“[osleg has] the resources to protect and … the zimbabwean company osleg and the kinshasha based...

“[OSLEG has] the resources to protectand defend, support logistically, and assistgenerally in the development of commercialventures to explore, research, exploit andmarket the mineral, timber, and otherresources held by the state of theDemocratic Republic of the Congo.”

Extract from the partnership agreementbetween the Zimbabwean company OSLEG andthe Kinshasha based Comiex-Congo, whosemajority shareholder was Laurent Desire Kabila,former president of the DRC.

Global Witness LtdP O Box 6042, London N19 5WP,United Kingdom

telephone: + 44 (0)20 7272 6731fax: + 44 (0)20 7272 9425e-mail: [email protected]://www.globalwitness.org/

ISBN 1 903304 05 9

A Report by Global Witness. February 2002

2nd edition: Updated February 2002

Zimbabwe’s Resource Colonialism inDemocratic Republic of Congo

Branching Out

Recommendations contained on page 2

Branching Out – Zimbabwe’s Resource Colonialism in Democratic Republic of Congo

Contents

Recommendations

Preface

Introduction

The timber deal

. The creation of SOCEBO

. Supporting information

. Will the deal happen as planned?

. The Malaysian element

Zimbabwean military involvement inDRC

. Operation Sovereign Legitimacy

(OSLEG) – the corporate structure

develops

. The Structure of ZDF’s holdings in

DRC

. The cost of Zimbabwe’s

intervention in DRC

Conclusion

References

Mbanza-NgunguBoma

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Mwene-Ditu

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Kabinda

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Gemena

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Preface

The first version of this report was released

in August . Since then there have been

significant developments which make the

release of an updated report necessary.

Firstly, logging has commenced in DRC’s

Katanga Province. Secondly, in mid – late

the United Nations Panel of Experts

on the Illegal Exploitation of Natural

Resources of the Democratic Republic of

Congo (DRC), under an extension of their

mandate, carried out further investigations

and were able to obtain important new

details about Zimbabwe’s logging ambitions

in the DRC.

Since then the political situation in

Zimbabwe has seriously deteriorated, very

probably increasing President Mugabe’s

dependence on the DRC’s natural resources to

fund the forces, both political and military,

necessary to his political survival. Therefore

the logging deal detailed in this report could

well become a central plank in Mugabe’s

funding of his increasingly despotic regime

and corrupt electioneering.

Recommendations

● The Government of Zimbabwe should unilaterallywithdraw from the SOCEBO logging deal, as it is contraryto peace initiatives in the Democratic Republic of Congo.

● The Parliament of Zimbabwe should condemn thecorporate ambitions of Zanu-PF, the ruling party, some ofwhich are detrimental to regional peace, and underminepolitical stability.

● To demonstrate its commitment to regional peace, theGovernment of the Democratic Republic of Congoshould cancel the SOCEBO contract to exploit thecountry’s forests.

The UN Security Council should:

● Endorse and expand upon the recommendation containedin the Report of the Panel of Experts on the Illegal Exploitation ofNatural Resources and Other Forms of Wealth of the DemocraticRepublic of Congo, that ‘conflict timber’ be categorised as acommodity banned from international trade.* Accordingly,the UNSC should impose sanctions on all timber exportsfrom the DRC until it can be demonstrated that theseexports do not fund or otherwise contribute to thecontinuation of conflict.

The UN Security Council and the Commonwealth Heads ofState should:

● Condemn the Government of Zimbabwe’s ‘resourcecolonialism’ in Democratic Republic of Congo.

● Exert pressure on both Zimbabwe and the DRC to cancelthe proposed million hectare logging deal because itposes a severe threat to the regional peace process,sustainable forestry is not possible in the current climate,and because the forests of DRC have been highlighted bythe United Nations Environment Programme (UNEP) asone of only countries where conservation efforts shouldbe concentrated.

The international community, particularly the EU, its memberstates and the Commonwealth, should:

● Place an embargo on imports of natural resources thathave been plundered or expropriated by armed factions, orthose linked to them.

List of acronymsCIO Central Intelligence OrganisationDRC Democratic Republic of CongoOSLEG Operation Sovereign LegitimacySOCEBO Société congolaise d’exploitation

du boisWHCM Western Hemisphere Capital

ManagementWHRE Western Hemisphere Resource

ExplorationZDF Zimbabwean Defence ForcesZDI Zimbabwean Defence IndustriesZFC Zimbabwean Forestry

Commission

* “New criteria on ‘conflict timber’ should be considered…Failure to abide by[the recommended procedures] should be considered to be complicity on thepart of those countries and they should be listed as countries facilitating ‘illicittimber’ and ‘conflict timber product’…” Report of the Panel of Experts on the IllegalExploitation of Natural Resources and Other Forms of Wealth of the Democratic Republic ofCongo; .

Introduction

THIS REPORT focuses onZimbabwe’s logging ambitions in theDRC – potentially the world’slargest ever timber deal. However, itshould be remembered that this deal

is just one strand of the powerful and intricatecorporate web created over the past few years byZimbabwe’s ruling party, Zanu-PF, and theZimbabwe Defence Forces, in an attempt to captureboth foreign and domestic state and private assets.This network has presumably been created toenhance the personal wealth of those involved, tomaintain Zanu-PF’s power base and to recoup someof the costs of Zimbabwe’s chaotic militaryintervention in DRC.

