The Bailout of Robert Mugabe – How Wall Street Money Led to Intimidation, Torture and Death in Zimbabwe

$100 million that flowed directly to Zimbabwe’s brutal dictator Robert Mugabe was more than just a cash infusion to a corrupt dictator.   Rather, it was a veritable political lifeline to a desperate and vulnerable despot. Facing defeat in the initial round of elections to the opposition, and with the nation’s currency was hyper-inflating, the only thing he had at his disposal were valuable platinum assets that were at the time held by Anglo American Platinum.
So Mugabe did what any desperate tyrant would do:  He expropriated the assets from Anglo-American and immediately put them on the market to raise money to crush his opposition.
Enter Wall Street…

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Submitted by Michael Krieger, Liberty Blitzkrieg
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Four days later, Camec announced it was using the money it raised to purchase a joint venture with the Zimbabwe Mining Development Corp., or ZMDC, Mugabe’s state-owned mining company. The joint venture owned the platinum stakes on the Great Dyke that had been taken back just a few weeks earlier from Anglo American. The price included $5 million in cash; Camec issued shares to partners whose identities were shielded by a shell company based in the British Virgin Islands; and $100 million to Mugabe’s government. Camec said the $100 million was a cash loan “to comply with its contractual obligations to the government of Zimbabwe” for the platinum claims.   It said the money would be repaid out of ZMDC’s share of future platinum earnings. Camec’s balance sheets for the period make clear that funding for the platinum rights came from the private transactions involving Och-Ziff.

– From the excellent Bloomberg article, The Hedge Fund and the Despot 

The $100 million figure mentioned above that flowed directly to Zimbabwe’s brutal dictator Robert Mugabe was more than just a cash infusion to a corrupt dictator. Rather, it was a veritable political lifeline to a desperate and vulnerable despot. Facing defeat in the initial round of elections to the opposition, and with the nation’s currency was hyper-inflating, the only thing he had at his disposal were valuable platinum assets that were at the time held by Anglo American Platinum. So Mugabe did what any desperate tyrant would do. He expropriated the assets from Anglo-American and immediately put them on the market to raise money to crush his opposition. Enter Wall Street.

 

 This is where the Central African Mining & Exploration Co., or Camec, sniffed opportunity. Seemingly set up specifically to buy assets on the cheap from desperate African dictators, Camec immediately set out to raise funding to provide Mugabe with much need cash in exchange for the recently stolen platinum assets. Camec had no trouble raising this money from a variety of Wall Street firms, with the core participant being the massive hedge fund Och-Ziff, which contributed 75%, but also included BlackRock, GLG Partners and Credit Suisse.

Mugabe immediately used the money to intimidate, torture and murder opposition leaders until his primary opponent pulled out of the race. The ninety year-old Mugabe remains in power, while many of the Wall Street titans have retired lavishly to multi-million dollar retreats in the English countryside.

This is how financial oligarchs role.

More from Bloomberg Businessweek:

The informant was right: Mugabe lost that first round to Morgan Tsvangirai. Two weeks after the loss, McGee spoke to the insider again. “He told us the regime was preparing for war,” he recalls. Mugabe’s men were setting up command centers for torture and killing in areas that voted for the opposition, the man told McGee, and regional party leaders like him were told to draw up lists of people to target. The ambassador learned that Mugabe’s government had landed critical funding, totaling $100 million, only days after the vote. The regime even provided hundreds of trucks and other vehicles to ferry militias to regions that favored Tsvangirai. Reports of violence across the country soon poured into McGee’s embassy as Mugabe’s militias sought to punish opposition activists, drive their supporters from their homes, and intimidate the rest into backing Mugabe in the next round of elections. So he recruited the gardener at the ambassador’s residence in Harare as a body double and sent him out behind the tinted windows of the embassy limousine one dawn. Mugabe’s intelligence agents dutifully fell in line, on a parade to nowhere. About an hour later, McGee climbed into another limo and met diplomats from the U.K., European Union, and other allied missions waiting outside town.

