Monday, August 13, 2012

Och-Ziff Capital Management Group Supplied the Money that Kept Mugabe in Power

From the Mail & Guardian (South Africa):
The investor who saved Mugabe
A New York hedge fund "loaned" the millions Zanu-PF needed to crush the opposition Movement for Democratic Change's victory in the 2008 elections.
The source of a controversial $100-million loan that allegedly made it possible for President Robert Mugabe to steal the 2008 Zimbabwean election is a major US institutional investor, the Mail & Guardian can reveal.
The payment, which critics say helped Mugabe's Zanu-PF to buy votes and unleash a campaign of brutal repression in an election in which he faced almost certain defeat, was made possible by the New York-based Och-Ziff Capital Management Group.

Mugabe's government was bankrupt and teetering as the rival Movement for Democratic Change won the most votes in parliamentary and first-round presidential elections. Facing a trouncing in the runoff against the MDC's Morgan Tsvangirai, Mugabe needed money fast.

So his government sold the family silver – or rather platinum concessions freshly squeezed from South Africa's Anglo American Platinum. The ultimate buyer was a mining company founded by former English cricketer Phil Edmonds. On top of the purchase price, the company threw in the $100-million (then R780-million) lifeline.

That much is known. But Edmonds's Central African Mining and Exploration Company (Camec), then listed in the United Kingdom, did not have that kind of cash. So it did what listed companies do – issue and sell new shares.

Contrary to listing rules, the purchaser of the shares was not revealed, which meant that the ultimate source of the money remained a mystery. That source, it now turns out, was Och-Ziff.

Although it has about $30-billion in assets under management, Och-Ziff has kept a low profile. Closer to home, it is best known for its joint venture with Mvelaphanda Holdings, the private investment vehicle part owned by Human Settlements Minister and presidential hopeful Tokyo Sexwale.

Although the partnership, then cast as "exclusive", had been announced only months before, Mvelaphanda denies having participated in the Zimbabwe deal. The M&G is not aware of evidence to the contrary.
It is surprising that Och-Ziff was willing to finance the Zimbabwean loan despite the likelihood that Mugabe, whom Western governments opposed implacably, would use it to fuel repression.
Och-Ziff declined to comment.

Step 1:  Squeeze
Less than a week before Zimbabwe went to the first-round polls, its most tightly contested yet, Mugabe bagged a prize asset. Anglo American Platinum, the world's top platinum producer, ceded more than a quarter of its platinum concessions in Zimbabwe to the government.

The deal had elements of a "shakedown" – Anglo was over a barrel, not least because foreign exchange due to it had been frozen by the authorities – but the cession did not happen for free. In return, Anglo was granted empowerment credits and foreign exchange indulgences that would allow it to develop a valuable remaining concession.

Step 2:  Flip
Immediately after Anglo had been relieved of its concessions, the ­government awarded them to Todal Mining, a joint venture between the state-owned Zimbabwe Mining Development Corporation (40%) and a private company, Lefever Finance (60%).

Lefever was owned by the opaque Meryweather Investments, registered in the British Virgin Islands.
Meryweather's ownership remains a mystery, but it has been associated with Billy Rautenbach, a close Mugabe ally who allegedly fronted for Zanu-PF or its functionaries in business deals.

Rautenbach was placed under European and United States sanctions later that year for allegedly supporting Mugabe's regime. At the time, he was also wanted on criminal charges in South Africa. But in a 2009 plea bargain with South African prosecuting authorities Rautenbach pleaded guilty, on behalf of one of his companies, to 326 fraud charges. He paid a R40-million fine.
Rautenbach did not respond to requests for comment.

Step 3:  Cash in
The parliamentary and first-round presidential elections were held on March 29 2008. Although the electoral commission initially withheld the results, Mugabe was on the ropes and he knew it.
Less than a fortnight after the vote, the regime turned the platinum assets into instant cash. This is how it was done:

On April 11 Camec, then chaired by Edmonds, bought Lefever for $5-million cash plus millions of newly issued Camec shares. That went to the owners of Meryweather, whoever they were. But in a stock exchange announcement Camec confirmed also that it had "agreed to advance to Lefever [which it had just bought] an amount of $100-million by way of a loan to enable Lefever to comply with its contractual obligations to the government of the republic of Zimbabwe"....MORE
HT: naked capitalism
See also:
Inside Mugabe's torture camps: beaten, maimed and poisoned with weedkiller