Dancing in the Glory of Monsters (58 page)

When the second Congo war broke out on August 2, 1998, President Laurent Kabila knew that he didn’t have the resources or the army to beat back the Rwandan troops who were rapidly approaching the capital. Their indigence was underscored when Kabila sent an urgent delegation to Luanda to plead for military assistance to repel the Rwandan offensive. “First pay us the debt that you owe us,” the Angolan foreign minister told the envoys, referring to a $6 million debt Kabila owed for military support during the first war.
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The Congolese government also owed the Zimbabwean government over $5 million for deliveries of weapons and equipment, and it was clear that neither country would be willing to spend the resources needed without something in return.

Like an entrepreneur trying to fend off bankruptcy, Kabila started putting up his country’s most valuable assets as collateral to secure further loans. He transformed COMIEX into a sprawling conglomerate that struck up partnerships with the Zimbabwean and Angolan state in massive timber, petroleum, mining, banking, and agricultural projects. In Harare, President Mugabe copied his comrade’s business plan, setting up his own privately registered, state-run hybrid called, somewhat ironically, Operation Sovereign Legitimacy (OSLEG), through which he intended to funnel investments and any eventual profits.

The assets involved were enormous: OSLEG went in fifty-fifty with COMIEX in a timber business that received 3,800 square miles from the Congolese state to log, as well as in Sengamines, one of the country’s most lucrative diamond concessions. Several banks were set up to manage the cash flows to and from these various projects, and shares in the front companies were reserved for parliamentarians and ministers in both governments.
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The management of Mugabe’s corporation OSLEG included the commander of the Zimbabwean Defense Forces, General Vitalis Zvinavashe, as well as the minister of defense, along with top officials in the state mining company and minerals marketing board.
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This kind of business climate favored enterprising, rough-mannered, and unscrupulous businessmen. Billy Rautenbach fit this mold. A former race car driver and the son of a wealthy Zimbabwean trucking magnate, Rautenbach took over the family business when his older brother died in an accident, and he set up lucrative car dealerships throughout southern Africa. He was known for his sharp temper. “He used to run the company by yelling at people. All day he would yell at people,” a former business associate told me.
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Over the years, he accumulated charges in South African courts ranging from customs fraud to theft to involvement in the murder of a former business rival. The murder charges were later dropped and Rautenbach eventually settled for the fraud charges, paying $5.8 million in fines.
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In September 1998, Laurent Kabila’s government handed the entire Central Mining Group over to Rautenbach to manage as part of a deal with its Zimbabwean allies. Gécamines officials lamented Rautenbach’s bad temper and the fact that he cherry-picked the best ore, instead of systematically excavating the rock, which damaged the long-term profitability of his Kakanda mine. “He brought in these new machines that weren’t appropriate for the job,” one Gécamines official who was there at the time complained, “and picked holes throughout the concessions. It looked like a half-exploded minefield!”
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Mining analysts were particularly outraged with the immense size of the concession that Rautenbach had obtained. There was no way that he would be able to work on more than a small part of the concession. In the meantime, some of the most lucrative copper and cobalt deposits in Africa lay fallow.

President Kabila was initially happy with Rautenbach’s performance, as he was one of the few people who seemed to be able to squeeze any profit out of the various moribund state-run companies, and just months later made him the director of Gécamines. “Kabila would be on the phone every week with Rautenbach, asking him for more money for the war,” one Gécamines employee remembered.

Rautenbach did not perform poorly at first. By one estimate, he made $20 million from the Kababankola processing facility alone over eighteen months, while in Likasi he was processing 150 tons of cobalt a month, worth $6 million.
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“He kicked ass, got people to work, and cranked out production,” another mining executive remembered.
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However, Rautenbach was out to make quick cash, as was the government, and did not reinvest much of his earnings into the upkeep of infrastructures. By the end of 1999, Gécamines’ mineral production had fallen, and creditors were seizing shipments in order to pay back debts. Moreover, Rautenbach had made powerful enemies by laying off 11,000 state workers and canceling all previous marketing agreements for cobalt, transferring them to one London-based company. In March 2000, Kabila replaced the Zimbabwean with a local businessman.

Similar deals proliferated, usually featuring dubious businessmen and getrich-quick schemes. In 2000, John Bredenkamp, a Zimbabwean arms dealer who has been involved in busting sanctions on Zimbabwe, obtained six concessions with estimated mineral reserves of $1 billion. He gave a down payment of $400,000 and promised 68 percent of net profits to the Congolese and Zimbabwean governments. The same year, another South African entrepreneur with a criminal record, Niko Shefer, met with President Kabila and obtained a deal to trade diamonds through Thorntree Industries, a joint venture with the Zimbabwean army. Shefer’s rap sheet included setting up a pyramid scheme with an evangelical church in Florida and a five-year prison sentence for fraud in South Africa. This time, Shefer was intent on taking advantage of a discrepancy between the official and the black-market exchange rates in the Congo to profit from diamond trading. A South African intelligence report details a conversation between Shefer and a potential business partner:

The official exchange rate is currently $1 = CF [Congolese Francs] 4.5. The unofficial (referred to as “parallel”) rate is $1 = CF 28. Most foreign imports come in at the parallel rate. KABILA has agreed that Thorntree can buy Congolese Francs at $1 = CF 16 whilst diamond and gold purchasing will be conducted at the official rate. This mechanism will create huge margins that will give Thorntree a distinct advantage over its competitors. KABILA agreed to this proposal because he will personally receive 30 per cent of Thorntree’s discount. SHEFER estimates that CF 40 to 60 million a month will be needed to cover the requirements of initial buying operations....

