US embassy cable - 04HARARE1519

UNCLAS HARARE 001519 
 
SIPDIS 
 
STATE FOR AF/S 
 
SENSITIVE 
 
E. O. 12958: N/A 
TAGS: ECON, ETRD, EINV, PGOV, ZI, Sanctions 
SUBJECT: Possible Financial Sanctions Violation 
 
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Summary 
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1. (SBU) Various news reports over the past several 
months have alleged that a possible grain deal between a 
GOZ parastatal and U.S. firm Sentry Financial, aspects of 
which may have violated Executive Order 13288 of March 7, 
2003, which restricts financial transactions between U.S. 
entities and 77 Zimbabweans connected to the GOZ and 
ruling Zanu-PF party.  An opposition Movement of 
Democratic Change (MDC) activist has pressed the issue, 
including writing directly to Sentry.  We have not been 
able to substantiate these reports in Harare and request 
that the Department of State pass to the Department of 
Treasury's Office of Foreign Asset Control (OFAC) for 
further investigation (see paragraph 6). 
 
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Alleged Grain Deal 
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2. (SBU) In late-May, Africa Confidential - a bimonthly, 
London-based newsletter about African politics and 
economics - first reported an alleged grain deal between 
the Zimbabwean parastatal Grain Marketing Board (GMB) and 
Sentry Financial of Salt Lake City, UT.  The article 
cited as its source a memorandum between Jewel Bank 
(owned by Central Bank head Gideon Gono) and the GMB in 
which Sentry Financial is alleged to have offered a 
US$700 million loan facility to the GOZ for grain 
purchases. 
 
3. (SBU) Zimbabwe's opposition subsequently picked up on 
the reported deal.  MDC National Executive Member Eddie 
Cross sent a letter to Sentry Financial Executive Vice 
President Kirk Heaton on May 22.  Cross subsequently made 
the letter public.  In it he asserts:  "As a U.S. company 
you are also violating the wishes of your government and 
cannot expect any succor from that quarter."  Cross does 
not refer specifically to financial sanctions (and the 
GMB is not a sanctioned entity), rather his objection is 
that the GOZ would use the grain as a political weapon. 
 
4. (SBU) For its part, the GOZ has denied that any deal 
exists.  On May 16, Agriculture Minister Joseph Made said 
publicly that Zimbabwe did not require grain imports due 
to the success of fast-track land reform.  Made 
reiterated GOZ forecasts of a banner maize harvest of 2.4 
million tons, far exceeding the country's 1.8 million ton 
consumption needs. 
 
5. (SBU) Subsequent Africa Confidential articles have 
further alleged that Mashonaland Tobacco Company - a part- 
subsidiary of U.S. firm Dimon of Danville, VA - 
guaranteed the line of credit in return for tobacco 
supplies.  Africa Confidential and the local opposition 
press also asserted that some of the tobacco Mashonaland 
Tobacco Company purchased could have originated on farms 
occupied by Zimbabwe Defense Industries (ZDI).  ZDI is on 
the Department of Treasury's Office of Foreign Asset 
Control's designated sanctions list and were this 
allegation substantiated, it could constitute a violation 
of EO 13288. (Note: Central Bank Governor Gono is on the 
travel ban but not on the financial sanctions list.) By 
early-June, several U.S. media outlets, including the 
L.A. Times on June 9, ran articles reporting the deal and 
alleging that it violated U.S. sanctions on Zimbabwe. 
 
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Comment and Action Request 
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65. (SBU) The Embassy has not succeeded in substantiating 
whether a alleged deal exists between the GMB and the two 
U.S. firms.  Nor are we able to track the origins of the 
tobacco cited in the media. Post requests that the 
Department of State refer the matter to the Department of 
Treasury's OFAC for further investigation.  The 
Department should alert OFAC that Senator Russell 
Feingold has also requested information about the 
purported transactions. 
 
Dell