When reference is made to the ‘plunder’ of Africa, or, in more technical terms, to ‘illicit financial outflows,’ the focus is usually on exploitative multinational mining companies, under-declaration of exports and tax evasion by the private sector. The Panama and Paradise papers showed how billions of dollars that rightfully belong in tax coffers have been siphoned off to Swiss bank accounts and tax havens like the Bahamas and Mauritius. In 2018, the West Africa Leaks shed a spotlight on the stark consequences of this phenomenon for poor African countries that, in spite of massive natural wealth, don’t provide even proper roads to citizens, let alone healthcare or education. But one important factor in the plunder of Africa’s resources often escapes scrutiny: the accountability of Africa’s political leaders themselves. Estacio Valoi is a freelancer who lives and works in Pemba, northern Mozambique, where he says he witnesses cargo ships taking out his country’s wealth on a daily basis. He reports on this for the Oxpeckers environmental unit, 100 Reporters and the online magazine ZAM, and is a member of the African Investigative Publishing Collective (AIPC). Valoi’s reporting on the looting of ruby and other natural resources in his country, Mozambique, provides much-needed scrutiny.
His chapter in the larger transnational investigation into African oligarchs published by AIPC shows how foreign companies are drawn into partnerships with the ruling Frelimo party elite, who hold the licences that provide access to the natural resources. Valoi shows, using the Extractive Industries Transparency Initiative (EITI) and company registry data, that nearly all the licences to exploit natural wealth in northern Mozambique have been allocated to local ruling party-connected individuals first, before the foreign companies came in. Valoi’s identification of Frelimo politicians, lawyers and generals as beneficiaries of these licences also shows that this is not an issue of ‘indigenisation’ of Mozambique’s extractive sector. It is not Mozambique’s working business people or artisanal miners who benefit from the foreign investment and expertise. The powerful individuals who end up owning up to half of these joint ventures are conduits: the foreign company does the work, takes out the goods and hands a share of the profit to the local partner.
Where does the tax evasion come in? This part of what Valoi unearthed really shatters the notion that only foreign looters are to blame for this scourge. The main multinational in the area, gemstone giant Gemfields/Pallinghurst, has been faithfully paying the agreed 10 per cent of profits in royalties to the Mozambican state. Montepuez citizens have not benefitted from these moneys at all, in spite of an arrangement with the company that close to a third of the royalties should directly be put to good use in the region. This is not the fault of Gemfields/Pallinghurst, but of Mozambican bureaucrats who have ignored the requirement. In another case unearthed by Valoi, a localforeign joint venture was able to take out rubies worth over US$110m without the necessary licence. It was thanks to high-level political connections that they bypassed the provincial mining authority with impunity. Valoi’s third achievement in this piece is that he shows how a political ‘plunder’ elite erodes the state itself. Why have a system of licences and a provincial mining authority if its rules and regulations can be ignored? Why have a tax authority if the moneys it collects do not benefit the citizens? Why even have human rights laws and artisanal mining agreements if – as Valoi also documents – powerful individuals can bypass regular police command unleash militias and Special Forces on farmers and villagers? Valoi’s relentless reporting, often while risking his life, in the forests, fisheries, export ships and mining sites, has had significant impact in Montepuez. He reports that Gemfields/Pallinghurst works less directly with the generals now, and more with the local state and justice structures. A company with a globally advertised corporate social responsibility and environment-friendly image cannot afford to be called, as one of Valoi’s stories was titled, ‘Friends with the general’.
Valoi, Estacio and Mohammad, Gesbeen. 2016. The Ruby Plunder of Montepuez. ZAM magazine. Available at: www.zammagazine.com/chronicle/chronicle-22/318- the-ruby-plunder-wars-of-montepuez, accessed on 18 August 2018. AIPC. 2017. The Plunder Route to Panama. How Arican oligarchs steal from their countries. ZAM magazine. Available at: www.zammagazine.com/images/pdf/ documents/African_Oligarchs.pdf, accessed on 18 August 2018
All the Generals’ Licenses
Estacio Valoi, ZAM magazine, 12 April 2016
The mining concession map of Montepuez, drawn up by Mozambique’s mining and energy department in compliance with international Extractive Industries Transparency Initiative (EITI) requirements, is so completely covered in squares, rectangles and other angularly shaped blocks that it begs the question where the people are going to live. The entire region seems to have been allocated to mining, with only space on the side for a nature reserve. Company papers related to the ruby concessions in the area show that practically all these concession areas are owned by a set of well-networked, ruling party-connected generals and security supremos, politicians and former and present highranking ruling party members, as well as the Mayor of Maputo. The biggest concession, of Montepuez Ruby Mining, aka MRM Gemfields – the only one that has already been legally owning, producing and exporting rubies from Mozambique for the past five years – is partly owned by Mozambican General Raimundo Domingos Pachinuapa, a powerful member of Mozambique’s ruling party, former liberation movement Frelimo. General Pachinuapa’s company Mwiriti holds 25% of MRM, of which the other 75% is owned by UK multinational Gemfields, recently taken over by Pallinghurst. Pachinuapa also holds a quarter each of Gemfields/Pallinghurst’s other concessions, Megaruma and Eastern Ruby, as well as 20 other licencses of his own for ruby mining in Montepuez. His son Raime is MRM’s manager for corporate affairs.
