Mining group hid links with Zimbabwe army, court told

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The Independent Online

A mining company concealed the involvement of the Zimbabwean government in an operation to mine diamonds in the war-torn Democratic Republic of Congo, the High Court was told yesterday.

The Independent went to court to force Oryx Natural Resources to disclose crucial documentation, which Desmond Browne QC, for the newspaper, claimed would show the mining firm was involved in an act of "commercial piracy".

Oryx, named in a report by a United Nations expert panel last year as acting as a front for the Zimbabwean army's substantial interest in the mine, has brought an action for libel against The Independent over an article published last November following the UN report.

At the start of the two-day hearing, Mr Browne told Mr Justice Eady: "The whole venture was clothed in public deceit. The Zimbabwean government was party to an attempt to conceal an act of commercial piracy and Oryx were a willing partner to that concealment." The potential profits could be seen from Oryx's claim that the mine could eventually provide 10 per cent of the world's diamonds.

Mr Browne said that in 1998, the Congolese government offered the Zimbabwean defence forces (ZDF) the mining concession in return for help during its civil war. The ZDF approached Oryx, which set up a joint venture called Oryx Zimcon with a ZDF company called Osleg, of which the ZDF commander, General Vitalis Zviniavashe, and the country's Defence Secretary, Job Whabira, were directors. Mr Browne said that although Oryx sought to represent Osleg as a joint Congolese-Zimbabwean company, it was "exclusively an emanation of the ZDF" and that Oryx.Zimcon was "a deniable entity".

However, plans for Oryx to float on London's financial markets in May 2000 were abandoned after City regulators warned of the "utter unacceptability of a London listing for a company involved with the Zimbabwean military in the exploitation of diamonds in a conflict zone", he told the court.

Mr Browne said an attempt was made to conceal the ZDF involvement and, at meetings later that year, Osleg's shares in the mining company, Sengamines, were transferred to Oryx to act in its place. Despite this, Oryx appointed General Zvinivashe and a ZDF brigadier as directors of Sengamines. Over the next two years, both men attended company meetings, a situation which Mr Browne described as "bizarre".

Oryx said their involvement with the ZDF ended in December 2000, said Mr Browne, but in May 2002 General Zviniavashe spoke at a meeting of the Congolese and Zimbabwean governments of an "equitable redistribution of Sengamines shares between the two countries". It was inconceivable, said Mr Browne, for Oryx to claim that documents relating to these meetings, such as share transfers, registers and minutes, could not be produced. Statements supplied by the company's in-house solicitor were misleading and selective, but even he concluded their absence was "unsatisfactory and inconclusive", said Mr Browne.

Mr Browne argued that the level of documentary evidence would be insufficient to satisfy high-profile investors such as the former Emir of Qatar, his adviser Dr Issa Al Kawari and the Libyan government, let alone Oryx's auditors, PricewaterhouseCoopers.

Responding, Richard Rampton QC said that because the allegations were untrue and the events had never happened, it was not surprising the relevant documents could not be found. He said a number of documents had been disclosed and "excitable and overheated" misreading had led the defendants to jump to the wrong conclusions. "If we are the villains that has been suggested, then these documents would have been buried or shredded a long time ago," he said. Oryx has demanded that the newspaper's source material be disclosed.

Last year Oryx received £500,000 from the BBC over an untrue allegation that a shareholder was linked to al-Qai'da. The judge, also Mr Justice Eady, awarded some costs against the company, criticising it for failing to fulfil its legal obligations of disclosure.