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This story starts with James McGee, the former US ambassador to Zimbabwe during the contentious 2008 election that Movement for Democratic Change (MDC) leader Morgan Tsvangirai was tipped to win.

Shortly before the poll, McGee secretly met a member of Mugabe's political machinery.

McGee was deeply sceptical of this insider during their first meeting, but one of his tips was plausible: Mugabe was about to lose the first round of elections and he knew it.

Mugabe did indeed lose the first round to Tsvangirai, and two weeks later McGee again spoke to his insider from the president's ranks. "He told us the regime was preparing for war," he recalls. The issue was how to finance this war.

Funding a crackdown

Mugabe's men were setting up command centres for torture and killing in areas that voted for the opposition, the man told McGee, and regional party leaders like him had been told to draw up lists of people to target.

The ambassador learnt that Mugabe's government had landed critical funding, totalling $100-million, only days after the vote. The regime provided hundreds of trucks and other vehicles to ferry militias to regions that favoured Tsvangirai.

Reports of violence across the country soon reached McGee's embassy as the Zanu-PF leader's militias sought to punish opposition activists, drive their supporters from their homes and intimidate the rest into backing Mugabe in the next round of elections.

Shaking off Mugabe's intelligence agents, McGee met diplomats from the UK, EU and other missions outside town. They headed to an old sawmill turned torture centre. There, in a local village and at two hospitals, McGee and his entourage, which included journalists, interviewed and photographed victims of the violence.

McGee had witnessed just a fraction of the violence aimed at swinging the second election, scheduled for June 27 2008.

In the weeks leading up to the runoff, there were thousands of casualties reported - and tens of thousands of refugees.

Enter the hedge fund

McGee would not find out for years but, as the attacks were unfolding, a Wall Street consortium provided the $100-million for Mugabe's government.

These millions secured the rights to mine platinum from central Zimbabwe.

Several firms were involved in the investment, including BlackRock, GLG Partners and Credit Suisse. But the most vital player was Och-Ziff Capital Management, the largest publicly traded hedge fund on Wall Street.

Och-Ziff, founded by Daniel Och in 1994, is a hedge fund titan with an estimated $45.7-billion in assets under management. The seeds for Mugabe's salvation were sown when Och-Ziff met Camec (which is not the same company as Camac Energy, the controversial company in which the Public Investment Corporation recently bought a stake).

By February 2008, 40% of Camec's shares were controlled by an Israeli diamond trader named Dan Gertler, who had forged a close relationship with Joseph Kabila, president of the Democratic Republic of Congo.

A panel headed by former UN secretary-general Kofi Annan last year said that the Congo lost about $1.4-billion when its government underpriced assets that it sold to Gertler.

Gertler has denied any wrongdoing.

A source familiar with its investment decisions says that Och-Ziff was primarily interested in Camec because of the Congo assets it was developing with Gertler.

Grabbing Amplats's claims

Zimbabwe has few sources of foreign currency, but in March 2008 one asset it did have was platinum, which at that stage hit a record $2301.50 an ounce.

Some of the best of Zimbabwe's platinum claims are along the southern tail of a narrow, 480km seam of ridges known as the Great Dyke - one of the richest platinum seams ever found.

Weeks before the election, Mugabe's government took control of undeveloped platinum claims along the Great Dyke held by Amplats.

Almost immediately, the government set out urgently to sell the rights.

Camec was ready to buy - it just needed money. And so Camec announced that it was privately raising $200-million by selling ownership stakes, cash it said it would use to pursue "multiple investment opportunities in Africa".

Och-Ziff then stepped up, providing 75% of Camec's total fundraising, or $150-million, making it the mining company's fourth-largest shareholder.

Camec raised the rest of the cash by selling smaller stakes to BlackRock and 10 other companies, including GLG Partners and Credit Suisse, according to records and interviews with other fund managers involved.

Finally, on April 7 2008, Och-Ziff got its hands on the Camec shares.

Four days later, Camec announced that it was using the money it had just raised to buy a "joint venture" with the Zimbabwe Mining Development Corporation (ZMDC), Mugabe's state-owned mining company.

The joint venture owned the platinum stakes on the Great Dyke that had been taken back just a few weeks earlier from Anglo American.

The price included $5-million in cash - Camec issued shares to partners whose identities were shielded by a shell company based in the British Virgin Islands - and $100-million paid to Mugabe's government.

Officially, Camec said the $100-million was a cash loan "to comply with its contractual obligations to the government of Zimbabwe" for the platinum claims. The money, it said, would be repaid out of the ZMDC's share of future platinum earnings.

It was pretty clear that the money Camec used to pay Mugabe for the platinum rights had come from the deal with Och-Ziff.