The despotic behaviour of the Zimbabweangovernment in early , in the lead up to theMarch elections, can only be maintained by thebrutal exercise of power; the Zimbabwean army istherefore crucial to Mugabe’s power-base. In earlyJanuary the army commander issued a statementstating that “we [the army] will …not accept, letalone support or salute, anyone who has a differentagenda that threatens the very existence of oursovereignty…”; in effect, that they would onlysupport a Zanu-PF victory in the elections. The factthat Mugabe had doubled army pay the week beforeis very possibly related.

A Zimbabwean company whose board comprisessenior Zanu-PF and military figures have effectivelycreated the world’s largest logging concession bygaining rights to exploit million hectares of forestsin the DRC: % of total land area and one and ahalf times the size of the UK. Logging has alreadycommenced in Katanga province, carried out by theZimbabwean military in conjunction with a companycalled SAB Congo. The export sales arm of SABCongo is a London based company, AfricanHardwood Marketing Ltd.

In a deal made with former President LaurentKabila, but still being actively pursued, the embattledleaders of the Zimbabwean government aredesperate to recoup some of the losses they haveincurred in their disastrous intervention in DRC.

The vehicle for this ‘resource colonialism’ isSOCEBO (Société congolaise d’exploitation du bois),a joint venture between Zimbabwean militarycontrolled OSLEG (the ironically named OperationSovereign Legitimacy) and Kinshasa based companyComiex. It appears that DRC has placed most, if notall of its timber concessions under the SOCEBOumbrella. It is unlikely that SOCEBO can achieve itsover-ambitious production and profit targets, but sucha deal would almost certainly see severe social andeconomic impacts on local populations, who virtuallyalways suffer at the hands of industrial forestconcessions, massive revenue loss in DRC andmassive destruction of the country’s forest resources.

According to the Addendum to the Report of the[UN] Panel of Experts investigating natural resourceexploitation in the DRC, released in late , astated aim of SOCEBO is to “contribute to the wareffort in the framework of South-Southcooperation”. Even in a continent permeated byresource-based conflicts, this blatant assertion is asurprisingly cynical example of perpetuating conflict

using funds derived from natural resourceexploitation. It could more accurately be regarded asSouth-South colonialism.

Given the Lusaka peace process and the proposedwithdrawal of troops from DRC by foreigngovernments, perhaps most disturbing is the fact thatthe Zimbabwe Defence Forces are still planning toexploit DRC’s forests. This casts severe doubt onZimbabwe’s pledges to withdraw troops from theDRC, a scenario which would pose a significantthreat to the peace process. It accords with othersources that suggest that even if the DRC conflictended, a core of Zimbabwean troops would remainin DRC. Furthermore, Global Witness receivedreports about the current process of fake troopwithdrawals whereby troops are being flown intoDRC, and then directly back again, creating theillusion that they are returning soldiers.

In short, to obtain personal wealth and to shoreup Zanu-PF’s political machine, Zimbabwe’s elite arepursuing the development of a business empire at theexpense of a country (DRC) which has seen thedeaths of . million people and where % ofchildren born during the war have or will die beforethe nd birthday. In this, the Zimbabweangovernment is complicit in prolonging one of theworld’s bloodiest conflicts. The growing oppression,intimidation and violence against the lawful politicalopposition, white farm owners, black farm workers,all to perpetuate the rule of one man, requiresextensive funding. This funding is being sought fromeven weaker countries – a new colonialism.

The logging deal is just one part of an extensiveZanu PF inspired and controlled business strategywhich has significant implications both in Zimbabweand for the region. The strategy is devoted tocontrolling not just numerous businesses, but theinfrastructure essential to virtually all business activityin the region, including energy and transport. Thestrategy centralises both money and power under thecontrol of key Zanu-PF politicians and militaryleaders.


Zimbabwe’s President Mugabe looking happy after meeting French PresidentChirac, Paris; March . The day before, Mugabe said in Brussels that hiscountry was ready to withdraw its forces from DRC. They are still there.

© A

PPhoto / François M

ori

The timber deal

AS DISCUSSED inSection , Zimbabwe’sintentions to exploitDRC’s naturalresources are well

documented, and the corporatestructure is in place to manage suchexploitation. However, Zimbabwe’sexperience with Gecamines (see Section.) and the failed floatation of OryxDiamonds demonstrates thatZimbabwe has not yet been able to riseto the challenge of resourceexploitation in such a difficult climate.Expert opinion relating to the timberdeal suggests that, once again, acombination of poor judgement(unrealistic optimism) and a lack ofmanagement skills and financialresources means that the projectedreturns from the deal are extremelyunlikely to be met, even in small part.However, some large quick returnswould be possible if SOCEBO teamedup with an unscrupulous short-terminvestor, and Africa’s logging industry isriddled with these.

Possibly the first public affirmationof Zimbabwe’s intentions to exploitDRC’s rich timber resources was made in an articlein The Herald, a pro-Government newspaper, onth January . The article was one of many putout at this time to counter public criticism ofZimbabwe’s cripplingly expensive militaryinvolvement in DRC. It was essentially a puff pieceboasting of the country’s close ties with thegovernment of Laurent Kabila, and of the richnatural resources that would be available toZimbabwe. “…This co-operation has seen theestablishment of a rail link between Harare andLubumbashi,…the shipment of , tonnes ofcopper concentrates from Gecamines….and themoving in of the Forestry Commission to exploittimber in the vast country”.

