September 23, 2017

Zimbabwe’s diamond revenue doesn’t add up….thanks to dodgy auctions and collusion

Zimbabwe may have lost substantial potential revenue from diamonds, after Belgian firm, First Element – contracted to clean and sort the gems – allegedly picked buyers for local auctions in a dodgy scheme crafted to facilitate collusion.

A Parliamentary Portfolio Committee on Mines and Energy’s report on consolidation of diamond mining firms also says Zimbabwe might have lost huge potential revenue due to lack of value addition and understanding of the diamond industry.

Part of the reason was that the marketers of diamonds, especially from Marange diamond fields, did not understand the diamonds’ footprint and only after feedback from the market, it became apparent they sold some unique gems far below the real value.

Negligible revenue and lack of transparency in the sector caused government to combine the diamond mining companies into Zimbabwe Consolidated Diamond Company.

Seven firms operating in Chiadzwa – namely Mbada Diamonds, Anjin, Marange Resources, Gye Nyame, Kusena, Jinan and Diamond Mining -Company were to merge into one entity, ZCDC, where government would hold 50%.

The investors would hold shares in ZCDC as per the investment they had put in thus far.

The aforementioned parliamentary committees noted that First Element was handpicked by the Mines Secretary without proper due diligence to ascertain its capability and credibility.

Over time, operational deficiencies were noted by the Minerals Marketing Corporation of Zimbabwe (MMCZ) and highlighted “to the executive”, but MMCZ management was threatened for interfering with First Element.

This comes amid a slew of alleged impropriety, financial and administrative, levelled against Mines and Mining Development secretary Professor Godfrey Gudyanga. The committee has recommended that Gudyanga be dismissed from his post.

The report by the portfolio committee says First Element was single handedly selected by Gudyanga after MMCZ management objected to enlisting its services.

Most of the anomalies occurring in the marketing of and revenue from the sale of diamonds were ostensibly not detectable or were swept under the carpet, as the firm mandated to scrutinise the books of MMCZ, was also allegedly handpicked by Gudyanga.

“The audit firm was not appointed by the Auditor General’s office and the Auditor General was not aware such an operation was taking place. As a result, the company’s financial records have been compromised,” said the committee.

The MMCZ lost approximately $4 million through illicit financial flows to an unknown recipient outside Zimbabwe, the committee on mines and energy noted, according to evidence from former acting general manager, Richard Chingodza.

“The director of Pedstock, Jackson Dror, admitted before the committee that he was being used as a conduit to transfer the money from MMCZ to the unnamed recipient.

The secretary for mines and mining development, Gudyanga allegedly admitted to the committee that the money was sent to an unknown recipient who is a foreigner.

Source: The Herald Zimbabwe

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