WORK ON THE UK'S NEW EMBASSY in the Zimbabwean capital is at an advanced stage, Brian Bruce, the chief executive of South Africa's leading construction group Murray & Roberts, said in a radio interview on Friday.

And yesterday he told the Sunday Herald: "It is a completely new facility from scratch, costing in the region of £10 million. Work began about 18 months ago and is pretty close to complete."

The British government said last week it is drafting sanctions it hopes the European Union and United Nations will impose on members of the Zimbabwean government. At the same time it urged world leaders to work towards removing Mugabe from power.

"We are preparing intensified sanctions, financial and travel, against named members of the Mugabe regime," prime minister Gordon Brown told the Commons.

He said the way forward on Zimbabwe was through the UN and the African Union "working together for a change of regime".

Brown went further, telling parliament that companies helping Mugabe's government, which was defeated by the opposition Movement for Democratic Change in elections 14 weeks ago, should "reconsider their position".

Yet he failed to mention the government's multimillion pound investment in its new Harare facilities and, as far as is known, the British public has not been told until now that such a major project was under way there.

The Foreign Office said last week that Britain is preparing proposals for a widening and deepening of EU sanctions against Zimbabwe, which it would take to the next EU foreign ministers' meeting this month.

These could include targeting further members of Mugabe's inner circle who are not currently affected by sanctions and further action against the travel, foreign bank accounts and education of children of Mugabe's close supporters.

The UK's minister for Africa, Mark Malloch Brown, warned companies active in Zimbabwe to "look very carefully at their investment portfolio. British and other companies will find that actually the knot is tightening and that a lot of activities they can do till now they won't be able to do going forward".

A Foreign Office spokesman in London yesterday declined to comment on the building project in Zimbabwe and referred the Sunday Herald to the British embassy in Harare, where the telephones were not answered.

The Anglican Archbishop of York, Dr John Sentamu, last week called for the government to close the British embassy in Harare as part of tougher sanctions against the Zimbabwean government.

Speaking on BBC One's Andrew Marr Show, he said: "Some actions need to be done and done pretty quickly The UN needs to pass a resolution actually calling for tougher sanctions, and I would never be one of those who has ruled out the possibility of military intervention because the man Mugabe is destroying his own country and his people."

Malloch Brown said on the same show that while Italy had proposed that all EU member states close their Harare embassies, Britain is reluctant to do so given the number of its nationals in Zimbabwe who might need consular help.

There is no reference to the British embassy contract in published reports by Murray & Roberts, which has a current South African and international order book worth £2.5 billion, including contracts at the expanding Dubai International Airport.

Brian Bruce was interviewed by Bruce Whitfield, business editor of the Johannesburg independent station Talk Radio 702, on whether investment in Zimbabwe by international companies is justified, in view of Mugabe's violent crackdown on the opposition and calls by Britain and other Western governments for tougher sanctions against Zimbabwe's leadership.

Bruce said Murray & Roberts had been investing in Zimbabwe for many years and had a continuing responsibility to care for the 1000 people it employs there. The company is servicing international mining companies in Zimbabwe as well as building the new British embassy, he said.

He told the Sunday Herald that Murray & Roberts's Zimbabwe subsidiary is 48% owned by the Johannesburg parent company. Murray & Roberts (Zimbabwe) is listed separately on the Zimbabwe Stock Exchange and the other major shareholder is Old Mutual, the major pension provider in Zimbabwe.

Bruce said the senior parent company executive on the separate Zimbabwe board is the financial director, "who has to engage with inflation accounting in trillions of Zimbabwe dollars, which is a pretty daunting process".

And he revealed that Murray & Roberts (Zimbabwe) pays corporation tax to the Mugabe government. "The British project was conceived some time ago in anticipation of a different future," he said.

"We always saw this as a positive sign of a better future ahead for Zimbabwe, in which we believe the British government is interested. There are lots of people there trying to do positive things in pretty difficult circumstances."

Mugabe and his top government and security lieutenants have been widely accused of looting the devastated country's remaining lucrative assets.

Jean-Jacques Cornish, Radio 702's international affairs editor, reported on several days last week that every time Grace Mugabe, Mugabe's second wife, flies to Malaysia - where the Mugabes' major assets are believed to be located - she takes several large cases containing hundreds of thousands of US dollars. Cornish also alleged that Mugabe himself takes gold and other bullion on his frequent visits to Malaysia. Mugabe's corrupt finance ministry is widely derided as "Bob's Take-Out".

As the demand for full-blown sanctions against Zimbabwe grew louder last week, the Munich-based company Giesecke & Devrient said it would stop supplying quality banknote paper to Zimbabwe after coming under intense pressure from the German government. With inflation now running at a mind-boggling 4,000,000% - and doubling weekly - Zimbabwe's central bank is engaged in a non-stop process of printing money which people carry in large bags or parcels.

Tesco, which has been importing peas and beans from farms stolen from white commercial farmers by senior Mugabe aides since 2000, last week announced it would stop buying Zimbabwean produce "while the political crisis exists".

Brown made his call for intensified sanctions against Mugabe and his top men following news that London-based Anglo American is to go ahead with a £200m investment in a new platinum mine in Zimbabwe.

"Businesses and individuals who have any dealing with Zimbabwe must examine their own responsibilities and must not make investments that prop up the regime," said Brown of the Anglo American investment, which is designed to compete with the other major platinum mining investment in Zimbabwe by South African giant Impala Platinum, which last year recorded revenues in Zimbabwe of £50m.

The Bushveld Igneous Complex, extending from northern South Africa into Zimbabwe, contains more than 80% of the world's known reserves of platinum and allied metals.

Despite Robert Mugabe's rants about British imperialist designs on Zimbabwe, British companies still control vast swathes of the country's economy.

Barclays and Standard Chartered are two of the main banks in Zimbabwe, enabling remaining companies and government departments to access foreign exchange. They are also required to contribute to Mugabe's Agricultural Sector Productivity Enhancement Facility, a government-run loan scheme for farm improvements.

At least five ministers have received loans under the scheme for farms seized as part of the so-called land reform policy that left 4000 white and some black commercial farmers, and tens of thousands of black farm workers, destitute.

British American Tobacco has cornered what remains of the tobacco crop, BP has a large slice of the fuel retail sector and Rio Tinto is involved in gold mining Many other enterprises headquartered in South Africa are also big players in Zimbabwe.