McGee had witnessed just a fraction of the violence aimed at swinging the second election, scheduled for June 27, 2008. In the weeks leading up to the runoff, there were thousands of casualties reported—and tens of thousands of refugees. McGee wouldn’t find out for years, but as the attacks were unfolding, and as he worked with Washington to financially isolate Mugabe, a Wall Street consortium provided the $100 million for the dictator’s government. These millions secured the rights to mine platinum, among the most valuable of minerals, from central Zimbabwe. Several firms were involved in the investment, including BlackRock, GLG Partners, and Credit Suisse. The most vital player was Och-Ziff Capital Management, the largest publicly traded hedge fund on Wall Street. An Och-Ziff spokesman declined to comment for this article. Now some of its African investments are at the center of an investigation by the U.S. Department of Justice and the Securities and Exchange Commission.  Och-Ziff, founded by Daniel Och in 1994, is a hedge fund titan, with an estimated $45.7 billion in assets under management. Large institutions such as the California Public Employees’ Retirement System, private foundations, wealthy families, and other fund management firms all put their money in its care. When Och took the fund public in November 2007, it became the foundation of a personal fortune estimated by Bloomberg to be about $3.7 billion. The Central African Mining & Exploration Co., or Camec, was listed on the AIM exchange and wasn’t afraid of doing business in chaotic places. It attracted attention in the British press because its chairman was a retired English cricket star. But by February 2008, an Israeli diamond trader named Dan Gertler had negotiated the largest individual ownership stake in the company—almost 40 percent, to be held in family trusts. He forged a close relationship with Joseph Kabila, the former army chief and current president of the Democratic Republic of Congo, or DRC, and later amassed stakes in that country’s state-owned mining ventures, along with a fortune estimated by Bloomberg to be worth $2.5 billion. A panel headed by former UN Secretary General Kofi Annan last year said the DRC, among the world’s poorest countries, lost about $1.4 billion when its government underpriced assets sold to Gertler. The businessman has denied any wrongdoing, and a London-based spokesman declined to comment for this article. Just weeks before the first round of elections in March 2008, Mugabe’s government took control of undeveloped platinum claims along the Great Dyke held by Anglo American Platinum, according to the company’s shareholder filings. (Anglo American is the world’s largest primary producer of the precious metal.) Then the government set out urgently to sell the rights. Camec was ready to buy. It just needed money. It announced in March and April that it was privately raising about $200 million by selling ownership stakes, cash it said it would use to pursue “multiple investment opportunities available to the company in Africa,” besides funding its existing DRC operations. It didn’t specify what or where such opportunities may be. Camec was ready to buy. It just needed money. It announced in March and April that it was privately raising about $200 million by selling ownership stakes, cash it said it would use to pursue “multiple investment opportunities available to the company in Africa,” besides funding its existing DRC operations. It didn’t specify what or where such opportunities may be. Och-Ziff provided 75 percent of Camec’s total fundraising for the effort, or $150 million, corporate records show, making it the mining company’s fourth-largest shareholder. Camec raised the rest by privately selling much smaller stakes to BlackRock and 10 other companies, including GLG Partners and Credit Suisse, according to records obtained by Bloomberg Businessweek and interviews with other fund managers involved. Och-Ziff’s shares in Camec were issued on April 7, 2008. Four days later, Camec announced it was using the money it raised to purchase a joint venture with the Zimbabwe Mining Development Corp., or ZMDC, Mugabe’s state-owned mining company. The joint venture owned the platinum stakes on the Great Dyke that had been taken back just a few weeks earlier from Anglo American. The price included $5 million in cash; Camec issued shares to partners whose identities were shielded by a shell company based in the British Virgin Islands; and $100 million to Mugabe’s government. Camec said the $100 million was a cash loan “to comply with its contractual obligations to the government of Zimbabwe” for the platinum claims. It said the money would be repaid out of ZMDC’s share of future platinum earnings. Camec’s balance sheets for the period make clear that funding for the platinum rights came from the private transactions involving Och-Ziff. On the day Camec announced the deal with Mugabe’s government, two of McGee’s embassy employees were in the countryside gathering intelligence on Mugabe’s efforts to ensure his win. A lieutenant colonel in the president’s army told embassy staffers that soldiers, militia members, and ruling party backers loyal to Mugabe were training to conduct what he called a “reorientation campaign,” according to McGee and embassy cables. The lieutenant colonel also said 400 vehicles were being deployed to facilitate the operation. Violence intensified throughout May. Soldiers drove opposition supporters out of their rural villages or urban neighborhoods. According to the United Nations Office for the Coordination of Humanitarian Affairs, more than 33,000 people were driven from their homes by month’s end. Hundreds turned up at the gates of the American Embassy. “These people were literally running for their lives,” McGee says. The ambassador also began getting reports of the murder of opposition party activists: Men in Toyota pickup trucks without license plates abducted three members of the opposition’s youth group. Their bodies, two badly mutilated, were found over the next few days. An opposition leader named Shepherd Jani was abducted off a sidewalk in his town and pushed into a truck by four men. His mutilated body was found two days later. Such reports multiplied.
So what. At least a couple of hedge fund guys made their billions.
No runoff election was held; the opposition leader withdrew from the race hoping his move would end the attacks. The U.S. Department of State estimated the violence left 289 dead and more than 22,000 injured.