Global Witness spoke to the author of this piecewho confirmed its veracity. Moreover, the tone of theconversation suggested that all the Zimbabweanagencies involved were acting under centraliseddirection; the sections which follow hint at where thisdirection may come from. He stated that theZimbabwe Forestry Commission (ZFC) were“sluggish” in their response, given that the NationalRailways of Zimbabwe, Air Zimbabwe andZimbabwean mining interests had already beguntheir operations. He described the ZFC’s role astwofold, either to carry out timber exploitation or toact as a consultancy, seconding others to help withforest management. The timber would be exported asZimbabwe is self sufficient, although some could beused for domestic consumption in DRC. He also gavethe impression that the ZFC were dragging their feeton the project, stating that the bureaucracy on theZimbabwean side had been slowing things down, andthat there was mistrust on the part of the ZFC oftheir counterparts in DRC. The engine pushing theprocess forwards is the Zimbabwe Defence Forces.

Global Witness provided informationrelating to SOCEBO to the UN Panel ofExperts investigating resource exploitation inthe DRC, and their subsequent investigationsunearthed interesting new information. Ofgreat interest is that they interviewed PresidentMugabe himself, in Harare, and that he wasable to comment on the deal. This illustratesthe high level of importance accorded to it inZimbabwe. Mugabe stated that logging shouldhave commenced in May but had beendelayed by an inability to pay customs duties tothe Zimbabwe Revenue Service on importedmachinery.


. The creation of SOCEBO

On th January COSLEG, the ZimbabweDefence Forces (ZDF)/DRC joint venture company(see Section .), established a subsidiary, SOCEBO –Société congolaise d’exploitation du bois – to exploitfour forest concessions in DRC. The company isbased at No.D Avenue Colonel Ebeya – Kinshasa,Gombe, DRC.

COSLEG hold .% of the shares in SOCEBO,with the remaining .% held by:

Mawapanga Mwana Nanga – Minister ofFinance under Laurent Kabila, appointed by JosephKabila as Minister of Fisheries and Livestock.

Abdoulaye Yerodia Ndombasi – Minister ofForeign Affairs under Laurent Kabila.

Godefroid Tchamlesso – Minister of Defenceunder both Laurent and Joseph Kabila.

Charles Dauramanzi – Global Witness does notknow if this person is the same as Major-GeneralDauramanzi, a director of OSLEG.

Francis Zvinavashe – Brother of VitalisZvinavashe – commander of the Zimbabwean army.

Colin Phiri – Projects Coordinator of theZimbabwe Forestry Commission.

A further joint venture, SAB-Congo, has beenestablished between SOCEBO and Western

Hemisphere Capital Management (WHCM), aUnited Kingdom Company with an office in Harare,to develop the Katanga concession. WHCM owns% of the shares in the new venture and isproviding capital and equipment. SOCEBO owns% of the shares with the remaining % being heldby the Congolese state-run Institut National pourl’Etude et la Recherche Agronomique (INERA). Itwas anticipated that the first timber sales wouldcommence in November , and in late theUN Expert Panel received information that theZimbabwean military were engaged in intensivelogging operations in this concession, with SAB-Congo.

It was always the intention of the ZDF that theyactually carry out the logging operations, rather thansub-contract a third party company; the Zimbabwe


Zimbabwe troops serving with government allied forces, Mbandaka, DRC; April .

© A

P Photo / Blaise Musau

“SOCEBO aims to be the world leaderin trading tropical hardwoods.All ouroperations are environmentally friendlyand our products are designed to meet ourcustomers specifications in terms ofdelivery time and quality. Sustainableforestry management is our business. Ouremployees are our strength and theirdevelopment and growth is our concern.”

Mission statement of SOCEBO, Sociétécongolaise d’exploitation du bois.

Forestry Commission are purely advising on thetechnical aspects of the project, which is headed by avariety of senior military figures.

The start-up capital required was just under US$million, with the remainder to be made up fromborrowing from financial markets (see Section .).

The intention is to create four concessions, fromeach of which SOCEBO hopes to produce over,m of timber per year at full capacity.SOCEBO has received the rights to a total land areaof million hectares: % of the DRC’s total landarea; . times the size of the UK. All the concessionswere scheduled to be opened by th April butthe start dates have not been met. The fourconcessions are located in Katanga, Kasai, Bandunduand Bas-Congo Provinces.

SOCEBO originally expected to make profits ofup to US$ million in the first three years of

operations, but these targets are almost certainly over-optimistic. Similarly, the company has probablyunderestimated start up costs, estimated to beapproximately US$- million per concession. It isthis initial investment that SOCEBO lacks, and isprobably the only thing that has prevented theoperations from commencing.

President Mugabe told the UN Expert Panel thatcommencement of logging operations had beendelayed “owing to an inability to pay the customsduties to the Zimbabwe Revenue Service onmachinery imported for the project”. However, thedirectors of SOCEBO told the Panel that the delaywas caused by lack of capital. The Panel received“credible reports” that the initial start-up capital of$, had been embezzled by representatives ofthe diamond buying office of another COSLEGsubsidiary, the Mineral Business Company.


