THE VIRGINIAN-PILOT Copyright (c) 1997, Landmark Communications, Inc. DATE: Sunday, January 26, 1997 TAG: 9701260052 SECTION: FRONT PAGE: A1 EDITION: FINAL SOURCE: BY BILL SIZEMORE, STAFF WRITER LENGTH: 377 lines
It was exciting, exotic and potentially lucrative. It was also risky. But Pat Robertson was no stranger to risk.
Robertson had gambled years before on a down-at-the-heels Portsmouth TV station and transformed it into a multimillion-dollar religious broadcasting empire.
Now there were diamonds - lots of them, waiting to be plucked from the heart of Africa.
Mining concessions in Zaire, the second-biggest diamond-producing country in the world, were being made available to the Virginia Beach-based evangelist by the government of longtime Zairian dictator Mobutu Sese Seko.
In 1992, Robertson rolled the dice and embarked on an amazing African adventure.
It eventually involved whacking out a big patch of jungle deep in the rugged bush while dodging crocs and hippos. There were the twin plagues of political instability and frustrating equipment failures. There was an improbable cast of characters that included a defrocked Pentecostal preacher, a high-ranking felon from a Reagan-era Washington scandal, and a pair of former Navy SEALs - Sea-Air-Land commandos trained in clandestine operations.
For protection, there were guns purchased on a discreet shopping trip to the Chesapeake Wal-Mart.
And overriding everything was money - lots of it.
Robertson embodies the ``prosperity gospel'' school of evangelical Christianity that blends doing good with doing well. His plan in Zaire was to turn a profit and give some of the proceeds back to help the country.
But as it turned out, virtually all of the cash flow was outgo, not income. For Robertson, the mega-successful televangelist, diamond mining turned out to be a big-time bust.
The venture lost millions, and now the recriminations have begun.
What happened? How did Robertson, operating in a diamond-rich country with the blessing of the dictator, manage to lose it all?
There are conflicting accounts.
To puzzle it out, The Virginian-Pilot consulted legal and regulatory documents as well as published accounts and reports from watchdog and advocacy groups. Dozens of interviews were conducted with people who worked in and with the Robertson organization and others familiar with it through religious, humanitarian, political and diplomatic connections.
In an interview last fall, a Robertson spokesman blamed the business losses on the economic and political chaos engulfing Zaire today. Critics say Mobutu has looted the country, amassing a fortune estimated at $6 billion, and letting Zaire's public infrastructure collapse. Inflation and unemployment are rampant; poverty is unrelenting. There is an armed rebellion raging in the east.
But a different version emerges in a lawsuit filed in late November by Robertson's African Development Co. in a Norfolk federal court. In its complaint, the company blames its failure on defective equipment.
The suit against Keene Engineering Inc., a California-based manufacturer of mining equipment, claims that two dredges purchased from Keene for extracting diamonds from riverbeds were ``wholly inadequate'' for the task. Robertson's company is seeking relief in excess of $1.25 million, which includes the cost of the dredges and more than $1 million in business losses.
Which explanation for African Development's failure is correct? Both, Robertson's spokesmen now say.
``Clearly the defective dredges and the inability to move forward with the mining venture was a contributing factor to ADC's decision to terminate its operation in Zaire,'' Gene Kapp, a vice president for public relations at Robertson's Christian Broadcasting Network, said recently. ``It is still true that the general internal chaos in the country was part of the reason as well.''
Robertson himself declined to comment on the venture.
David Ventker, a Virginia Beach lawyer representing African Development in federal court, explained the company's position.
``We bought six dredges, for which we paid in full,'' Ventker said. ``The first two were disasters. They didn't work properly. They had to be modified. There was lots and lots of down time. At that point, delivery of the other four was canceled. Keene now has four dredges and the money, and won't refund it.''
Keene Engineering has filed a motion for dismissal of the suit on jurisdictional grounds.
Wayne Keene, president of the company, conceded in an interview that there were problems with the first two dredges, but he said they were corrected.
When Robertson sought to cancel his order for the remaining four dredges, Keene said, ``I explained to Mr. Robertson that it was custom-built equipment and was sitting on our shipping ramp waiting for shipment, and I couldn't give him his money back because the money had already been spent on the product.
``I told him the best I could do for him is hold the equipment on consignment and as we sold it, give him the money back,'' Keene said. ``We've made a couple of payments to him. But he keeps coming after me, telling me my equipment is defective.''
The full story of African Development's failure, however, is more complex.
``There wasn't enough pre-planning and exploration,'' one person with intimate knowledge of the operation said. ``They shot from the hip. Plus, every time you drove down the street, you had to pay somebody off. Taxes, licenses - everybody had their hand out. It was a giant fiasco.''