The potential margin is very attractive. For example, at the end of November [1999], I saw a package of 3000 carats, 80% gemstones, bound for the Oman-backed company. The parcel was worth $2.5 million; they paid the CF equivalent of $200,000.
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It is difficult to know exactly how much money the various actors involved made. According to UN estimates, between 1998 and 2001 the Congolese government took roughly a third of Gécamines’ profit to fund the war effort, sending tens of millions of dollars to the Zimbabwean government to cover its military expenses.
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The International Monetary Fund, working from incomplete budgetary data that probably excluded some revenue, concluded that at the height of the war in 2000, the Congolese government was spending 70 percent of its expenditures on “sovereign and security items,” a budget line that was managed entirely by the presidency and dedicated mostly to the war.
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That amounted to over $130 million for that year alone. Some money also went directly to paying the Zimbabwean army—both Rautenbach and Bredenkamp gave money directly to Zimbabwean army commanders to pay for their bonuses, as well as for food and medicine for the soldiers.
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Other money transfers circumvented the Congolese state and went straight to Harare. According to one account, Rautenbach sent between $1.5 and $2 million a month to government officials back home.
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According to several high-ranking Zimbabwean officials, when Rautenbach was removed from the leadership of Gécamines in March 2000, he threatened to reveal exactly how much President Mugabe and Justice Minister Mnangagwa had made during his tenure at the Congolese parastatal.
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In the end, like everything in the Congo at the time, the Zimbabwean profiteering degenerated into a piecemeal approach, as Zimbabwean government officials took advantage of their military links to conduct private business. In October 1998, state-owned Zimbabwean Defense Industries obtained a $53 million contract to supply the Congolese government with food and equipment, much of which would be transported by General Zvinavashe’s private transport company.
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The head of the state weapons manufacturer, Colonel Tshinga Dube, also took advantage of his contact in the Congo to set up his eponymous diamond mining company, Dube Associates—apparently not too concerned with hiding his conflict of interest—in the Kasai province, although without much success.
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By the time of the second Congo war, Mugabe was beleaguered by trade union strikes, food riots, and mounting inflation. He had also just embarked on a move that would come to dominate the next decade of Zimbabwean politics and bring him enemies from all corners of domestic and international politics: the expropriation of 45 percent of the country’s commercial farmland from its mostly white owners. After eighteen years in power, some of his former allies had begun to openly question his leadership. Dzikamayi Mavhaire, a powerful parliamentarian, moved to amend the constitution, arguing that Mugabe should be limited to two five-year terms. “The president must go,” he told an open session of Parliament. The government
Herald
newspaper also began running surprisingly critical editorials, fustigating the land redistribution policy.
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In this context Mugabe was eager to maintain the loyalty of key allies, particularly in the security services. As the economy at home shrunk, so did opportunities for domestic patronage. The Congo war provided the opportunity he needed to keep his collaborators happy and busy elsewhere. This explains the urgency with which the Congolese and Zimbabweans set up their joint ventures and how easily Zimbabwean officials gave up on getting their debts reimbursed through the mining ventures.

At the end of the day, and despite the considerable profits that some Zimbabwean businessmen and officers made, Operation Sovereign Legitimacy did not get a good return on its investments in the Congo. Lured by the promise of vast mineral deposits, the Zimbabwean generals did not realize that rich veins of turquoise copper and blue cobalt were locked up in layers of granite and slate. Unable to finance the billions of dollars of infrastructure rehabilitation and investment needed, Zimbabwe had to content itself with smaller deals—slag heaps, artisanal diamond production, and small-scale mining. Many loans given to the Congolese government were never paid back, and Rautenbach, like other clever businessmen, preempted much of his profits going to Harare through some accounting technicalities. He would sell the ore to one of his offshore holding companies at production price, reducing any profits that could have been taxed by the Congolese state or shared with his Zimbabwean backers to almost zero.
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“Zimbabwe ended up with the dirty end of the stick,” Professor Kampata, an official in the Congolese ministry of mines, told me. “The Congo, at least, got what it wanted: military assistance.”
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The Zimbabweans did not want to invest the billions of dollars needed to get the various diamond mines, copper processors, and timber mills up and working again. In the Senga Senga diamond mine, the Zimbabwean-appointed managers tried to run the elaborate mining equipment on diesel, which they imported over thousands of kilometers, instead of investing in repairing the nearby hydroelectric plant. At the Kababankola mine, Bredenkamp’s managers contented themselves with carting off and processing the tailings and slag heaps that were left over from previous mining operations; any further excavation was deemed too expensive. The Zimbabwean Electricity Supply Authority thought it could make money through hydroelectric power production on the Congo River, but here again they would have had to invest billions in refurbishing turbines and setting up power lines.
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As for the enormous logging concession in northern Katanga, the Zimbabwean managers could not attract the investors they needed to buy trucks and, above all, fix the hundreds of miles of roads that were needed to export the timber.