Log Exportsand the UKConnectionAs stated above, theexport sales arm ofSAB-Congo is AfricanHardwood MarketingLtd, of 2 Millwood St.,London W10.Theowner of bothWHCM and SAB-Congo is Elkin Pianim, former husband of Elizabeth Murdoch, daughterof media tycoon Rupert Murdoch.African Hardwood Marketing claimsto have an output of 11,000m3 of sawn timber per month and,according to Mr Pianim,“This timber has all been harvested usingcurrent best practice in forestry management, and we are workingtoward obtaining certification from internationally recognized agencies.”

However, according to the UN Panel of Experts, they received‘credible reports that Zimbabwean military personnel have beencarrying out intensive logging operations in the SOCEBO concession inKatanga, apparently in conjunction with SAB-Congo’. Elkin Pianimconfirmed to a Global Witness investigator that the timber originates inLubumbashi, in Katanga Province,7 but that he has hired specialists tocarry out the logging operations. Mr Pianim also stated that he hadonly been in the timber business for one year, so his assertion thatAHM operate using current best practice in forestry management isunlikely to be true.

Mr Pianim also owns a company called Western HemisphereResource Exploration, which is registered in the Isle of Man.Thiscompany has formed a diamond mining joint venture, this time withCOSLEG, the Societé Congolaise d’exploitation minière. It is highlylikely that some of the necessary investment required to exploit DRC’snatural resources has been provided by companies linked to ElkinPianim.

African Hardwood Marketing is actively looking for markets andalready claims to export timber to Germany.The timber from theKatanga concession is being transported both by rail through Zambiaand Zimbabwe for use in South Africa, and via Tanzania for exportfrom Dar Es Salaam.The other concessions are further north and, dueto poor road conditions, it is likely the timber would be transported byriver.

Currently 80% of logs exported from DRC transit via Congo-Brazzaville and are destined for the European market. Judging byregional trends France could become a major importer (as it is alreadyfrom Cameroon, Gabon and Liberia).

Whilst logging operations have actually commenced, there areseveral major obstacles to the project achieving its own targets:

● Realistic start up costs per concession are high, as discussed above.The ZDF and its affiliates do not have this kind of money available,and it is unlikely that any legitimate bank would lend against such arisk. However, Global Witness believes that, based on experience inCambodia and Liberia, it would be possible to attract investmentfrom south-east Asian, French, Lebanese or other loggingcompanies.There are rumours of Malaysian involvement in thisdeal, but Global Witness’ investigations did not expose such a link.However, Malaysia has a track record in investing in Zimbabwe andthese interests are still in-country.

● Transportation would be extremely difficult and costly.

➛ Some of the concessions are a very long way from suitabletransport routes.

➛ In many areas water transport would be necessary and in DRC thiswould mean that there would be no means of controlling ormonitoring the timber in transit.Whilst in some ways this is an idealscenario for illegal loggers, it also creates the possibilities of timbertheft – which could jeopardise the project.

➛ The nearest concession to Kinshasa is 60km, which with bad roadsmeans one log truck can do one trip per three days.They wouldneed 40 trucks to cope with the planned extraction rate, each onecosting US$50,000. In addition they would need the drivers, fueletc.

Timber in DRC has been exploited for over 60 years by what haseffectively become a cartel, which includes French, Belgian and someGerman interests. Unless a company is a member of this cartel, it isconsidered that operating timber concessions would be extremelydifficult, if not impossible. Entry into the cartel is not easy as thepickings are good.

“SOCEBO was set up …toprovide for Zimbabwecovering the incrementalcosts of their peacekeepingforce [in DRC].”

Elkin Pianim, owner of AfricanHardwood Marketing Ltd, theexport sales arms of aSOCEBO joint venture logging inKatanga Province. 25th January2002.

African Hardwood Marketing Ltd.2 Millwood St., London W10 6EH

Tel: +44 208 960 4153 / +44 7768 44 69 55Fax: +44 208 960 6037

1/23/02

Dear ...

I hope this letter finds you well, per your request, a brief overview of our companyand products.African Hardwood Marketing is the export sales arm of SAB CongoSARL, a forest products firm with concessions in the Democratic Republic of Congo.SAB produces 11,000 cubic meters of logs per month, and the schedule belowdetails the following on a per species basis: commercial name (where available),scientific name, local name, monthly output volume in cubic meters of logs.The logsare converted into planks by onsite sawmills, air-dried, and then exported by roadand rail to ports in South Africa and Tanzania.

...

Elkin Pianim

Above: Letter from African HardwoodMarketing obtained by Global Witness.

. Supporting information

Before the release of the first edition of this report inAugust , the Zimbabwean authorities did theirbest to conceal the existence of the SOCEBO deal.For example, in May a senior official within theZimbabwean Ministry of Environment and Tourism,responsible for the ZFC, denied that a company hadbeen established to operate logging concessions inDRC, denied that military affiliates OSLEG orCOSLEG were involved, and denied that the ZFChad actually visited the DRC. He did admit that theZFC was conducting a cost-benefit analysis ofexploiting timber in the south-eastern area of DRC,and that concession maps had been drawn up.

Many of these activities were carried out by anemployee of the ZFC, who visited DRC in May-August and in , both before and afterSOCEBO was formally established. He was carriedon at least one, if not all of these occasions, byhelicopter, suggesting collaboration with the military.

(At this time the current Minister of Agriculture, theHon. J M Made - then Head of AgriculturalExtension Services - was involved in meetings settingup agricultural projects in DRC. These projects nevercame off). Subsequently the ZFC drew up the harvestplans for the DRC concessions.

