TINASHE MAKICHI
A fight has erupted in the multimillion-dollar diamond cleaning industry amid revelations that foreign players are using their deep pockets to muscle out local investors.
The lucrative diamond cleaning industry is currently controlled by a local company, Kenako Diamonds jointly owned by locals Barbra Mutambanengwe and Munyaradzi Nzarayapenga.
The tussle comes at a time a former executive at the Zimbabwe Consolidated Diamond Company (ZCDC) is alleged to have roped in a Lebanese diamond dealer Hussein Robai to use state facilities for diamond cleaning as well as gaining access to the precious stones.
Robai, in partnership with South African tycoon Martin Simmons, are said to have tried to take over Kenako but formed a rival firm after the takeover bid failed.
It is alleged that Simmons has been approaching various government
departments in his battle with Kenako shareholders as the tussle for
the control of the sector turns nasty.
Kenako Diamond Processors founder Mutambanengwe confirmed to Business Times the manoeuvres by foreign investors to push out locals.
“Yes it’s true there have been efforts by this foreign investor to take over
my company in a hostile manner after he availed a US$400,000 loan
to the company.
“After realising that the efforts were not bearing fruits, he then decided to collaborate with ‘convicted’ diamond dealers to form a rival company using a section of people who claimed to be connected to higher offices to fight me,” Mutambanengwe said.
“Most diamond cleaning firms are facing funding challenges and some
foreign investors are taking this as an opportunity to muscle out locals.”
Business Times has it on good authority that Simmons allegedly
tried to cause the arrest of Kenako shareholder Nzarayapenga on
allegations of stealing trust funds.
The case is currently being handled by the Criminal Investigations
Department- Commercial Crimes Division.
According to an affidavit seen by Business Times, Simmons at one
point tried to convince Kenako to engage in illegal diamond trading, a
move which was rejected by locals.
After the fallout, Simmons then decided to invest in a rival company linked to Robai and other known illegal diamond traders in Zimbabwe.
“The investor tried to get the company to engage in illegal diamond trading which we refused leading to him fighting local shareholders and the company. As a result, he has frustrated all our efforts to trade normally and has since set up a rival company doing a similar business,” read part of the affidavit dated March 28, 2020.
Robai has since been deported by Zimbabwe Immigration.
A well-placed source said Simmons has been accused to grabbing people’s businesses in the name of funding them.
“He has done the same to most people where he has grabbed their businesses in a hostile manner. Most businesses have fallen victim to him
especially in Matabeleland,” said the source.
Simmons did not respond to questions sent to him when contacted for comment. Local diamond cleaning players are facing various funding challenges, a situation that has exposed them to hostile takeovers by foreigners.
Business Times is informed that some of these foreigners are also
seeing diamond cleaning as an easy avenue to clean their ill-gotten gems.
Over 60 houses in the leafy suburbs of Mutare are alleged to have
been converted into illegal diamond trading centres by a syndicate of
foreigners who have been getting the precious stone from illegal artisanal
miners.
The diamond trading syndicates are said to have devised sophisticated
methods and strategies to evade law enforcement agencies.
The converted
houses are alleged to be located in the leafy suburbs of the City mainly in Greenside, Morningside, Palmerstone and Murambi.
The fight for control of diamond cleaning at one time led to a massive
battle between Minerals Marketing Corporation of Zimbabwe and ZCDC.
Former ZCDC executives were accused of directing orders to MMCZ- exclusive agent for marketing and selling of all minerals produced in Zimbabwe and also determining the buyers, which the state minerals marketer was supposed to engage.
This is not supposed to be the norm, according to officials at MMCZ.