Three days after Treasury acted, a public filing from Camec in London revealed that Och-Ziff was behind 75 percent of Camec’s private fundraising effort in advance of the platinum deal. It’s not clear what triggered the filing or why Camec didn’t make it sooner, given U.K. regulations requiring that it be done “without delay.” By October 2008, McGee’s staff pursued a tip that a Camec shareholder, Muller Conrad “Billy” Rautenbach, was helping the government buy vehicles off the books. A Zimbabwean businessman named Raymond Tendai Chamba, who ran the local office of a Namibian export-import firm, alleges that Rautenbach and Mugabe’s central banker, Gideon Gono, placed orders for 642 vehicles with his company. They were mostly Isuzu pickups, Toyota SUVs, and minivans. Chamba says the orders began coming in during the election period, and he was paid $65,000 in cash per truck. He claims Rautenbach paid mostly in U.S. dollars.

Camec never disclosed precisely who in Zimbabwe got the $100 million it raised from Och-Ziff and others in London, nor did it identify its other partners in the platinum transaction. Former Camec Chief Executive Officer Andrew Stuart Groves hung up the phone this July before offering comment.

Although Camec called the $100 million payment a loan when it closed the financing in 2008, there are as yet no records of repayment. The platinum claims have never been mined.

On March 18, 2013, Och-Ziff announced Cohen’s departure from the firm, without explanation. Before Cohen left, he bought a $22 million English country estate outside London. Called Ewhurst Park, the more than 900-acre spread includes a sprawling main house, cottages, a church, a large lake with ducks, a boathouse, bridges, wooded areas, fountains, and formal gardens. Reached on his cell phone, Cohen declined to comment.
One year later, Och-Ziff warned shareholders that the Department of Justice and SEC were investigating the firm for, among other things, “investments by some of our funds, both directly and indirectly, in a number of companies in Africa.” The probe involves a statute against bribing foreign officials and “related laws,” the firm said, without elaborating. (Spokesmen for both Justice and the SEC declined to comment on their investigations into Och-Ziff.) The firm also handled investments for Libya’s sovereign wealth fund during the reign of the late Muammar Qaddafi, and a source familiar with the company’s operations said that business is also under investigation for possibly violating the Foreign Corrupt Practices Act. In July, Och-Ziff hired David Becker, the SEC’s former general counsel, as its chief legal officer.
Asked repeatedly when Och-Ziff first learned its money would fund the Zimbabwe platinum deal, a spokesman for the hedge fund firm declined to comment. Six different current and former hedge fund executives from other firms in London interviewed for this article said it’s unusual for fund managers to make a large private investment without knowing how the proceeds are to be used. Och-Ziff’s investment in Camec did not come with a seat on the mining company’s board. A tenuous power-sharing agreement between Mugabe and the opposition ended last year when Mugabe won new elections. The U.S. and others declared them rigged. American sanctions have been extended under President Obama. Mugabe, 90, is still in power.
Let the Justice Department and SEC investigate. Nothing meaningful will come out of it. Too many rich and powerful people got paid, and as Larry Summers so crudely admitted in 2009 “insiders don’t criticize insiders.” Just like how Jaime Dimon got a 74% raise in 2013 despite “settling” for $13 billion despite “doing nothing wrong” (in case you missed it, you must read: Jamie Dimon’s Big $13 Billion Secret – The Truth Behind the JP Morgan Settlement). There’s reason why Honore de Balzac’s famous words, “behind every great fortune lies a great crime,” still rings true today. While certainly not always the case, it is applicable in more instances than any of us wish to admit. For every vulnerable dictator, there is always an immoral opportunist waiting in the wings to snatch assets on the cheap. The more this sort of behavior remains unpunished, and the billionaires behind it celebrated, the more of it we will see. The masses will remain desperate and destitute and the oligarchs will continue to safely smile and sip champagne from estates in the English countryside. This is the real face behind the global oligarchy. In Liberty, Michael Krieger