ZUNDE on Diamond Industry Debacle: Does Chidhakwa understand what he is doing?

Since the pronounced discovery of diamonds at Marange almost a decade ago, the Ministry of Mines has amazingly shown policy inconsistencies and to date, there is absolutely nothing to show to the people what benefit if any the nation has had from the God given discovery. Mines Minister Walter Chidhakwa has gone one step further. In a lashing out move that's akin to a baby throwing a tantrum, the minister has ordered diamond miners to shut down and clear up! All nine of them!

The recent 'order' by Walter Chidhakwa is not only reckless; it sets a bad precedent for a country that is struggling to keep or woe investors. Not only is it ill-conceived; it is dangerous and clearly illegal.

For the avoidance of doubt and for clarity, this piece is not seeking to address legitimacy, legality and indeed morality of how the companies came into existence in the first place. Most of these companies are corruptly owned by people with vested interests in ZANU PF, its appendages and factions as well as the security sector. We start by acknowledging the fact that these companies exist today and they have shareholders and employees who have rights under employment and corporate law. We also acknowledge the fact that these companies are the main players in the entire diamond industry. A decision to carelessly and unilaterally shut down a whole industry therefore, becomes unprecedented. The manner in which it was announced is undoubtedly sinister. There is definitely politics, not economics or even the law at play here.

Perhaps a brief history of the 'Marange debacle' will help us understand the current drama and the absurdity of the Minister's decision. Most will recall that when diamonds were discovered, the company that discovered the diamond deposits had its license cancelled by the government. The government then went on to cherry-pick its preferred partners for the diamond mining ventures. Needless to say these were mainly from Mugabe's camp and friends from the East. The one constant in all these ventures is that the government has a huge stake in all of them.

Readers may recall reports of obscure deals and looting on a massive scale including billions of dollars of discrepancies between what the companies claimed to have paid to the government and what the government had receipted.  Parliament raised concerns about illegality and lack of transparency and dispatched a committee to Marange where it was barred from entering the area. Then, from nowhere, it was announced that alluvial diamonds were gone, finished – diamond companies needed more sophisticated equipment to continue operations into the future. The minister of mines then announced that mining operations in the Marange needed to consolidate and merge into one.  In an unpredictable ZANU PF dictatorial style shock, all the diamond companies were ordered to cease operations forthwith, in other words EVICTED!

Governments run by responsible people do not make decisions like this especially where they affect the rights and property of other people. If they do, it is only in very exceptional circumstances, for example where illegality or extreme danger to the public is a concern. It is therefore, unprecedented for a minister to shut a whole industry that is made of up to 9 companies and (by default) lots more that depend on it thereby throwing many people out of jobs and deeper into poverty.

Given the murky duality of his role in the diamond mines as a shareholder and the responsible government minister, it becomes difficult to see in which capacity his decision was made. The fact of the matter is he is the responsible minister and also represents the government as a shareholder.

Deciding as a government minister sets a very bad precedent. It amounts to doing business like they do dictatorships with little or no regard to the rights of people who have invested in the industry. This demonstrates the fact that the ZANU PF government is indeed a dictatorship. Somebody in that industry must challenge this arbitrary decision in court. Imagine a situation where a government minister decides that he wants OK, TM and Choppies to either merge into one supermarket chain or shut down. This opens the country's business community to the possibility that the minister can order any industry into downsizing, expanding, merging or ceasing operations without giving any explanation, interfering instead of enhancing and creating an enabling environment.

Such arbitrary decision making is likely to finish off any little business sentiment that might be left in Zimbabwe. Every investor will be left wondering why, and most importantly, who is the government lining up as new owners of the Marange diamonds. We all wonder where a similar order is going to be issued next? Surely the minister must clearly lay out his reasons for such a huge decision. Or at least get that issue debated in parliament before announcing the order. We are faced with a monumental breach of fundamental rights and freedoms in breach of the constitution. Do Zimbabweans and its investors have the rights and freedoms they need to do business as they please? This is how bad the minister's decision was, for those who really care.

The other option is that the minister's decision is made in his capacity as a shareholder in each of the companies. But this makes the decision even more bizarre. Reports suggest that there are nine (or at least six as recently reported in the media) diamond mining companies in Marange that are affected. Each of them has one constant; the government (through the ministry of mines) owns approximately 50% of each of the companies. The remaining 50 percent(s) are owned by various stakeholders. One shareholder ordering a company to close without explanation to other shareholders and stakeholders breaches the rights of the other shareholders and the trust between them. How does that happen in company law and good business practice? Is there no law that governs such closures?

Either way, the companies have been ordered to remove all their equipment. No compensation has been mentioned. It is well known that if someone has a business, its value potentially goes well above the value of its movable assets. Why would any investor want to invest in a country where a government minister is given free reign to close your business and potentially give it to someone else without compensation or accountability as to why? Even the so called 'all weather friends' from the East are likely to be alarmed by this smash and grab approach. This is the ugly face of dictatorship that is repugnant to democratic governance. In the strongest possible terms, ZUNDE condemns the Minister's actions. This is what we mean by saying there is no rule of law in Zimbabwe.

One can only hypothesize that the government has realised that they have botched the whole 'Marange debacle' from day one. An order to shut shop is accepting the whole arrangement is rotten from the roots. One can only assume that, the management by 'vote of no confidence' curse that is haunting ZANU PF is now mutating into the corporate world. One cannot rule out the possibility that the tentacles of the succession wars are already reaching further afield. Team Lacoste and the military are being badly hit here, it would appear.  Not that we sympathise with any of the two, but we stand for what is right in terms of law.

One thing for sure is that if they can do it to Marange companies, they can do it to any one of us any day. Bad policies and laws that are seemingly aimed at a minority can be used against anybody when this is convenient to a desperate and despotic government. We recall in the Superior Courts of two decades ago when white Judges were being purged, little was said about it. Little did we know that once they were finished with the white judges, next in line were black judges. Bad precedent had been set. The result was a total collapse of the rule of law. That is why Ministers like Chidhakwa are at liberty today to do as they are doing to business and investments. In democratic countries decisions by public officials are subject to judicial review. If Chidhakwa knew this, he would not have the liberty to do as he did.

It is of critical importance for all Zimbabweans to challenge state autocracy that has crept into the corporate world. Let market forces determine business dynamics.

David Mutori is a pro-democracy activist who is frustrated with politicians abusing their positions by duping people. He believes that Zimbabweans underestimate their individual responsibilities and potential to determine their future. He writes in his personal capacity and can be contacted on mutorid@gmail.com. Ben Paradza is a pro-democracy activist and interim vice-president of ZUNDE.