In addition to the admission by Elkin Pianim ofAfrican Hardwood Marketing that logging hadcommenced in Katanga, the following points supportthe theory that an extensive logging strategy is beingcreated.

● A transport operator interviewed by GlobalWitness met with some businessmen in DRC inApril , who mentioned that Zimbabwe hadbeen granted ‘huge’ timber concessions in DRC.These were not yet operational. Apparently “hugetrees are involved. One tree will take up a tontruck”. This person’s impression was that thetimber was for US buyers, as this was inferred byanother business contact.

● In late /early a Zimbabwe based bankmade several enquiries, presumably checkinginvestment security, on behalf of a client wantingto import timber to Zimbabwe from DRC. It wasapparent the bank was thinking of investing andwanted advice on the feasibility of the project.

This is in line with SOCEBO’s intention toborrow from financial markets.

● In May Global Witness overheard atelephone conversation with a member of the

State Activities Board of the ZFC. The callreferred to logging in DRC, and on the speakerphone the person was heard to say that nothinghas been done yet. Global Witness clearly heard“not yet”. He said that they did not know ofanything going on at board level, but they mayknow something at management level. GlobalWitness were not able to ascertain the identity ofthe person, other than that he is the son of agovernment minister.

Prior to the release of Global Witness’ report, andprior to the investigations by the UN Panel of Expertsin mid , the closest to an admission of theexistence of the deal, by the authorities, was on arather bizarre internet site hosted by Global AnalysisZimbabwe. An article accused Global Witness ofbeing ‘spy agents’ linked to MI, but confirmed that alogging deal had been agreed.

. Will the deal happen as planned?

Based on past experience, Global Witness believes thetimber deal will not achieve its projected returns.Costs are estimated far too low, and profits too highand too soon. The Zimbabwean agencies concerneddo not possess the necessary management or forestryskills demanded by the project, they lack financialand other resources, and are underestimating thedifficulties the project will face.

However, again based upon experience elsewhere,there is a very serious risk that the project will beunderwritten by foreign investors, as the involvementof Elkin Pianim demonstrates. There are numerousforeign logging companies (especially south east


Asian, Lebanese and French) which actively targetscenarios such as the one presented in DRC. The lackof rule of law, enforcement capabilities and astructured tax regime make DRC a honey pot forunscrupulous loggers. Other areas in which GlobalWitness works, for example Cambodia, Liberia andCameroon, had no problem attracting companieswhose intention is to ‘mine’ the forests. It may well bethat SOCEBO fails to achieve the returns it hopes for.The kind of company attracted to this type of dealprobably won’t hesitate to plunder the forests at anunsustainable rate and simultaneously to bribe seniorofficials in both Zimbabwe and DRC to look theother way regarding timber royalties and taxes.Zimbabwe has already lost heavily throughpotentially profitable ventures that went wrong, suchas the Gecamines cobalt operation and Oryxdiamonds’ failed share flotation. So although theprojected returns are extremely unlikely to beachieved, a few well-placed individuals would standto become extremely rich – or richer!

. The Malaysian element

Zimbabwe and Malaysia enjoy close commercial andpolitical links, which seem often to be intertwined. Insome well documented cases Malaysian interestsappear to have been given preferential treatment invarious business deals, allowing them to avoid, forexample, statutory competitive bidding processes forpublic contracts. For these reasons the suspicion of

Malaysian involvement in the timber deal wouldseem to have some foundation, although it could alsobe that Zimbabweans would cite Malaysianinvolvement simply because they are already involvedin so much and are the most likely candidates.

In Mugabe’s government awarded Malaysia’sYTL Corporation a % stake in Hwange powerstation, usurping an existing competitive tenderingprocess, whilst the Malaysian Celcom companyapproached Mugabe directly to benefit from the Posts& Telecommunication Corporation’s new cell phoneproject. Both of these deals, according to newsreports at the time, were allegedly connected to theson of Malaysia’s Prime-Minister MahathirMohammed. The Malaysian Hasedat Corporationcut a deal with the Development Trust of Zimbabweto secure logging rights in Zimbabwe’s forestreserves. A chorus of protest against these dealscame from Zimbabwean businessmen, theinternational donor community and, in the lattercase, forestry experts and conservationists.

No one seems quite clear what resulted from someof these deals as a certain amount of backtrackingtook place in the face of the protests. The YTL dealcollapsed when it was cancelled by the government,apparently at the behest of the World Bank. Thetimber deals did not go ahead, but the generalimpression is that the Malaysians are still very muchinvolved with senior figures and that the deals aredormant rather than dead.


Forest clearing for timber and land, DRC.

© N

ick Robinson / Panos Pictures

Zimbabwean militaryinvolvement in DRC

The timber deal, which is the mainfocus of this report, is just one ofmany business interests beingdeveloped by the Zimbabweanmilitary in DRC, and comes under

the same complex corporate umbrella as many of theothers. It is worth describing, in brief, the nature ofthese deals to put the timber deal in context, both interms of its corporate connections, but also the greatincentive it offers to offset what has so far been aninvestment disaster for Zimbabwe.

