family, although both parties have denied this. The Mail & Guardian recently reported that Mhlanga has been on a R200-million property buying spree in South Africa. The company he chairs, Mbada Diamonds, and other concerns operating in Marange have been accused of remitting inadequate revenue to the Zimbabwean treasury despite making "a killing". The United States and the European Union recently introduced new measures that require processors of rough diamonds to disclose the origin of the gems, putting a squeeze on companies operating in Marange. Central to Mbada's operation is a South African scrap-metal company, New Reclamation. Despite its lack of mining expertise, Reclamation was chosen to partner Marange Resources, wholly owned by the state's Zimbabwe Mining Development Corporation (ZMDC), in a joint venture called Mbada Diamonds. Mbada, favoured ahead of several other established diamond-mining companies, immediately received a 1000-hectare concession in the Marange fields. In October 2009 Zimbabwe's minister of mines and mining development, Obert Mpofu, appointed Mhlanga chairperson of the joint venture, which Reclamation entered through its Mauritian-registered subsidiary, Grandwell Holdings. Grandwell was given the mandate to oversee day-to-day operations and the right to market all diamonds produced. Although Mhlanga was ostensibly appointed to its board to represent the government's interests, the M&G has established that he has a stake in other companies linked to Mbada. Joint venture deal These include the mysterious Hong Kong-registered Transfrontier Mining, which acquired 49.99% of Grandwell last year. The owners of Transfrontier who would benefit could not be established. However, Mbada's Marange concession was increased sevenfold after Transfrontier bought into Grandwell. Mhlanga's lawyer of more than 10 years, Paul Casasola, a director of Grandwell and Mbada, is seen to represent Mhlanga's interests in both companies. The M&G was told that Casasola was involved in crafting the joint venture – although he insisted that the negotiations "occurred prior to my appointment as director at Mbada and Grandwell". He said he was a director of both companies but "had no financial interests in either". He did not respond to a question asking him whether Mhlanga had employed him to work in the companies. At the time the joint venture deal was clinched, Grandwell was wholly owned by New Reclamation. Casasola said he had "absolutely no relationship" with the latter. The M&G has also established that when a ZMDC team visited Johannesburg to conduct due diligence on Reclamation in August 2009, Mhlanga was among the representatives who met the group. Mhlanga attended the meeting in his capacity as the chairperson of a South African-registered commodities company, the Liparm Corporation, which trades in diamonds. He is its sole shareholder and director. Share registry documents indicate that Liparm does not have a stake in the Reclamation group. Reclamation's lawyer, David Hertz, said the scrap metal company "has a commercial arm's length relationship with Liparm". Until early this year, Liparm listed Transfrontier and Mbada Diamonds as sister companies on its website. However, the relevant section has been removed from the site. In questions put to him through Casasola, the M&G asked Mhlanga to explain his role in Mbada, but he did not respond. Mhlanga also did not answer a question about the nature of his relationship with the Reclamation Group and its chairperson, David Kassel, a director of both Grandwell and Mbada. Vision and growth strategy Casasola said he would meet Mhlanga on August 20 to put the M&G's questions to him, but later said the meeting did not take place. Mhlanga is believed to have played a role in ensuring Reclamation's acceptance as the ZMDC's partner, ahead of specialist mining companies such as Alrosa, Namakwa, Gem Diamonds, SAIIC and Community Energy. It is thought the scrap metal company's relationship with Mpofu dates to when he was Zimbabwe's industry and trade minister. In 2008 Reclamation approached Mpofu to acquire a stake in Zimbabwe's ailing state steel manufacturer, Ziscosteel. However, Mpofu was reassigned to the mines portfolio in February 2009 before the deal was concluded and Reclamation's Marange coup followed soon after. Ironically, the ZMDC team that came to South Africa to conduct due diligence "on approved" companies noted that Reclamation had no experience in diamond mining. Despite this, it gave the company the thumbs-up. Allegations are that Mhlanga and Mpofu's influence may have been crucial. "Reclam is not a mining house and is currently not involved in mining ... They have no diamond mining as part of their vision and growth strategy," the due diligence report states. Complicated mining techniques Hertz said there was nothing amiss with Reclamation landing the deal, because the company "drew on the experience of certain key executives and employees who have extensive experience in the mining sector". "These individuals were involved in the reopening of the Roberts Victor Diamond Mine in Kimberley and the Monarch Gold Mine in Botswana, which ... required the utilisation of complicated mining techniques and methods," he said. This is an apparent reference to Kassel, whose role in the two mines is mentioned on the company's website. Hertz said none of the Reclamation executives have a personal relationship with Mpofu. It had bid for Ziscosteel but the minister had not influenced the outcome. "The first time a meeting was held between any members of the Reclamation Group's executive team and minister Mpofu was in 2009 when the ministry met with the Reclamation Group to discuss the then prospective Marange transaction," Hertz said. "Subsequent to that meeting, the Reclamation Group interacted with the ZMDC and its wholly owned subsidiary, Marange Resources (Pvt) Limited." Allegations of diamond revenue being diverted into private pockets and concerns that elements of the Zimbabwean security forces have control of diamond companies have resulted in the US, Australia, New