The Financial Services Commission is tasked with regulating the financial industry in the BVI.
Photo Credit: BVI Platinum News
High-ranging United Kingdom officials are concerned that the British Virgin Islands has been named in a recent report as facilitating financing from Zimbabwe blood diamond trade through a locally registered company.
Human rights group, Global Witness says blood diamond money is being siphoned to finance Zimbabwe President Robert Mugabe and his secret Police.
Alistair Burt, Parliamentary Under Secretary of State (Afghanistan/South Asia, counter terrorism/proliferation, North America, Middle East and North Africa), Foreign and Commonwealth Office raised some concerns during the debate about 'Zimbabwe Blood Diamonds' in the Commons last Tuesday, July 17.
He said that the question of governance and transparency in diamond revenue flows remains genuinely difficult to answer, but it is clear that although there is still an important role for the international community, the UK has discussed with partners solutions that will have to be found inside Zimbabwe in light of lack of international unity.
"We have raised concerns about the handling of diamond finance with the British Virgin Islands. We will continue to work with international partners to support Zimbabwe, but our focus is increasingly on helping to improve conditions for effective regulation of the industry. We are, therefore, supporting initiatives by the World Bank and International Monetary Fund in the mining sector. We will also bring the new Global Witness report allegations on Anjin to the attention of the Chinese," Burt stated.
During the special debate, Peter Hain a former cabinet minister urged the current British government to keep measures already in place and to add more names, including those named in the new Global Witness report, to the list of individuals and entities subject to sanctions.
The Global Witness entitled "Financing a Parallel Government?" pointed to devastating evidence on Zimbabwe´s blood diamond trade.
During the Commons debate, it was pointed out that in Zimbabwe, mineral rights are vested not in the state, but with the President, who has granted a series of mining concessions - one was to Canadile, a company that has since collapsed amid allegations of corruption, including against Obert Mpofu, the ZANU-PF Minister of Mines.
Hain described Mpofu as a man on a £1,200 monthly salary, who is now rich enough to spend over £13 million buying a bank.
Another mining concession was to Mbada Diamonds, who Hain said is run by chief executive officer, Robert Mhlanga, a Mugabe crony, who is developing a £20-million mansion in Ballito, KwaZulu-Natal.
Behind Mbada Diamonds and up to its neck in its shady start-up, is a South African scrap metal company, New Reclamation, and its former chief executive officer, South African business man, David Kassell.
According to reports, in 2011, 25% of the shares of Mbada were transferred to a mysterious network of shell companies based in Mauritius, Hong Kong and the BVI.
According to Hain, those companies are connected to Robert Mhlanga, a retired air vice-marshal in the Zimbabwean air force.
"The use of secrecy jurisdictions and tax havens should raise a red flag for any legitimate businesses trading with Mbada. They should be asking the question, who are the real beneficial owners of Mbada? We have seen with Libya´s Colonel Gaddafi how banks, lawyers and businesses colluded in illicit financial outflows of national wealth. I fear that that is being repeated in Zimbabwe," Hain stated during the debate.
He pointed out that a third mining concession was to Sino Zimbabwe Development and a fourth to Anjin Investments.
It was noted that Sino Zimbabwe Development purports to be a joint venture between the state-owned Zimbabwe minerals development corporation and an investor, Sam Pa-a businessman from the Queensway syndicate, a network of companies based in Hong Kong, Singapore and Angola.
Hain said several sources suggest that Sam Pa gave the secret police-the CIO-a large sum of money, which one CIO document places at $100 million, and over 200 Nissan pick-up trucks.
In return for that apparent assistance, Sino Zimbabwe Development was granted opportunities in Zimbabwe´s diamond and cotton sectors.
Sino Zimbabwe Development was set up and registered in Zimbabwe and Singapore.
According Hain, The Singaporean company is in turn part-owned by Strong Achieve Holdings, a company registered in the British Virgin Islands and controlled by someone believed to be a member of the Zimbabwean secret Police.
"That, again, illustrates the highly disreputable role of the British Virgin Islands in facilitating such murky dealings," Hain stated.
The current UK Government recently shared that responsibility for the regulation of financial services has been devolved to the Government of the British Virgin Islands.
Therefore, the local authorities in British Virgin Islands are responsible for the regulation, supervision and inspection of financial services business carried out in or from within the Territory.
In 2006, diamonds were found in the Marange fields in eastern Zimbabwe. The area holds one of the world´s richest deposits of alluvial diamonds.
The gems lie close to the surface of the ground, making them easy to collect by hand.
During 2008, the military deployed soldiers and helicopter gunships during the clearance of thousands of small-scale miners from the Marange diamond fields, killing and wounding many people in the process.
Hain shared that nearly every soldier in Marange is involved in one way or another in illegal mining. Soldiers have formed syndicates of diamond panners, whom they protect and escort.
Many of the diamonds are smuggled to the town of Vila de Manica, in Mozambique, only 12 miles from the Zimbabwe border.
"It is crawling with illegal dealers from countries such as Lebanon, Sierra Leone, Guinea, the Democratic Republic of the Congo, Nigeria and Israel, most living in smart houses, bristling with barbed wire and CCTV cameras, and guarded by armed men, admitting they do so with the help of army syndicates and senior ZANU-PF politicians," Hain stated.
There are concerns that the financing from the sale of diamonds is helping to keep the current Zimbabwe regime in power and offer an unfair advantage ahead of elections due next June.