At the heart of this is the Speaker of theZimbabwean Parliament, Emmerson Mnangagwa. Aformer Chief of Intelligence in Zanu-PF’s militarywing, Mnangagwa has extensive military experienceand eastern-bloc training, which resulted in hisreceiving the post of Minister of State Security, incharge of the Central Intelligence Organisation(CIO), in the s. At the same time he was Zanu-PF treasurer and began to develop the party’s nowextensive business interests.,

In , because of his party loyalty and militaryexperience, he was sent by Mugabe to DRC toinvestigate the heavy human and material lossessuffered by the ZDF. Apparently, at around this timethe leadership in the Defence Ministry began toreport directly to him, rather than to MovenMahache, the Minister of Defence. In early Mugabe ordered Mnangagwa to take overresponsibility for the ZDF in DRC, effectivelyusurping Mahache., Mnangagwa used thisopportunity to forge close commercial links withLaurent Kabila, in conjunction with ZDF allies and

friends, in particular General Vitalis Zvinavashe, thehead of the Zimbabwean army.

During this period Mnangagwa developed aregional strategy to gain control over the region’s richnatural resources, and to take over and expand theinfrastructure necessary to transport and market theend product. This has resulted, so far, in severalmajor areas of interest: Oryx Diamonds, a jointventure between the ZDF, the late Laurent Kabilaand various business interests; the New LimpopoBridge Project, the Beitbridge Railway and theNational Oil Company of Zimbabwe. The timberdeal will be another major element of this portfolio.

. Operation Sovereign Legitimacy(OSLEG) – the corporate structuredevelops

From the beginning of Zimbabwe’s involvement inthe war in DRC the ZDF had provided advisors toLaurent Kabila to help him overthrow Mobutu, aspart of Mugabe’s general support, which alsoincluded the provision of US$ million to Kabila.This investment resulted in some quick returns: theZimbabwe Defence Industries’ General Manager,Col. Dube, secured a $ million* deal to supplyfood, uniforms, boots and ammunition to Kabila.The contract to transport these goods went toZvinavashe Transport, a trucking company owned byVitalis Zvinavashe the head of the army.

Two more deals followed a special request, in, by Mugabe to Laurent Kabila:

● Congo-Duka: The formation of Congo-Duka,a joint venture between Zimbabwe DefenceIndustries (ZDI) and its Congolese equivalent,General Strategic Reserves. It was intended thatthis company would supply consumer goods inDRC. ZDI received government loan guaranteestotalling Z$. billion (US$.m). The companyfailed to excite Zimbabwean businesses due togovernment manipulation of payment procedureswhich converted US dollars to a lower managedexchange rate against the Zimbabwean dollar.Consequently Congo-Duka became bankrupt.

● Gecamines: The appointment of long-timeZanu-PF supporter Billy Rautenbach as head ofGecamines, the DRC state owned cobalt miningcompany. This deal was forged at a meeting inKabila’s office at which Rautenbach, Mnangagwaand another man purported to be representingMugabe represented the Zimbabwean side.†

Although this operation produced around US$million worth of cobalt monthly it is believed thatlittle money was received by the Zimbabweangovernment, leading to speculation that themoney was siphoned off by senior figures. In Rautenbach was dismissed by the Congolese. Atthe same time the South African authorities wereclosing in on Rautenbach for tax reasons, whichmade his exports from Durban difficult, thereforecompromising the viability of Gecamines’organisation.


* It is unclear whether this is US or Zimbabwean dollars.† According to a journalist interviewed by Global Witness, it is likelythat the Congolese signatory on all DRC deals was Dr Pierre-VictorMpoyo, Minister of State in President Kabila’s office, whosesignature appears on virtually all natural resource deals includingGecamines. He was subsequently sacked by Joseph Kabila.

In mid- Mugabe ordered over , troops, athird of the ZDF’s strength, to deploy in DRC.Laurent Kabila pledged to pay for this support in USdollars, but was unable to honour this pledge. Insteadhe offered mining, agricultural and forestryconcessions. Following the failure of their previousinvestments the Zimbabwean’s saw the opportunity torecoup their losses. The ZDF were already deployedin the resource-rich Kasai Oriental and KatangaProvinces, and were ideally placed to guard theseresources for their own benefit.

In late Congo-Duka was replaced byOSLEG (Pvt.) Ltd. This company is regarded as thecommercial arm of the ZDF, and is the key to theirbusiness interests in DRC, including timber. Itsdirectors are listed as Lt. Gen. Vitalis Zvinavashe, JobWhabara, the Permanent Secretary of the Ministryof Defence, Onesimo Moyo, the Director of theMinerals Marketing Corporation of Zimbabwe andIsiah Ruzengwe, the General Manager of theZimbabwe Mining Development Corporation.OSLEG is represented in DRC by Zvinavashe’brother, Col. Francis Zvinavashe, retired Major-Gen.Dauramanzi and Brigadier John Moyo.

To match their military strength with businessexpertise OSLEG entered into a joint venture withComiex-Congo, a Kinshasa based company whosemain shareholder was Laurent Kabila. The jointventure is known as COSLEG (Pvt.) Ltd. Accordingto the company’s partnership agreement OSLEG has“the resources to protect and defend, supportlogistically, and assist generally in the development ofcommercial ventures to explore, research, exploit andmarket the mineral, timber, and other resources held

by the state of the Democratic Republic of Congo”.

As discussed below, Zimbabwe initially publicisedits commercial intentions in DRC to appease growingpublic concern about its expensive militaryinvolvement. But as time went on two main factorsled Zimbabwe to cover up the depth of itsinvolvement: several of its major investmentsembarrassingly and expensively failed, and theextensive international criticism of the role of DRC’sneighbours profiting from the war.