Zealand and European Union imposing restrictions on diamonds from Marange. Repeated efforts to contact Mpofu for comment were unsuccessful. * Got a tip-off for us about this story? Email amabhungane@mg.co.za The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources. - Mail & Guardian - MONDAY JUN 25, 2012 Ballito mansion battle rages on The battle over planning approval for an estimated R200 million development in Ballito by an alleged business associate and former helicopter pilot of Zimbabwean President Robert Mugabe raged on in the Durban High Court this week. This followed the High Court granting an interim order by consent to KwaDukuza Municipality in which the developer agreed not to occupy any of the new structures on the properties, to submit building plans, to allow access to building inspectors and to demolish any further work done on the properties should plans not be approved or opposition to the application fail. The court order read that it granted the order "as prayed" but it has emerged that this did not include an interdict asking them to stop work immediately. The municipality, however, had issued two stop-work orders to project manager Tozamile Hogana, the third respondent in the matter. The other respondents are Straightprops 92, For mate (Pty) Ltd and Stefanutti Construction. Robert Mhlanga, sole director of SalesTalk403 and Formate (Pty) Ltd, which owns the two plots of land next to Zimbali, this week lodged a counter-application and his responding papers, in which he claims that the municipality had "obstructed" and "frustrated" the developer in preventing his architect Ewald Plekker from lodging building plans. He said one of the properties was agricultural land for which no building plans were legally required. Mhlanga lashed out at the Saturday Star this week after we named him as the mystery man behind the development, and a close associate of Robert Mugabe. In his counter-application Mhlanga asked the court to order the municipality to approve or refuse approval of the plans that have since been submitted for approval via a covering letter from his attorneys, after it allegedly refused to accept plans over the counter. Mhlanga said the municipality had sent him a letter demanding "all planning approval rights for the property, letters of approval from the Department of Agriculture and Environmental Affairs, a letter of approval from the Department of Agriculture and a letter of approval from the Department of Transport" which it said was required before building plans could be submitted. Mhlanga said the plans submission fee of R19 368.87 had been paid on May 14 but the municipality repeatedly refused to accept the plans. He said his lawyer then sent a letter of complaint to the municipality on May 23 pointing out that the plans submission met all the requirements of the National Building Regulations. "To insist on further documentation before it would even accept the submission of the plans... was regarded as an act of bad faith and an attempt by the applicant (KwaDukuza Municipality) to frustrate the terms of the court order," Mhlanga said. Mhlanga said the municipality was "misguided" in contending that it was a "major development" because the building works did not cover the entire properties. He said although plans had now been submitted, the municipality had refused to consider or approve them until he had provided a site plan and approval letters from the various government departments. He said the municipality was acting "illegally" and not according to the National Building Regulations. In his answering affidavit to the municipality's initial application for an order to stop work, Mhlanga said he was the sole director and shareholder of SalesTalk403 (Pty) Ltd, which had acquired Straightprops 92, which owned one of the properties. "My intention was to develop the two properties as a private ecosensitive residence," Mhlanga said. He said the existing house on the Straightprops 92 property had been built in about 2004 and the new features included "a new pond and gazebo structure", "the guardhouse" and "a small changeroom incorporating ablutions". He said on the second property new features included "a gatehouse, certain driveways, a new pond which comprises a large water feature together with a gazebo comprising various rooms, which together are intended to function as an entertainment/recreational area". "The investigations conducted by me and the first respondent's legal representatives led us to conclude that at the time of the construction of the existing dwelling... the land in question comprised agricultural land for which no plans were required by the local authority at the time," Mhlanga said. However, he said that the Straightprops property had since come to fall within the ambit of the town planning scheme. "All improvements and structures that have been erected have, however, been professionally engineered and overseen and based on professional advice at the outset and during construction do not require environmental authorisation or the approval of any other authority for their erection," Mhlanga said. He added that the existing house had not been "extensively renovated and rebuilt" and that there was no underground construction, as suggested by the municipality. "There is a slope on the property in question. "Cut into the slope is a room which is built for the purposes of housing security monitors and security personnel. "This is depicted on the building plan and on the site plan." This reportedly has a grassed roof to blend in with the surroundings. "There are no below-ground works not depicted on the plan provided. There is a basement level depicted on the building plans submitted," Mhlanga said. "It has never been the intention to flout any applicable law," Mhlanga said. The Saturday Star tried twice this week to secure interview with Mhlanga. Saturday Star Comments by Sonny - Robert Mugabe's trusted chopper pilot? The Ballito architect who calls the shots for Robert Mugabe. NOBODY LIKES mugabe IN SOUTH AFRICA like the ANC! http://youtu.be/v-0u37ZppTQ