The Zimbabwe National Army (ZNA) is increasingly expanding its business empire, raising concern in the opposition party that it is strengthening its financial muscle to back up a parallel government.

Of late, the army has been involving itself in private business, raking in concessions in the mining of diamonds and is heavily involved with a company that has tourism and retail ventures. Now it is going into energy production.

Energy interests
A senior army source has revealed that the army has shares in China Africa Sunlight Energy, a company that will roll out a $2.1-billion project that involves coal mining, methane gas extraction and power generation in Gwayi in Matabeleland North.

Apart from getting a mining licence, the company has so far also managed to secure water rights, a power-generation licence from the Zimbabwe Energy Regulatory Authority and has finalised national grid power modalities with the Zimbabwe Electricity Supply Authority.

In an interview, Gift Chimanikire, the deputy mining development minister, confirmed that his ministry had granted the army and its Chinese partner the authority to carry out mining activities.

“I am made to understand that the army is involved in that project, which has also to do with methane gas. The army is also in partnership with Anjin at the Chiadzwa diamond fields. It has some subsidiaries that are involved in other mining activities as well that may be difficult to trace,” said Chimanikire.

Asked for clarity on the partnership in terms of the army’s ownership and what it uses the profits for, retired colonel Charles Mugari, China Africa’s deputy general manager, declined to comment.

“I have nothing to say. You can go ahead and write what you want. You have previously shown that you do not want to work with us,” Mugari said.

New diamond ventures
This week, Giles Mutsekwa, the secretary for defence in Prime Minister Morgan Tsvangirai’s Movement for Democratic Change (MDC), told the Mail & Guardian that his party had new information to the effect that the army was also mining diamonds in Chimanimani, in the same Manicaland province where the Chiadzwa fields are located.

Mutsekwa said the MDC was worried about the army’s business ventures because the military was turning into a government sustaining itself outside the national purse.

“The money it is raising could be a source of conflict. The temptation for the army to run a parallel government is imminent,” said Mutsekwa.

“For the sake of stability, every institution should draw from the national purse. This is a worrying factor. The army could refuse to submit to government authority.”

Some of the country’s army generals have vowed not to recognise any electoral victory by Tsvangirai and his party and have openly declared their membership and allegiance to Zanu-PF.

“Under such circumstances, what can stop them from using some of the money to fund Zanu-PF’s election campaigns?” asked Mutsekwa.

Defence Minister Emmerson Mnangagwa was not immediately available to answer why, if the army received full funding from the government, it needed to venture into private businesses.

The defence ministry was allocated $356.7-million, representing 9.2% of the total 2013 national budget.

It had the third largest allocation after the education ministry, at $754.9-million, and the health ministry, at $380-million. It is doubtful, however, whether it would have received its full allocation in the light of the precarious state of government finances.

The Mail & Guardian last month also reported that the army had continued to hire personnel despite a government moratorium freezing all posts owing to the financial squeeze.

Diamonds, tourism and a college
The army is also in a 50-50 partnership with Anjin, a Chinese firm, in the Chiadzwa diamond mining fields. Through Anjin, Chimanikire said, the army had managed to enter into retail, tourism and higher education.

In a response to parliamentary questions last year, Chimanikire said Anjin was owned by the Chinese and the government of Zimbabwe in a deal where the parastatal Zimbabwe Mining Development Company owned 10% and Zimbabwe Defence Industry, an arms company owned by the Zimbabwe national army, owned 40%.

Said Chimanikire: “Through Anjin, they have managed to enter into mining, tourism, retail and higher education. Anjin built the shopping centre in Belvedere and a hotel in Manicaland.”

The Manicaland hotel is the three-star Golden Peacock, opened last year, and plans are in place to build a five-star hotel, after the group purchases the popular Meikles Park in Mutare.

“Anjin also built the military college,” Chimanikire said.

The National Defence College is affiliated to the University of Zimbabwe, with plans to transform it into a fully fledged military university by 2016.

The $98-million university was built with a Chinese loan in a deal by which the loan would be repaid from the proceeds of the Anjin diamond deal in which the army has shares.

According to the loan agreement, building materials must come from Chinese firms and the Chinese may demand their money back should Zimbabwe’s government policies change.

Barter trade of national resources
Chimanikire said there was an element of barter between the army and the Chinese as, in some instances, the Chinese brought in mining equipment and were not given any cash, but mineral resources, as payment.

Two weeks ago, Finance Minister Tendai Biti told Parliament that in the first quarter of this year $200- million worth of diamonds had been sold, but the treasury had got nothing, raising suspicion about where the revenue was being channelled.

A recent parliamentary report fingered Anjin as one of the worst culprits in terms of diamonds proceeds not reaching the treasury.

Biti also told legislators that the treasury did not have any funds to bankroll the forthcoming polls, in part because of the non-remittance of diamond proceeds.

Biti told the House of Assembly that only President Robert Mugabe could stop some of the illegal activities, adding: “It requires political will from the leader. Unfortunately, that is not coming. That is the internal aspect.”

Political analyst Gideon Chitanga said the illegal activities were left unhindered as Zanu-PF was benefiting from the deal because the army was linked to it.

“There is mutual benefit for the Chinese, Zanu-PF and largely individual military actors who have corruptly amassed massive wealth in opaque deals that prejudice the state.

“The Chinese know very well that the military is a key strategic player in Zanu-PF’s hold on state power,” said Chitanga.

“Other than their personal interest in accumulating wealth, military actors are proactively involved in ensuring that diamond deals with the Chinese are used to fund Zanu-PF instead of government business.”

Controversial business
The other army partnerships are also not free of controversy. The Anjin shopping centre was built on a wetland despite opposition from the government watchdog, the Environment Management Agency, and the Harare Residents Trust. Building on wetlands is outlawed.

Two months ago, the Gwayi Valley Intensive Conservation Area also lobbied the government to block China Africa Sunlight Energy from operating in the area, saying it was affecting tourism.

Mutare residents have since launched a campaign dubbed “Save Mutare Meikles Park” to prevent the sale of the park to Anjin.

“Meikles Park, in the central business district of Mutare, is a place that is special in our hearts. The only place you could sit down and have pie while enjoying the cool breeze. Anjin has arm-twisted the city council to sell them our park so they can build a hotel,” reads part of the campaign’s protest messages.

In a parliamentary debate, MDC Mbizo MP, Settlement Chikwinya, said the army was using retired soldiers as fronts in its deals.

He said the companies were registered in such a way as to make it difficult to trace the ownership.

Chikwinya added that Mbada Diamonds and Canadile Miners, a partnership in which the army also has interests, was registered in Mauritius in 2009, even though it operates locally, and a court order would be needed to obtain its shareholding. Canadile’s licence was later revoked.

Chikwinya said retired Air Vice Marshall Robert Mhlanga, the chairperson of Mbada Holdings, was a former soldier.

The MP identified Canadile shareholders as retired Brigadier Victor Rongai, retired Colonel Charles Mugari, retired Major General Charles Ruwodo, and retired Major Lovemore Kurotwi.

Mail&Guardian