Foreign Banks must stop enabling violence & corruption in Marange

Foreign Banks must stop enabling violence & corruption in Marange by Partnership Africa Canada

Mineral Marketing Corp of Zim Sells Illegal Marange Diamonds by Partnership Africa Canada

MMCZ Diamonds for sale list March 2 11.pdf Leaked document

Partnership Africa Canada (PAC)
30 August, 2011

Johannesburg—Human rights groups called today on foreign financial institutions invested in Zimbabwean banks to use their influence to stop violence and corruption in the diamond fields of Marange.

The call follows the release of a leaked document that shows the Mineral Marketing Corporation of Zimbabwe (MMCZ), a government parastatal, offered over US$200 million worth of illicit Marange diamonds for sale earlier this year, in blatant contravention of the Kimberley Process (KP), the international scheme that governs the trade of rough diamonds. Marange diamonds have been subject to international export restrictions since November 2009.

The MMCZ letter to potential buyers also counseled them to make the financial transactions through three banks—the Commercial Bank of Zimbabwe (CBZ), BancABC and Premier Banking Group—which count among their major shareholders several well-known foreign banks.

Barclays Zimbabwe, a subsidiary of Barclays UK, is a 3.72% shareholder, while Standard Bank, trading under the name Stanbic, holds 2.12%, according to the CBZ’s 2010 annual report. BancABC’s most recent annual report lists a US$89 million loan from the International Finance Corporation, a “member of the World Bank Group”. BancABC records also show 62 unnamed shareholders in North America and Europe comprise almost 24% of the company’s stock.

“These banks subscribe to a higher ethical bar than those who are trafficking these dirty diamonds,” said Alan Martin, research director for Partnership Africa Canada, noting that they are all signatories to the Equator Principles or the International Financial Corporations Performance Standards, voluntary benchmarks aimed at promoting more ethical and socially responsible banking. “By facilitating these transactions Barclays, Stanbic and the IFC could be not only exposing themselves to reputational harm, they could be putting themselves offside with international sanctions regimes in place against Zimbabwe.”

The MMCZ document also notes that while exports will be issued a “local” Kimberley Process Certificate, an “internationally recognized…certificate will have to be arranged by the buyer”.

“The illegality of these trades is not in doubt,” said Tiseke Kasambala of Human Rights Watch. “It really begs the question: What legitimate diamond buyer would touch stones advertised as such?”

“Whether you purchase these stones, or help facilitate banking transactions, your actions are contributing to the continuation of the worst case of diamond related violence since Charles Taylor and Jonas Savimbi,” added Martin. “Helping corrupt parastatals circumvent the Kimberley Process and international sanctions could pose great financial risks to these banks.”

Martin and Kasambala offered a three-step plan the foreign banks should follow to remedy the situation:
• Undertake an audit of your investment in these Zimbabwean banks and the facilitation of these diamond transactions to determine if they breach your IFC commitments. Make the findings of your audits public;
• Should an audit determine that involvement with these banks compromises your commitments to ethical banking, commit to using your shareholder influence to stop illicit diamond related transactions;
• Should Zimbabwean banks refuse your requests for better financial governance, disinvest yourself from these banks.

ENDS