In late November the UN Expert Panel onDRC visited Zimbabwe but failed to obtain meetingswith Mugabe or most of his senior ministers, who allclaimed prior commitments. They did meet withForeign Affairs Permanent Secretary WillardChiwewe who, according to the ZimbabweIndependent, told the panel ‘not to concentrate onZimbabwe and its allies in the Congo because theywere not exploiters but liberators’. “I urged them tolimit their investigations to the aggressors and theirinternal rebel allies and not to include the SADCallies in their probe…The context of [the SADCallies] relationship with the DRC government excludethem from being the focal point of theinvestigation”. Accordingly, the UN Expert Panelreport contained very little information aboutZimbabwe’s role.*

As discussed above, in late , with an extendedmandate, the UN Expert Panel uncovered significantinformation relating to Zimbabwe’s role in the DRC.


* It should be noted that a plethora of information is available to thediligent researcher, so it is probably fair to say that the Expert Panelcould have been more thorough.

Zimbabwe soldiers loading ammunition onto planes, Mbandaka, DRC; April . These soldiers were on their way home as part of the peaceprocess. However, the Zimbabwean army are still operating in DRC, exploiting the country’s resources.

© A

P Photo / Blaise Musau

. The cost of Zimbabwe’s interventionin DRCZimbabwe’s intervention has incurred heavy costs inmen, materiel and money. These facts add to thegovernment’s incentive to recoup at least somefinancial losses, which they could use to justify theirrole in the country.

In mid the Zimbabwean governmentadmitted to the press that troops had been killed,although the rebel forces opposing Kabila claimed tohave killed over . Whatever the true facts are,they are suppressed because detailed casualty figuresare not released by the ZDF, other than various non-specific and probably inaccurate admissions to thepress. In addition to troop losses, which now certainly

run into the hundreds, Zimbabwe is believed to havelost MiG fighters, helicopter gunships, tanks andartillery.

In January the Zimbabwean FinanceMinister said the country’s (then) two yearinvolvement had cost Z$ billion (US$m), – butMichael Qunitana of Africa Defence Journal saidthese figures should be treated with caution, statingthat an estimated Z$ billion (US$. m) notmentioned by the Minister had been spent onmounting an air bridge to supply their army, and newequipment (gunships etc). Other sources stated thatthe official figures were direct costs only, and omittedthe funds necessary to replace and renew equipment.This was an additional cost of Z$ billion.


. The Structure of ZDF’s holdings in DRC

Zanu-PF

JointEconomic

Committeeof ZDF

Comiex-Congo

Exportmarkets incl.

S.AfricaGermany

OSLEG (Pvt)Ltd

COSLEG

WesternHemisphere

CapitalManagement

SOCEBO(Société

congolaised’exploitation

du bois)

AfricanHardwoodMarketing

Ltd

SAB–Congo(loggingKatanga

concession)

ZimbabweDefenceForces

Subsidiary

owned by Elkin Pianim

Export sales arm

Financial secretary

V. Zvinavashe

Commander ZDF

Member

E. Mnangagwa

Joint venture

owned by Elkin Pianim

Joint venture

Conclusion

ZIMBABWE has made no secret of itswish to exploit the natural resources ofDRC. However, it is probable thatwith the mounting expenses of theelection campaign, especially the need

to carry out intimidation of the opposition by both thearmed forces and ad hoc gangs, that Mugabe morethan ever needs to make the DRC pay. The doublingof army pay in January will add to this burden.Where will Mugabe find the money? Zimbabwe is ineconomic tatters and such gestures of largess must befunded from somewhere. Certainly, the country hasreceived Libyan support, but it is highly likely that thegovernment will look to its operations in the DRC.

What started as opportunism is now probably anecessity given the parlous state of Zimbabwe’seconomy, which is due in large part to their militaryinvolvement in DRC, together with intimidation andoppression of their own citizens. It is not just aquestion of recouping some of their losses: ifMugabe cannot rescue the economy, and is seen asthe man who brought about Zimbabwe’s Vietnam inDRC, then his political future is at stake. Thegovernment has already lied to the population, and tothe multilateral lending institutions about the true

cost of the war, and it will be hard to maintain this liethrough the Presidential elections in .

DRC’s timber provides a massive incentive to theunscrupulous logger, and it is an incentive the ZDF isactively pursuing. The logging has begun so, for thesocial, economic and ecological future of DRC, andindeed for regional security and stability, theinternational community must take action.

In the recent past the DRC has been racked by aresource based war which has resulted in millions ifdeaths, appalling atrocities and the social andeconomic breakdown of the country. ThatZimbabwe, a country that should be taking a leadingrole in pursuing regional peace, is in fact attemptingto profit by prolonging military intervention, is ademonstration of the moral bankruptcy of thenation’s leadership. It is evident that they will stop atnothing to cling to power.

History shows that in the absence of proper forestmanagement, tropical forests are mined to thedetriment of the country concerned. Moreimportantly in the short to medium-term, any naturalresource exploitation by warring factions, especiallyforeign-backed ones, will seriously delay if notcompletely derail the potential for lasting peace andstability in DRC. It is therefore imperative, given thatDRC’s timber is destined for foreign markets, that theinternational community take strong action toprevent the Zimbabwean deal going ahead.


Mayombe Rainforest, DRC.

© M

ichel Gunther / Still Pictures

References

Mugabe security ‘will not accept’ defeat, Michael Hartnack, The Times of London; thJanuary .

