21 April 2024 | 01:51 AM

Did US investors flout sanctions to help Mugabe?

Key Takeaways

The Mail & Guardian revealed last year that Och-Ziff Capital Management Group, one of the world’s largest asset managers, was the mystery investor whose purchase of $150-million of stock in a controversial mining firm enabled the latter to throw Mugabe’s regime a $100-million (about R1-billion now) lifeline in return for platinum mining rights.

Contrary to listing rules, Och-Ziff’s stock purchase was not disclosed at the time. The loan allegedly made it possible for Zimbabwe’s functionally bankrupt regime to embark on a campaign of mass intimidation and vote-buying ahead of the 2008 presidential run-off, leading frontrunner Morgan Tsvangirai to withdraw, handing the election to Mugabe.

Now a British nongovernmental organisation working on human rights in business has built on the M&G exposé, showing that Och-Ziff may have broken US sanctions by making the transfer. It has called on the US treasury, which monitors the sanctions, to investigate.

The US instituted targeted financial sanctions on Zimbabwe in 2003, prohibiting transactions with Mugabe and others it accused of “undermining democratic processes or institutions”. These were extended in 2008, not long after the elections, to bar transactions with any senior government official and many others allegedly responsible for human rights violations.

The NGO, Rights and Accountability in Development (Raid), said in a report last week that “there is evidence that finance originating from Och-Ziff went to the government of Zimbabwe; and that the government of Zimbabwe is synonymous with the Mugabe/Zanu-PF regime — comprising sanctions targets — who used the finance to undermine democracy, commit human rights abuses and retain power for their own benefit”.

The report held that “specifically designated nationals” (SDNs) named in the US sanctions were “directly implicated in the planning and orchestration” of Operation Makavhoterapapi, the intimidation campaign in 2008.

And “not only did SDNs benefit from the loan, but certain designated entities were parties” to the platinum rights transaction for which Och-Ziff’s money was used.

The report conceded that timing might have been crucial in this respect. The state-owned Zimbabwe Mining Development Corporation, which was central to the transaction, was designated on July 25 2008, only three months after Och-Ziff’s stock purchase.

Seeking clarity

Raid said it had written to the US treasury to ask that it investigate whether US sanctions were broken, and to Och-Ziff to clarify questions including the nature of the due diligence it had done before the transaction; the purpose and timing of its investment; and “the extent to which it knew, or should have known, that it was providing funds whose ultimate beneficiary was the Mugabe regime and SDNs”.

Och-Ziff has maintained that it was no more than a passive investor, implicitly pointing fingers at the Central African Mining and Exploration Company (Camec), the London-listed firm in which it invested and which in turn provided the loan to the regime as part payment for platinum rights.

This week a spokesperson said: “Och-Ziff has no connection to Zimbabwe politics whatsoever and made no loan to Camec. The firm was among many institutional investors who participated in a private placement of shares in a London-listed public company [Camec], and as a passive investor had no role in the direction of the company.”

There is evidence, however, that Och-Ziff’s investment in Camec was not so passive.

Och-Ziff’s $150-million dwarfed the $50-million in total invested in the same Camec share issue by other investors. It is very unlikely Och-Ziff would have committed so much capital without interrogating how Camec would use the money.

A Camec regulatory announcement in early March 2008 stated that the original purpose of the new share issue was to raise cash to develop Camec assets in the Democratic Republic of Congo. But on March 28, a day before the first round of elections in Zimbabwe, Camec put out another announcement saying that it had “further discussions with the placees [the would-be investors] regarding the multiple investment opportunities available to the company in Africa”.

On April 11 — as the regime was holding out against announcing election results that showed Zanu-PF had lost its parliamentary majority and Mugabe was trailing presidential challenger Morgan Tsvangirai — Camec announced the Zimbabwean platinum rights acquisition, to be paid for partly by providing the $100-million loan to the regime.

The implication of Camec’s two statements is that it consulted Och-Ziff about using its money in Zimbabwe rather than in the Congo.

In the weeks following the transaction, pending the presidential run-off, Operation Makavhoterapapi went into overdrive.

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The M&G Centre for Investigative Journalism, a non-profit initiative to develop investigative journalism in the public interest, produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.

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Before joining the amaBhungane team in 2017, Micah was the national coordinator for media freedom and diversity at the Right2Know Campaign. He holds a Masters in African Studies from Oxford University and a BA Honours in History from Wits University.

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