Zimbabwe regime accused of stealing $2bn in diamonds Miners dig for diamonds in the Marange fields. A report by Partnership Africa Canada (PAC) alleges that at least $2bn has gone to a 'parallel government' in Zimbabwe. Photograph: Tsvangirayi Mukwazhi/AP Diamonds worth at least $2bn (£1.26bn) have been stolen by the Zimbabwe president Robert Mugabe's ruling elite, international dealers and criminals, in "perhaps the biggest single plunder of diamonds the world has seen since Cecil Rhodes," a watchdog has claimed. Revenue that could have revived the country's ailing economy has been channelled into a "parallel government" of police and military officers and government officials loyal to Mugabe, according to Partnership Africa Canada (PAC), a group campaigning against "blood diamonds." The Marange fields in eastern Zimbabwe were discovered in 2006 and are one of the world's biggest diamond deposits. But funds from diamond sales have not reached the state treasury, says a PAC report, published on Monday to coincide with a Zimbabwe government conference on the diamond trade in Victoria Falls. Instead there is evidence that millions have gone to Mugabe's inner circle. "Marange's potential has been overshadowed by violence, smuggling, corruption and most of all, lost opportunity," says PAC. "The scale of illegality is mind-blowing" and has spread to "compromise most of the diamond markets of the world." The report, Reap What You Sow: Greed and Corruption in Zimbabwe's Marange Diamond Fields, describes the $2bn lost to the Zimbabwean treasury since 2008 as a "conservative estimate." Tendai Biti, the finance minister, said in his latest budget he had been promised $600m in diamond revenue for the national treasury to help rebuild neglected hospitals, schools and other public services. Only a quarter of that pledge has been received, he claims. The PAC names Obert Mpofu, mines minister since 2009 and a key Mugabe ally, as perhaps the biggest winner. He has amassed an unexplained personal fortune and is linked to a "small and tight group of political and military elites who have been in charge of Marange from the very beginning" and who are personally benefiting from the diamond sales, the report alleges. Mpofu spent more than $20m" "mostly in cash"" over the past three years, the report says, and owns vast swaths of land. "While Mpofu is not the only Zanu official benefiting from Marange's riches, his role as the chief guardian of Marange raises the most concern," the report says. Mpofu insists that western economic sanctions have prevented the government from getting fair prices for the diamonds on the international market. He has repeatedly refused to give exact figures on diamond revenues, the PAC claims. In 2010 leading industry insiders, including Filip van Laere, a Belgian diamond expert working for the Mugabe government, forecast the country could produce as much as 30m to 40m carats a year, worth about $2bn annually, the PAC report says. The diamonds are being mined and sold but the funds are not reaching the Zimbabwean treasury, according to the report. Instead they are going to Mugabe's allies, a group of Zimbabwean military generals and foreigners in South Africa, China, Dubai, India and Israel. Most of the revenue is lost through a lack of transparency in accounting for how many diamonds are mined, how much is earned from their sales, the underpricing of gems on world markets, smuggling and a "high level of collusion" by government officials. Records show that 10m carats of Marange diamonds were exported to Dubai in late 2012 for $600m, which the report says is half the value it should have been. This "underscores a price manipulation scheme perpetrated by Indian buyers and their Zimbabwe allies, with whom they are believed to share the spoils," the report says. PAC's researchers were also unable to trace a 2.5m carat stockpile, valued at around $200m, which mysteriously disappeared in November 2011. It charges that $300m in diamond sales never made it to the Zimbabwe treasury in 2011. The report also criticises the Kimberley Process for allowing the misuse of funds to happen. "Calls for greater transparency have been dismissed within the Kimberley Process," it says. "The lack of transparency surrounding Zimbabwe's diamond revenue is a matter of critical public interest and amplifies concerns for some time that these revenues are funding a parallel government" of Mugabe loyalists, many known to be building private mansions and buying luxury cars costing far in excess of their income from tax-funded salaries, the report adds. Analysts have warned that the diamond wealth could boost Mugabe's war chest for elections expected next year, giving it a huge advantage over prime minister Morgan Tsvangirai's Movement for Democratic Change. Mugabe's Zanu-PF dismissed the report as politically motivated. Rugare Gumbo, a party spokesman, said: "Our view is that PAC is just there to destabilise the situation in southern Africa. The Kimberley Process monitor and other monitors have been here and say it's being done properly. What people don't understand is that we had to bring order to a process that was chaotic. He added: "PAC don't believe we should benefit from the resources of our country. The scapegoat always is President Mugabe because of the regime change agenda. Mpofu told Voice of America: "I will not dignify those baseless accusations with a response. This is pure madness, rank madness really from a group that is sponsored by countries that do not want to see us benefiting from our diamonds. They can continue to talk but we will not look back. Zimbabwe's diamonds are the best and they are hurting that they are not mining in Marange, that's all. We are used to this. They release reports ahead of major conferences and Kimberley plenary sessions but we are not fazed at all.