Letter received by Global Witness from Elkin Pianim of African Hardwood Marketing Ltd, byemail; rd January .

Addendum to the report of the Panel of Experts on the Illegal Exploitation of NaturalResources and Other Forms of Wealth of the Democratic Republic of Congo. S//.

Interview with senior journalist; May .

Mortality Study, Eastern Democratic Republic of Congo, the International Rescue Committee;February-April .

Telephone conversation with Chris Chivinge, journalist with The Herald; th May .

Telephone conversation between Elkin Pianim and Global Witness investigator; th January.

Interview with anonymous Zimbabwean government official; rd May .

Anonymous informant interviewed by Global Witness; th January .

Interview with anonymous government official (A), Zimbabwe; th May .

Interview with Zimbabwean air transport operator; th May .

Interview with anonymous government official (B), Zimbabwe; th May .

Interview with anonymous public sector worker; nd May .

British Agenda for Zimbabwe, www.glob.co.zw; th June .

Cutting deals to cut down trees, Iden Wetherall, Mail & Guardian; th November .

Zesa/WTL deal collapses, Busani Bafana, Zimbabwe Independent; th December .

Mnangagwa in charge of DRC operations, Brian Hungwe, Zimbabwe Independent; th November.

All reported widely.

The New Scramble for Africa, anon; September .

UN DRC probe team to return to Zim, Dumisani Muleye, Zimbabwe Independent; th November.

Zim sinks $m into DRC war, Kindness Paradza, Financial Gazette; th May .

Newspaper article, MISA; rd January .

DRC war costs taxpayers $ billion in months.


© M

ichel Gunther / Still Pictures


Global Witness’ previous publicationsalso available on our website: http://www.globalwitness.org

“Can Controls Work? – A Review of the Angolan DiamondControl System”

published September 2001

“Taylor-made—The Pivotal Role of Liberia’s Forests and Flagof Convenience in Regional Conflict”

published September 2001

“The Credibility Gap — and the Need to Bridge ItIncreasing the pace of forestry reform”

published May 2001

“Review of the Sierra Leone Diamond Certification System andProposals and Recommendations for the Kimberley Process for

a Fully Integrated Certification System (FICS)”published April 2001

“Conflict Diamonds — Possibilities for the Identification,Certification and Control of Diamonds”

published June 2000

“Chainsaws Speak Louder Than Words”published May 2000

“Timber Takeaway — Japanese Over-comsumption — theForgotten Campaign”

published March 2000

“The Untouchables — Forest crimes and the concessionaires—can Cambodia afford to keep them?”

published December 1999

“A Crude Awakening — The Role of the Oil and BankingIndustries in Angola’s Civil War and the Plundering of State

Assets”published December 1999

“Made in Vietnam — Cut in CambodiaHow the garden furniture trade is destroying rainforests”

published April 1999

“Crackdown or Pause — A Chance for Forestry Reform inCambodia?”

published February 1999

“A Rough Trade — The Role of Companies and Governmentsin the Angolan Conflict”

published December 1998

“Going Places — Cambodia’s Future on the Move”published March 1998

“Just Deserts for Cambodia — Deforestation & the Co-PrimeMinisters’ Legacy to the Country”

published June 1997

“A Tug of War — the Struggle to Protect Cambodia’s Forests”published March 1997

“Cambodia,Where Money Grows on Trees — Continuing Abuses of Cambodia’s Forest Policy”

published October 1996

“RGC Forest Policy & Practice — the Case for PositiveConditionality”

published May 1996

“Corruption,War & Forest Policy — the Unsustainable Exploitation of Cambodia’s Forests”

published February 1996

“Thai-Khmer Rouge Links & the Illegal Trade in Cambodia’sTimber”

published July 1995

“Forests, Famine & War — the Key to Cambodia’s Future”published March 1995

Global Witness is a British based non-governmentalorganisation which focuses on the links betweenenvironmental and human rights abuses, especiallythe impacts of natural resource exploitation uponcountries and their people. Using pioneeringinvestigative techniques Global Witness compilesinformation and evidence to be used in lobbyingand to raise awareness. Global Witness’ informationis used to brief governments, inter-governmentalorganisations, NGOs and the media. GlobalWitness has no political affiliation.

Acknowledgements

Much of the information in this report wasobtained on a Global Witness investigation inZimbabwe in May 2001. Global Witness wouldlike to acknowledge the support and advice ofmany courageous Zimbabweans who providedinformation and context at considerable risk tothemselves, and in particular to the independentmedia who uncovered Zanu-PF’s corporateweb, to which this report adds a small part.Global Witness would also like to thank theZimbabwean government for hosting aconference at Victoria Falls, in April 2001,focusing on mitigating the effects of armedconflict on the environment.This supreme ironyprovided Global Witness with the perfectexcuse to carry out its investigations.

As ever, nothing would have been possiblewithout the support of Global Witness’dedicated team of volunteers and staff.

Design by Dan Brown ([email protected]).

Printed on 100% unbleached recycled paper.

ISBN 1 903304 05 9

Global Witness LtdP O Box 6042, London N19 5WP, United Kingdomtelephone: + 44 (0)20 7272 6731 fax: + 44 (0)20 7272 9425e-mail: [email protected]://www.globalwitness.org/

“[osleg has] the resources to protect and … the zimbabwean company osleg and the kinshasha based...

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