Hear the interview with Patrick Smith

A diamond company connected to the Governments of both Zimbabwe and Congo, is planning to list on the London stock market.

Oryx, which has concessions to mine diamonds in the Congo, has announced a reverse take-over of an existing stock market group called Petra Diamonds. Oryx' chairman, Thamer Al Sanfari, is thought to be a friend of Zimbabwean President Robert Mugabe.

So why is the group seeking to raise money in London? Patrick Smith is editor of Africa Confidential, the magazine which broke this story in its latest issue. He told our reporter Roger White that it was a backdoor way for Zimbabwe to pay the cost of keeping its soldiers in Congo, where it is backing Congolese President Laurent Kabila:

"Basically, Kabilla could not afford to pay the Zimbabwean army compensation for their military operations in the Congo which were propping up the Kabilla government. So instead, Kabilla awarded the government of Zimbabwe, and Mugabe, with these diamond concessions. This latest deal is just a way that the Zimbabweans have found of making these concessions work - or so they believe.”

Roger White asked why they wanted to float the company on the London stock Market?

“Well, that will give them the sort of international respectability and credibility, which they hope will enable them to raise finance capital to develop the mine. The mining concession they have is in two areas. It is a number of alluvial sites which require very little investment, basically panning for diamonds in the river beds, but there are also six kimberlight pipes which involve complex and highly skilled deep mining, and to do that they are going to need to raise a few hundred million dollars internationally."

They feel that a listing on the London Stock Exchange is going to give them international respectability. Patrick Smith

Was there any prospect that the London Stock Exchange will say that they do not want to list the company because it was a policy of the British government to encourage people not to buy diamonds from war-torn areas in Africa and elsewhere? Roger White asked Patrick Smith.

"It is going to be difficult to see how they are going to stop them. They have apparently already started investigation into the Petra diamonds plan and the difficulty of course, is that Petra Diamonds is already listed on the London Alternative Investment Market and it is really going to need the regulatory authorities in London to look into the mechanics of this take-over.

I think one of the things they may be particularly unhappy about, is the level of disclosure that Oryx Natural Resources has made. Mr Al Sanfari is an extremely secretive business man. He has registered all his economic assets in the Cayman Islands or similar-type locations, where it is really impossible to find out who has the majority shareholdings, the conduct and nature of the companies and their financial performance. So it may be that Mr Al Sanfari will be forced to make more disclosures at least about the operations of his companies. I think that is probably going to be the biggest regulatory bar to this listing going ahead.

What they are planning to do is to have a meeting in London of all the Petra Diamond shareholders who are existing now, on the 12th of June and, if they then vote for this take-over, they would hope to then list the new company the following day on the London Stock Exchange."

If shareholders vote for this take-over, they would hope to list the new company the following day on the London Stock Exchange. Patrick Smith