This person's estimate of the venture's total losses: somewhere between $2 million and $10 million.
An American businessman and longtime resident of Zaire put the figure at $5 million to $7 million in a report last summer in the San Antonio Express-News.
Attorney Ventker declined to put a figure on the losses beyond the $1 million-plus mentioned in the lawsuit. But he said: ``Those were all Pat Robertson's personal funds - his own money.''
When Craig McFarland arrived in Zaire in mid-1994, the hemorrhage of cash was quickly apparent.
McFarland, a freelance mining consultant from California, had been hired to set up and operate the dredges.
Soon after McFarland's arrival, Robertson paid a visit to the remote site.
``They said at that point, over two years and $2 million had already been spent on that project,'' McFarland said. ``I don't know where it went. There was nothing physical to show for it.'' No camp, airstrip, or other infrastructure was in place.
Up until then, Robertson had been relying chiefly on William Lovick, a former Assemblies of God minister who had spent nearly 35 years in Zaire. Lovick, who died last May, had been dismissed by the church in 1985 for unethical fund raising.
``Dr. Lovick was their direct line to Mobutu,'' McFarland said. ``He had a couple of little prospecting dredges over there - just for sampling. He was trying to start the operation up for Dr. Robertson. I think that's where a lot of the $2 million went.''
Lovick was eventually pushed aside and the operation significantly enlarged. And the outflow of money continued.
``They were going to expand,'' McFarland said. ``They had concessions and documentation to go all over the country.''
The mining company had been registered in mid-1992 in Bermuda, where there is no corporate income tax and business regulations are minimal.
A Zairian headquarters, which seemed lavish by McFarland's standards, was set up in Kinshasa, the capital.
``They rented two condominiums,'' he said. ``They also maintained a room at the Intercontinental Hotel. That's expensive. A lot of money was spent on living really good.
``Each condo had four bedrooms; they used part of it as an office. They were brand-new. You went through the gates and it looked like you were in Florida. It was a beautiful place - inside the fence. Outside was dirt and rubbish like the rest of Kinshasa.''
Caribou aircraft, which are capable of landing and taking off on a short runway, were acquired to haul equipment to the mine site and take the diamonds out. The flight crews were housed at the Kinshasa headquarters.
Also based there was Thomas Demery, whom Robertson had brought in to oversee the operation. Demery had been the highest-ranking official indicted in the $2 billion influence-peddling scandal at the U.S. Department of Housing and Urban Development during the Reagan administration.
Demery, an assistant housing secretary, pleaded guilty to two felony counts in 1993. The charges involved accepting a second mortgage from a developer to whom he had steered $15 million in federal subsidies for rehabilitating low-income housing projects, and submitting false receipts for use of a developer's condo on a vacation.
Demery agreed to cooperate with special prosecutors investigating the HUD scandal and was sentenced to two years' probation last March.
Among Demery's responsibilities in Zaire, McFarland said, was making sure there was no improper intermingling of Robertson's for-profit operations with those of Operation Blessing, CBN's nonprofit, tax-exempt humanitarian arm.
Nevertheless, the mining operation depended at times on Operation Blessing, McFarland said. ``We used their plane half the time to take our gear out when our planes were broke,'' he said.
There were times when African Development leased Operation Blessing planes, spokesman Kapp said, but the company always paid full fair market value.
Demery has an unlisted telephone in Northern Virginia and could not be reached for comment.
In contrast to the company's Kinshasa digs, the mining site was a world away.
The dredges were set up on a river near the village of Kamonia, close to the Angolan border in southern Zaire. An airstrip was built in the village, and 7 1/2 kilometers of trail had to be widened into a road so the equipment could be trucked to the site. The nearest town of any size, Tshikapa, was a five-hour drive away.
A swath of jungle was cleared out and a camp constructed. The miners lived in grass huts with thatched roofs. The huts were perched on platforms 4 to 5 feet off the ground. ``You wanted to be up on a platform to keep the snakes, crocs and hippos away,'' McFarland said.
The miners hired local villagers as laborers - about 10 to 15 most of the time, occasionally as many as 50, McFarland said. Wages ranged from 50 cents to $1 a day - ridiculously low by U.S. standards, but competitive in a country where the per capita annual income is less than $150.
One of the former Navy SEALs was operations manager; the other was chief of security. Security was a continuing concern, McFarland said, and it became a point of contention between him and the ex-SEAL.
``He'd keep bringing these military people out to me for security,'' McFarland said. ``I'd tell him, `I don't need them.' The Zairian military - they're the worst ones. They'd come out and harass their own people. Then the local villagers would get mad at me because I had military there. So I kept sending the military back.''
