ARTICLE by David Masunda
30th August 2001

The ruling Zanu-PF party is at the centre of a complex deal that will rake profits worth US$300 million within the first three years of operation and involves Congo's Kabila family, Zimbabwean army generals and the Kinshasa government in exploiting vast tracts of Congolese forests, an investigation by an international group revealed this week.

Global Witness, which probed the deal, is an international non-governmental agency that focuses on links between the exploitation of natural resources and the funding of wars.

The timber deal, said to be the largest logging contract in the world, will enable ZANU PF companies and the Zimbabwe government to log 33 million hectares of Congolese trees in an area estimated to be one-and-a-half times the size of the United Kingdom.

According to Global Witness' report made available to the Financial Gazette, the logging deal is being executed through a company called the Congolese Society for the Exploitation of Timber, whose French acronym is Socebo.

Socebo is part of a complex web of ZANU PF businesses under the control of Zimbabwe's powerful Speaker of Parliament and party administration boss Emmerson Mnangagwa.

Socebo is a joint venture between Osleg, the Zimbabwean military-controlled company, and a Kinshasa-based firm called Comiex Congo. It is based at Number 196D Avenue Colonel Ebeya in Kinshasa.

Comiex Congo's main shareholder is listed as Laurent Kabila, the late president of the Democratic Republic of the Congo (DRC) who was assassinated by his bodyguards earlier this year.

The deal was brokered by the late Kabila as compensation to the Zimbabwean government for its massive losses in money and human lives in the DRC war, dubbed "Africa's First World War", that has sucked in at least seven southern and east African countries, Global Witness said.

Finance Minister Simba Makoni last year said Zimbabwe had spent about Z$10 billion in its involvement in the then two-year-old war but experts say the actual figure is much more than that.

The government has refused to give figures on the number of Zimbabwean soldiers killed in the conflict that began in August 1998.

President Robert Mugabe deployed the Zimbabwe Defence Forces (ZDF) in the DRC after an appeal by Kabila, who was then under siege from rebels supported by Rwanda, Burundi and Uganda.

Global Witness said Kabila was keen to appease Mugabe after the failure of other business ventures between the two governments such as the aborted flotation in London of Oryx Diamonds and the collapse of Congo-Duka, a joint venture between the Zimbabwe Defence Industries (ZDI) and its Congolese partner General Strategic Reserves.

Oryx Diamonds' flotation on the London Stock Exchange as part of the reverse takeover of the British registered Petra Diamonds Limited failed after the British government blocked the takeover.

Congo-Duka, in which the government is said to have poured Z$1.65 billion as guarantees to ZDI, was formed to supply consumer goods to the war-ravaged DRC.

It also failed to take off because Zimbabwean business leaders were unhappy with the payment plan used which converted US dollars to a lower managed rate against the local currency.

Cosleg - a combination of Comiex Congo and Osleg - the commercial arm of the ZDF whose full name is Operation Sovereign Legitimacy, replaced Congo-Duka.

Osleg's directors are listed as ZDF commander General Vitalis Zvinavashe; Job Whabira, the permanent secretary in the Ministry of Defence; Onesimo Moyo, the director of the Minerals Marketing Corporation; and Isiah Ruzengwe, the general manager of the Zimbabwe Mining Development Corporation.

The late Kabila failed to honour his pledge to pay most of the expenses of Zimbabwean soldiers in the DRC in foreign currency and instead offered mining, agricultural and forestry concessions to Mugabe, Global Witness said.

The logging concessions were mooted in an article in the government's Herald newspaper last year, which reported that part of the cooperation agreement between the Harare and Kinshasa governments included the "moving in of the Forestry Commission to exploit timber in the vast country".

Enos Shumba, the commission's managing director, this week did not respond to requests from this newspaper for comment on whether the Forestry Commission was still acting as a consultant to the deal or was now involved in the actual logging.

According to the Global Witness report, Cosleg established Socebo on January 6 last year to exploit timber reserves in four forest concessions in the DRC.

Part of the deal was that the actual logging would be done by the ZDF, which already has soldiers in most of the areas concerned, while the Forestry Commission would act as technical adviser.

Socebo was supposed to have been launched with a start-up capital of about US$15 million and the remainder of its financial needs sourced from the financial markets.

Among its possible financiers were Malaysian banks and logging companies from France, Malaysia and Lebanon.

The intention, says Global Witness, was to create four concessions and Socebo hoped to produce more than 150 000 cubic metres of timber a year from each of the four at full throttle.

Laurent Kabila gave Socebo the rights to log the forests in 33 million hectares, an area of about 15 percent of the Congo, Africa's third largest country.

The concessions, which are in Katanga, Bandundu and Bas-Congo provinces, were all supposed to be opened by April 30 this year.

Socebo calculated that it would make profits of up to US$300 million in the first three years of operation but analysts pointed out that the amount could be far less because the company had underestimated start-up costs and overestimated profits.

Most of the timber, some of which would have to be transported by rivers because of the poor roads in the DRC, would be exported via Harare and Durban to markets in south East Asia and some European destinations such as France.

Patrick Alley, a Global Witness official, said this week he had information that the logging deal was going ahead despite Kabila's death and protests from environmentalists that it was likely to destroy one of the largest rain forests in Africa.

He said he knew that the Zimbabwe government had approached some local banks to bankroll the massive project but it was not yet clear whether any of the banks could finance the high-risk venture.

Alley said capital for the venture however could be easily obtained from "unscrupulous sources" such the Italian Mafia and other criminal gangs whose companies dominate large-scale logging in Africa and Asia.

He said because logging of the magnitude being planned in the DRC was generally a short-term venture, it was clear that sustainable environmental practices would be sacrificed to achieve quick maximum profits.

"The environmental impact of this deal, especially on the Congolese people who will not be consulted, will be very severe," Alley told the Financial Gazette by telephone from London.

He added: "One of the most important issues about this deal is the human impact. What it means is that the ZDF by engaging in logging has no intention of leaving the DRC."

Zimbabwe says it is withdrawing most of its 12 000-strong force from the DRC as part of the 1999 Lusaka peace accord signed between the belligerent countries, the rebels and Kabila's government.

ZDF spokesman Mbonisi Gatsheni this week said he had no information on the involvement of Zimbabwean soldiers in the logging of timber in the DRC.

"You know we have a company called Cosleg. What their operations in the Congo are in depth I do not know," he said.

Colonel Madzvamuse, the director of operations of Cosleg, asked for questions to be submitted to him in writing before he could comment about his company's involvement in the DRC. He promised to respond but had not done so at the time of going to print.

Zimbabwe has largely escaped blame in the massive looting by countries such as Uganda and Rwanda that has been reported in the DRC.

A special United Nations (UN) report on the DRC this year accused Rwanda, Burundi and Uganda of looting Congelese diamonds, other minerals and its forests but spared the so-called allied forces of Zimbabwe, Angola and Namibia.

Regional diplomats however say the allied forces were only spared because there was insufficient information about their exploits in the vast central African country because the trio refused to cooperate with the UN investigators.