The General doesn’t answer several requests for interviews. The closest I ever come to him is in a bar in Pemba, on an afternoon in 2016, when a lawyer known to be ‘well-connected’, suddenly sits next to me and tells me how ‘generous’ the general is known to be to his ‘friends’. These friends are most likely not the common inhabitants of Montepuez, though, since no one has been particularly generous to them since mining started. The damage to, in some cases destruction of, villages and farms has not been compensated by an increase in services to the population – electricity, water, schools or shops – as promised by the company and its governing elite partners at the time, in 2014. Mining jobs at MRM – 1,100, says MRM, much less, say locals – have also not compensated for the loss in income experienced by 1,500 artisanal mining families in the region. In the early days – before the partnership was formed between Mwiriti and Gemfields to create MRM – these artisanal miners had been selling rubies to the Mwiriti operation. But, according to locals, it had been no more than ‘two weeks after the arrival of Gemfields’ that the artisanal mining associations had been destroyed and the first accounts of violence against artisanal miners by nacatanas, militias working for the company, were recorded. ‘Formal’ mining is still officially supposed to benefit the Montepuez region. According to provincial financial department administrator Fernando Djange, MRM Gemfields has an agreement with the Mozambican state to pay it 10% of the sales value of each ruby auction in royalties. Of this, 2.75%, says Djange, is ‘paid to the Montepuez district in royalties at the end of every budget year’. With over nine auctions to date, with according to Gemfields a total revenue of US$288m, royalties would amount to close to US$29m, with 2.75% of that being over US$7m. Seven million American dollars for a sparsely populated district could do a lot of good. Only it never came. Perusing the budget records at the Cabo Delgado provincial administration, under which Montepuez falls, I only see one input from MRM Gemfields of 6m meticais (US$ one hundred thousand) in 2016. There is no input over the other years. ‘We’ll check with the finance department,’ says Dange. ‘It is definitely there.’ But neither he nor the finance department come back to clarify the issue. Montepuez district administrator Etelvina Fevereiro, asked if her department ever received the money, explains that ‘we only get it two years after the auction. So the money from the auction in 2017, we’ll get it in 2019.’ But two auctions were held in 2014, totaling over US$76m in revenue. Royalties would amount to close to US$2m, 20 times the amount actually paid in 2016. Fevereiro says she doesn’t know about that. ‘You should check with the Cabo Delgado provincial financial administration.’ Gemfields maintains in an email that all royalties have been paid and notes that ‘allocation and distribution’ is the responsibility of the Mozambican government.
Whether Gemfields is responsible for the fact that millions of dollars in benefits from its mining are not reaching the villagers, or the Mozambican state, is difficult to answer. Gemfields’ operational partners are the Mozambican state, after all. Several others among Mozambique’s Who’s Who list of ruby concession owners have also found international partners with substantial mining capacity. Felicio Zacarias’s company, Regius, features as a partner in UK Redstone mining; Zacarias and prominent Frelimo lawyer Lukman Assade Amane are also partners in Australian Mustang resources. According to Mining Weekly of 20 January 2017, ‘Mustang Resources announced in late January that it had dispatched its “first commercial parcel of the precious stones of 6,221 carat of rubies from its project in (Mozambique) to the US”. Mustang’s website estimates the value of one carat of rough Mozambican rubies between US$18,000 and US$42,000, which would place the value of the parcel at at least US$112m. Informed about this, Montepuez mining director Ramiro Nguiraz says he has ‘dispatched an inspection team’ to the Mustang concession in Montepuez. ‘Mustang only has a prospecting licence. They are not allowed to produce and sell. We think there are few things they did against the law.’ Mustang managing director Christiaan Jordaan is adamant, however, that the company’s exploration and prospecting licence allows the right to export and sell rubies ‘to finance further exploration’. He adds that ‘all Mustang’s exports have been approved by the Department of Minerals and the Department of Customs’ and that ‘regarding the export of rubies from Mozambique, including the parcel mentioned by you that was exported at the start of this year … we have gone through all the official channels with the Mining Department to secure the necessary export permits and we paid the royalties as calculated by the department.’ Jordaan does not respond to an email in which we ask him to provide the text of the licence. There are more such, let’s call it communication gaps, between Montepuez’s civil servants trying to do their job and those involved in the mining. Last year, then district administrator Arcanjo Cassia complained that he did not know where to turn to demand delivery on the promised Corporate Social Responsibility Projects (schools, employment projects, water wells among others). In another case, provincial Attorney General Pompilio Uazanguia was demoted from his position after he had attempted to prosecute militia killers of artisanal miners. The demotion took place amid unsubstantiated rumours that Uazanguia was ‘involved in timber smuggling,’ which were then echoed as fact in a letter sent by Gemfields to a publication that had quoted Uazanguia. (Uazanguia has started a defamation lawsuit against Gemfields/Pallinghurst for airing the accusation.)