At one point, it was decided that the mining party needed guns for protection. Someone was quietly dispatched to a local Wal-Mart from African Development's home office at CBN headquarters in Virginia Beach to buy the weapons, which were shipped to Zaire.
The risks faced by the miners came not so much from other humans as from Zaire's inhospitable wildlife, said someone familiar with the Wal-Mart mission.
``They've got crocs and cobras over there,'' this person said. ``It's not a city park. One guy was bitten by a scorpion. Another got malaria and had to be airlifted out. The Medevac bill was $5,000.''
Robertson's contract with the Mobutu government stipulated that 50 percent of African Development's profits would be plowed back into humanitarian projects in Zaire, McFarland said.
But there were never any profits.
Once the mine finally got up and running, its output was disappointing. The stones were small and mostly industrial grade - not the clean, pure gemstones that can be cut into jewelry. The difference in value is significant: Industrial diamonds typically bring no more than $5 per carat, while gem diamonds can fetch hundreds of dollars per carat.
At its height, McFarland said, the mine produced only about 20 to 25 diamonds a day. One insider estimated the total output at less than $10,000 - a tiny fraction of the millions Robertson had invested.
Still, McFarland told his bosses that he believed the operation could be turned around.
``I told them that this was kind of a test for the local people - if they could work with us and we could work with them,'' McFarland said. ``I said, `They told me when we came here that the diamonds were small, so don't expect big ones out of here. Now if this works out and we do what we say - we hold up our end, we build schools, roads, whatever we're promising them - then they're going to take us to the concessions where there's large, good-quality stones.' ''
The company tried supplementing the mine's meager output by buying additional diamonds on the side for resale.
``They had an Indian doing their diamond buying,'' McFarland said. ``He would buy stones from the local natives out in the bush and sell them in Brussels or Antwerp.''
But by early 1995, Robertson apparently had decided to pull the plug.
After seven months in Africa, McFarland came back to the United States for a vacation. ``While I was here,'' he said, ``Tom Demery got hold of me and said, `Well, they're going to terminate the project, so there's no reason for you to come back.' ''
While the diamond mine was struggling, a farming operation run by Operation Blessing - on a large tract of land outside Kinshasa that once belonged to Mobutu's first wife - was also failing miserably.
By the end of 1995, it was all shut down.
Robertson had had grand plans for becoming a bigger player in the diamond game and expanding into gold mining and timber, one person close to African Development said. But the desire to stanch the cash hemorrhage finally overcame those urges.
``I think he had spent all the money he wanted to,'' this person said. ``I think he's terribly embarrassed. He thinks of himself as a shrewd businessman - and he is. His downfall is that he acts impulsively at times.
``I think he was trying to do good - trying to make some money and help people, too.''
But in the end, when Robertson took stock of his African adventure, it wasn't about missionary work or humanitarian aid. It was about the bottom line.
``He's a businessman,'' McFarland said. ``He was there to make money.'' MEMO: Related story on page A10. ILLUSTRATION: Color photo
Zairian villagers watch a diamond-mining dredge being loaded onto an
Operation Blessing plane.
ASSOCIATED PRESS file photo
Zairian President Mobutu Sese Seko - shown with his wife, Bobi
Ladawa, at their chateau on the French Riviera early this month -
seems far removed from the desperate poverty and political unrest of
his country. The embattled dictator has sought to parlay his
connection with Pat Robertson, the Virginia-Beach televangelist,
into valuable political support.
THREE DECADES OF DEATH
Killings attributed to the regime of Zairian President Mobutu
June 3, 1966: Four Cabinet members publicly hanged without the
opportunity to appeal their case.
June 1969: Soldiers fire on students demonstrating at Lovanium
University; an estimated 50 killed, many more wounded.
1971: Some 500 people killed by assassination squad organized by
Mobutu's security chief for Kinshasa.
Jan. 25, 1978: 14 people hanged in public without trial.
February 1978: At least 800 members of the Kasongo religious
community massacred by Mobutu's elite personal guard. Recent reports
put the toll as high as 2,000.
March 17, 1978: 13 civilians and military officers executed by
firing squad with no opportunity to appeal. Some were accused only
of belonging to a particular religious sect.
December 1978: 10 people die of gangrene and tetanus after
soldiers weld chains around their wrists and ankles.
1978: At least 20 people die of disease and malnutrition in camps
after more than 1,000 unarmed civilians are detained by the army
1978: 40 inmates starve to death in Makala Prison.
July 19, 1979: About 300 civilians massacred by army units in
East Kasai region.