The bloodshed spreads

On the day that Camec announced the deal with Mugabe's government, two US embassy employees were gathering intelligence on Mugabe's efforts to ensure his victory.

People in Mugabe's army told the embassy staffers that soldiers, militia members and people loyal to Zanu-PF were training to conduct a "reorientation campaign". They said that 400 vehicles had been deployed for this operation.

What happened next is a vivid - and grim - memory for many Zimbabweans. The violence intensified throughout May. Soldiers drove opposition supporters from their rural villages or urban neighbourhoods. According to the UN, more than 33000 people were driven from their homes by month's end.

With the violence escalating, Tsvangirai withdrew from the race in a move he hoped would stem the bloodshed. No runoff was held and Mugabe triumphantly clung to power.

The bottom line: 289 people were left dead and more than 22000 were injured.

Following the money

Part of McGee's job was to assist in identifying the sources of funding that had helped the regime to stay in power so that Washington could apply more targeted sanctions.

The platinum deal was an obvious starting point.

Embassy staff interviewed mining industry insiders and sent a cable to Washington in June 2008 titled "Rich Platinum Claims Change Hands in Hush-Hush Deals".

They did not know where Camec got the funding, but on July 25 2008 the US Treasury Department placed Camec's partner - Mugabe's ZMDC - under sanctions.

Then, by October 2008, McGee's staff pursued another tip that one of Camec's shareholders - Billy Rautenbach - was helping Mugabe's government to buy vehicles off the books.

A Zimbabwean businessman named Raymond Tendai Chamba, who ran the local office of a Namibian export-import firm, claimed that Rautenbach and Mugabe's central banker, Gideon Gono, placed orders for 642 vehicles with his company. They were mostly Isuzu bakkies, Toyota SUVs and minivans. Chamba says the orders began rolling in during the election period and he was paid $65000 in cash per truck. Rautenbach apparently paid in US dollars.

In November 2008, after those vehicle orders had been reported by McGee's embassy to Washington, the US Treasury designated Rautenbach for sanctions, calling him a Mugabe crony. (Rautenbach did not respond to phone and written requests for comment).

Reached at a poultry farm he runs in Zimbabwe, Gono said: "As soon as I left the bank, I closed off my mind to anything that related to the bank's business."

Gono said he did not recall the platinum deal or any vehicle purchases.

What is interesting about Camec's supposed $100-million "loan" to Mugabe's government is that there are no records of any repayments. Camec also never disclosed precisely who in Zimbabwe got the $100-million it raised.

Andrew Stuart Groves, Camec's former CEO, declined to comment, but his spokes-woman said the $100-million went "to a series of international creditors for a variety of commodities, primarily for seeds, grain, fertiliser and fuel" and that the company "undertook appropriate due diligence" when it paid out the money.

Not only has the loan never been repaid, however, the platinum claims have never been mined.

Camec implodes

Since that bloody Zimbabwean election, Camec has been through some changes. It was bought out in 2009 for $970-million by a much bigger company, listed on the London Stock Exchange, called Eurasian Natural Resources. Eurasian, which was made up of a trio of Kazakh oligarchs in business with their country's government, pulled itself off the stock exchange in November last year after corruption allegations caused its shares to plummet.

A few months ago, Och-Ziff warned shareholders that the US Department of Justice and Securities and Exchange Commission were investigating the firm for, among other things, "investments by some of our funds, both directly and indirectly, in a number of companies in Africa". The probe involved claims that it may have bribed foreign officials, the firm said.

Asked when Och-Ziff first learnt that its money would fund the Zimbabwe platinum deal, a spokesman declined to comment. It seems unlikely that it would not have known.

Payback time

On April 28 this year - about six weeks after Och-Ziff disclosed the federal probe - it suffered the biggest daily drop in its stock price in almost five years when the Wall Street Journal reported that, starting in 2008, it had loaned a total of $284-million to two of Gertler's African ventures in the Congo.

Through his lawyers, Gertler denied any wrongdoing in the Congo and "any allegation which might be understood to mean that our client was involved with, or engineered an investment which potentially involved funds being used to promote the Mugabe regime in Zimbabwe".

Zimbabwe's political environment remains a mess.

The tenuous power-sharing deal with Tsvhangharai's MDC ended last year when Mugabe, who is now 90-years old, won new elections - which many independent observors described as rigged.

McGee, now 65 and retired, was outraged to learn that Camec closed the funding deal only nine days after Mugabe lost the first election.

"That's how all the good work we do, or try to do, gets blown away in nine days," he said. "There's just so, so many behind-the-scenes deals in Africa," he said. - Bloomberg and Business Week

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