The Dutch government has given a lame excuse for allowing a Netherlands registered company to enter into business with a Zimbabwean company which is partly owned by one of President Robert Mugabe's top lieutenants.

This follows revelations that the Dutch government had turned a blind eye to what appeared to be sanctions busting by African Management Services Company which assisted River Ranch Diamond Mine near Beitbridge from 2004 to 2007 by seconding five managers to revive the mine.

River Ranch was at the time owned by Saudi Arabian businessman Adel Aujan who had taken on former army commander Solomon Mujuru and former legislator Tirivanhu Mudariki as his partners.

What has been of particular interest is that River Ranch was barred from selling its diamonds during the entire period because of an ownership dispute with Bubye Minerals which claimed it owned the mine.

This has raised questions at to how AMSCO was paid for its management services if River Ranch was not trading, raising speculation that the mine might have been smuggling its diamonds out of the country.

The mine claimed it was producing about 20 000 carats of diamonds a month but when the Kimberely Process Review team visited the country in May 2007, it found only 59 000 carats in its vaults, yet the company had been in full production for more than a year.

Mujuru is on the European Union and United States sanctions list.

AMSCO is owned by the United Nations Development Programme, the Inernational Finance Corporation and the African Development Bank. The Dutch development finance company FMO is also a shareholder in AMSCO.

The Dutch Ministry of Foreign Affairs told Radio Netherlands Worldwide that the relationship between AMSCO and River Ranch was "unwise" but the company would not be prosecuted because the mine was not registered on an official black list.

The world raised a furore two weeks ago when it was discovered that Swiss company Nestle was buying milk from President Robert Mugabe's Gushungo Holdings.

The British media also raised a stink when it discovered that Barclays Bank which is listed on the Zimbabwe Stock Exchange but is majority owned by the British Bank was funding Mugabe's controversial land reform programme.

Although Mugabe, his wife Grace, his sister Sabina and his nephews Leo and Patrick are all on the EU sanctions list Gushungo Holdings is not. And neither is Barclays. There are 40 Zimbabwean entities and 203 individuals on the EU sanctions list which was updated last week.