Late 1979, early 1980: Eight people killed in custody by
government security agents in Kinshasa.
February 1980: At least seven university students killed by
soldiers during a demonstration in Kinshasa.
March 1980: At least nine people executed by the military without
due process of law.
June 1980-March 1981: Nine civilians executed without trial by
soldiers in Kivu region.
March 1981: 17 people hanged at Luzumu Prison in Kinshasa after
being sentenced in a civil trial, the fairness of which was
challenged by Amnesty International.
Early 1982: 21 civilians executed without trial by military
security agents south of Lubumbashi.
June-August 1982: More than 50 people executed without trial at a
detention center operated by Mobutu's Special Presidential Brigade.
December 1983: 30 people starve to death in Makala Prison.
1983: At least 50 people killed or starved to death by government
agents in Kinshasa.
Jan. 2, 1984: Eight people executed without trial at National
Gendarmerie headquarters in Kinshasa.
Nov. 15-22, 1984: At least 130 unarmed civilians killed by
soldiers in Moba.
December 1984: At least 24 people killed by firing squad without
trial at Kalemie Naval Base on Lake Tanganyika.
February-May 1985: At least 30 people believed executed without
trial by gunshot or drowning on Idjwi island in Kivu region.
Feb. 10, 1985: 30 civilians killed by soldiers in Katandala
village, Shaba region.
July 1985: At least five people believed executed without trial
outside army headquarters in Moba.
October-December 1985: Five members of the Union for Democracy
and Social Progress killed in custody. They are among hundreds
incarcerated and beaten for peacefully advocating legalization of a
second political party.
1985: 40 civilians killed by troops in Kivu region.
Jan. 17, 1988: At least three people killed by soldiers, dozens
injured at a rally for returned opposition leader Etienne
1988: Eight civilians murdered, three disappear in north Kivu
Feb. 22-25, 1989: Between 14 and 40 students killed by army units
in Kinshasa and Lubumbashi.
May 11, 1990: At least 63 killed when commandos from the Special
Presidential Division assault students in their dormitories at
Lubumbashi University with knives and bayonets. Later inquiries put
the death toll as high as 250.
November 1990: 61 people die of starvation or malnutrition in
Makala, Kassapa and Bolono prisons.
Nov. 4, 1990: 10 killed, 30 wounded when forces of the Special
Presidential Division violently disperse a peaceful pro-democracy
gathering at Kinshasa International Fairgrounds.
April 13-15, 1991: 56 people killed by soldiers after a peaceful
pro-democracy rally in East Kasai region.
September-October 1991: At least 250 people killed in violent
looting by poorly paid soldiers in Kinshasa and other cities.
Jan. 22, 1992: 18 members of the armed forces believed killed in
custody by security agents.
January 1992: Soldiers kill at least two people in Kinshasa who
tried to stop them from looting their homes.
Feb. 16, 1992: At least 42 Christians killed, more than 100
wounded by soldiers during a peaceful pro-democracy march after
Sunday church services.
October 1992: Several people reportedly killed by soldiers on a
looting spree in Mbandaka, Equateur region.
November 1992: About 10 villagers executed extrajudicially by
soldiers near Likasi in Shaba.
1992: Dozens of prisoners reportedly die of malnutrition and
medical neglect in Makala Prison.
January 1993: Rioting troops in Kinshasa kill nearly 1,000
people, many of them unarmed civilians.
Feb. 22, 1993: About 52 unarmed men, women and children
reportedly shot dead and many others injured in Kinshasa by members
of the Special Presidential Division.
1993: Dozens of deaths from starvation and medical neglect
reported in Makala and other prisons.
June 27, 1994: Three people reported killed by local police in
Mbuji-Mayi, capital of East Kasai region, when an opposition
political meeting is violently broken up.
1994: Dozens of unlawful killings by members of the security
forces reported throughout the year. At least two of the victims
were dissident journalists.
1994: Scores of deaths from starvation and lack of medical care
reported in Makala and other prisons.
July 1995: At least seven demonstrators killed and 23 injured
when security forces violently break up a peaceful pro-democracy
Dec. 25, 1995: At least 15 civilians killed by members of the
security forces in Goma, North Kivu.
May 1996: Dozens of villagers extrajudicially executed by
soldiers in Vichumbi, a small fishing village on Lake Edward.
June-August 1996: Hundreds of civilians reportedly killed by
soldiers in Kanyabayonga, a large village in northern Rutshuru
SOURCES: Amnesty International, Africa Report, U.S. State
Department, Africa News, European Parliament, Africa Watch,
Washington Office on Africa, National Council of Churches.