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Cablegate: Possible Financial Sanctions Violation

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS HARARE 001519

SIPDIS

STATE FOR AF/S

SENSITIVE

E. O. 12958: N/A
TAGS: ECON ETRD EINV PGOV ZI
SUBJECT: Possible Financial Sanctions Violation

-------
Summary
-------
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).

------------------
Alleged Grain Deal
------------------

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.

--------------------------
Comment and Action Request
--------------------------

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

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