US to seize funds accruing from the sale Zim diamonds

The United States has said it will seize funds accruing from the sale of Chiadzwa diamonds in Europe.

Zimbabwean diamonds are expected to flow into Europe following the lifting of EU sanctions on the Zimbabwe Mining Development Corporation and the Minerals Marketing Corporation of Zimbabwe in September.

With most transactions in the global economy being conducted via New York, the US government said it will enforce its Office of Foreign Assets Control (Ofac) law that stipulates the confiscation of money belonging to entities covered by sanctions under the Zimbabwe Democracy and Economic Recovery Act (ZDERA).

US Ambassador to Zimbabwe Mr Bruce Wharton told The Sunday Mail that the Ofac law would be applied on Zimbabwe's diamond trade in Europe.
"We have an ongoing dialogue with our EU colleagues regarding our respective policies and other issues of mutual concern and interest. There is no general prohibition on doing business with the Zimbabwean diamond industry or on the importation of Zimbabwe-origin diamonds to the United States," said Mr Wharton.

"However, US persons are prohibited from engaging in any transactions in which a person or entity on the Specially Designated Nationals and Blocked Persons (SDN) list has an interest. If European entities seek to transact business via the US banking system, US laws will apply."

A high-powered delegation, led by the AWDC chief executive, Mr Ari Epstein, visited Zimbabwe last month to map out trade modalities. Mr Epstein, in an exclusive interview with The Sunday Mail, said the diamonds will fetch good prices because the Antwerp market is the world's largest diamond trade platform.

A Zimbabwean delegation is this week expected to visit the AWDC. The imminent trade opportunity will likely leave the Americans in an invidious position if they seize funds from Zimbabwe's diamond sales.

Tampering with the money, experts say, would threaten European stakes in the Marange diamond trade. So far, OFAC has taken more than US$30 million destined for Zimbabwe.

Contacted for comment over the looming clash, EU Commission Head of Delegation to Zimbabwe Ambassador Aldo Dell'Ariccia said it was up to the United States to respond to matters regarding its sanctions position on Zimbabwe.

"The decision by the US whether or not to lift their sanctions on ZMDC is a responsibility of the US," he said. US-based legal expert Mr Erich Ferrari, who specialises in Ofac matters, however, said Washington had opened itself to a possible barrage of lawsuits from EU companies.

"The real reason for this, of course, is because in the global economy, most financial transactions eventually are routed through New York. Once there's a transaction involving a party blocked by OFAC, that transaction is blocked," he said.

"As such, any such transactions being routed through New York will eventually be blocked, thereby making the financial transactions necessary for international trade nearly impossible. It depends on the EU parties involved and, as you have referenced in your previous questions, if the funds are transferred through the US financial system. For EU companies which have a nexus to the US or US subsidiaries, affiliates, or partners, which may in some way participate or facilitate transactions with the SDN-designated parties, there could be civil or criminal liability, depending on the circumstances. In extreme cases, those who are doing more than just routine trading with those SDNs could also end up being designated as SDNs themselves, depending on the level and nature of involvement they may have with the designated parties."