ZIM NOTES 01-08-2010

UNCLAS SECTION 01 OF 03 HARARE 000012 AF/S FOR B. WALCH ADDIS ABABA FOR USAU ADDIS ABABA FOR ACSS NSC FOR SENIOR AFRICA DIRECTOR STATE PASS TO USAID FOR L.DOBBINS AND J. HARMON COMMERCE FOR ROBERT TELCHIN SIPDIS E.O.12958: N/A TAGS: PGOV PREL ASEC PHUM ECON ZI SUBJECT: ZIM NOTES 01-08-2010 -------------- ¶1. SUMMARY -------------- Vacations Delay Negotiations... Diamond Sale Announced Then Cancelled... MDC-T Investigating Corrupt Ministers... Zim Ambassador Invades Malaysian-Owned Farm... Teachers and Mine Workers Threaten Strikes... Michael Jackson's Ghost Sighted in Zimbabwe... Counterfeit US$50,000 Found in Toilet... Gono Sells Own Bank to German Investors... Electricity Utility Seals a Deal with Botswana Power Company... Mobile Phone Giant in Talks with State-Owned Mobile Operator... Economic Woes Take their Toll on Redcliff Town... -------------- On the Political and Social Front -------------- ¶2. Most Zimbabweans remained on vacation this week. President Mugabe is rumored to be in Asia and Prime Minister Tsvangirai has been in Dubai and the Seychelles. The principals are expected to return mid-January at which point they and their negotiators will attempt to resolve the remaining outstanding issues: the appointments of Gono, Tomana, Bennett, and the governors. Parliament will also re-open mid-January. ¶3. On Thursday The Herald announced that Mbada Diamonds, one of the companies currently digging in the controversial Marange diamond fields, was planning to sell 300,000 carats (approximately 60 kgs) of diamonds in an auction on January 7 to international buyers. This came as a surprise since the Kimberley Process action plan on Zimbabwe that was signed in November stipulated that no diamonds could be exported without approval of a monitor, who has not yet been designated. In a quick about-face, announcements late Thursday cancelled the sale, with the Deputy Minister of Mines Murisiwi Zwizwai explaining that the government was not aware of the sale and had not approved it. ¶4. The MDC-T announced that it has set up a 13 member team to investigate reports of alleged corruption by three of its (unnamed) cabinet ministers, several law makers, and councilors and vowed to dismiss those found guilty. Recently the party took drastic measures to weed out corruption from its ranks and dismissed the mayor and suspended a councilor from Chitungwiza. The party announced that it will adopt a code of conduct that will require its ministers, 
legislators, and councilors to declare their interests and assets as a measure to fight corruption. ¶5. On Tuesday, Zimbabwe's Ambassador to Tanzania, Edzai Chimonyo, was ordered by the High Court to vacate a banana plantation he occupied over the festive season in Manicaland, but the retired army general refuses to leave the farm. The property, Fangundu Farm, southeast of Mutare, is owned by a Dutch and Malaysian company and is protected by a Bilateral Investment Promotion and Protection Agreement (BIPPA). Chimonyo has reportedly ordered armed soldiers onto the property and has begun harvesting bananas in spite of Tuesday's High Court order. A Lands Ministry official in Mutare described the High Court ruling as "just a piece of paper." Qdescribed the High Court ruling as "just a piece of paper." ¶6. Demanding increased salaries, teachers' and mine workers' unions are threatening to go on strike. Teachers from both of the major teachers' unions have reiterated their demand, which they've been making for the last year, for a wage that complies with the poverty datum line, most recently estimated at US$600. The next semester is scheduled to begin on Tuesday January 12. Like other civil servants, most teachers make US$150 per month. Similarly, the Associated Mine Workers' Union of Zimbabwe is threatening to strike after failing to reach an agreement with the Chamber of Mines. The Chamber said they HARARE 00000012 002 OF 003 were only prepared to pay a minimum wage of US$80, a reduction from the previous minimum wage of US$100, while the mineworkers were demanding a minimum wage of US$200. ¶7. Just when we thought we'd heard it all, we learned this week that The King of Pop has chosen a Catholic girls school in Harare as his preferred haunting grounds. According to press reports, during a nativity play at St Mary's Mission School, children dressed as Mary, Joseph, and the Wise Men were on stage when suddenly the lights went out, then a "ghost-like being" appeared on stage waving a white-gloved hand. The terrified students emptied the hall along with the supervising nuns. Almost all students later agreed that it was Michael Jackson. "It definitely was MJ" noted Theresa, a student at the school. "It was his face and his clothes. He smiled and waved at us." We're not convinced, but this is Zimbabwe, where anything is possible. ¶8. In other "even we can't make this up" news, a Harare man was arrested after he was found hiding fake bills totaling US$50,000 in a toilet at a stationery shop, according to The Herald. This is one of several recent arrests of producers and dealers in counterfeit currency. -------------- On the Economic and Business Front -------------- ¶9. In a rare spasm of efficiency, Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono approved in record time the sale of 54 percent of a local financial institution, Premier Bank, to German investors. It happens that Gono and an ally were Premier Bank's main shareholders. The deal worth US$6 million saw the RBZ unilaterally fast-tracking a waiver on Zimbabwe's stringent banking and indigenization policies to allow foreigners a controlling stake in order to facilitate recapitalization. Gono and his crony, RBZ supervision chief Norman Mataruka, reportedly owned 50 percent of Premier Bank, with a further 4 percent belonging to Mataruka's brother-in-law. ¶10. The Zimbabwe Electricity Supply Authority (ZESA) has entered into a contract worth US$8 million with the Botswana Power Company that will see it revive the Bulawayo Thermal Power Station. According to ZESA, the deal will enable the company to produce 90 megawatts of electricity with 40 megawatts being exported to Botswana while the remainder will be consumed locally, thereby reducing load shedding. ¶11. According to a report in the Financial Gazette, MTN has set its sights on acquiring a significant stake in Zimbabwe's state-owned mobile phone provider, NetOne. Although NetOne executives have refused to comment on developments, officials from MTN have been camped at NetOne's offices for nearly a month now. Many analysts believe that a deal is imminent. ¶12. The town of Redcliff in the Midlands has reportedly collapsed following the closure of the town's main industry, Zimbabwe Iron and Steel Company. Most companies operating in the town have stopped QSteel Company. Most companies operating in the town have stopped paying local taxes to the Redcliff council, citing viability problems, while residents are also not paying because of difficult economic conditions. As a result of these problems, the Town Council is failing to settle its bills with electricity and telephone services providers ZESA and TelOne. -------------- Quotes of the Week -------------- ¶13. "The entire process of mining, transportation to marketing is being done in compliance with the requirements of the Kimberley Process." -- Robert Mhlanga, Chairman of Mbada Diamonds, The Herald, HARARE 00000012 003 OF 003 January 7, 2010. ¶14. "The due process for selling diamonds produced in Zimbabwe involves the Minerals Marketing Corporation of Zimbabwe, ZRP Minerals Unit, the Ministry of Mines and Mining Development, and Zimbabwe Mining Development Corporation where diamonds from Marange are concerned... In the case of Mbada Diamonds, this process is yet to happen." -- Ministry of Mines Permanent Secretary Thankful Maskukutwa, The Zimbabwe Independent, January 8, 2010. RAY