HomeCommentTransparency: ‘Missing link in the economy’

Editor’s Memo: Justice Awaits Rapists

Tsvangirai suggested that revenue trickling into treasury coffers was not a true reflection of the work being done by the four companies operating at the fields, Anjin, Mbada Diamonds, Marange Resources and Diamond Mining Corporation –– a concern which has been raised by different stakeholders on several occasions. The involvement of state security institutions in the mining of Chiadzwa diamonds has helped fuel belief that some of the proceeds from diamonds were not finding their way to national treasury.

 

The army, for example, is in partnership with Anjin while the police, Central Intelligence Organisation and Zimbabwe Prison Service are also said to be involved. 

“We must show transparency in the way we exploit this resource; the way we market it and the way we benefit for all of our very wide range challenges we face as a country,” Tsvangirai said.

Finance minister Tendai Biti has been leading calls for transparency and accountability on how the Chiadzwa diamonds are handled. Several non-governmental organisations and international organisations such as Global Witness have also called for transparency in operations at Chiadzwa. Three days before Tsvangirai’s tour, Global Witness released a report titled Diamonds: A Good Deal for Zimbabwe, questioning whether all revenue from diamonds was finding its way to national treasury.

The organisation said it was concerned that the Anjin Zimbabwe board members included senior serving and retired military and police officers.
“Control by the military and police over a major diamond mining company creates opportunities for off-budget funding of the security sector. There is a real risk of these revenues being used to finance violence during a future election,” read the report.

The report also said 25% of Mbada was passed to a third party, Transfrontier, which had an opaque company structure based in secrecy jurisdictions and tax havens. The beneficial owners of Transfrontier are unknown although the firm is named as a “sister” company by a South African firm, Liparm Corporation, whose sole director is former Air Vice Marshal Robert Mhlanga, who is also the chairman of Mbada.

“The presence of Mbada, Transfrontier and associated companies in countries with zero rates of corporation tax such as Mauritius, Hong Kong, British Virgin Islands and Dubai in the United Arab Emirates, raises the questions of where these companies pay their taxes and whether these arrangements are a good deal for Zimbabwe.

Complex legal structures and secrecy jurisdictions can be used to hide who benefits from natural resources. Such secrecy is inappropriate for national assets and has the potential to conceal corruption, tax avoidance or off budget government spending,” said the report.

Tsvangirai said the discovery of diamonds should be regarded as a blessing for the country and the benefits should cascade down to the ordinary people. His call was well-received by those in attendance, but stakeholders believe there should be transparency in all sectors of the economy, and not just in the diamond industry.

Minerals have the potential of spurring the growth of an entire nation as evidenced by Botswana, which heavily relies on diamonds. The economy of one of Zimbabwe’s neighbouring countries, Zambia, strongly depends on copper.

Botswana, the world’s biggest diamond producer by value, has maintained one of the world’s highest economic growth rates since independence in 1966, transforming itself from one of the poorest countries in the world to a middle-income country with a per capita GDP of US$13,100 in 2010. Diamond mining has fuelled much of the expansion and accounts for more than one-third of GDP, 70-80% of export earnings, and about half of the government’s revenues. Botswana is rated the least corrupt country in Africa, according to an international corruption watchdog, Transparency International.

Besides the Chiadzwa diamonds, the precious mineral is also being mined at River Ranch Mine in Beitbridge and Murowa Mine in Zvishavane, but very few people are in the know of the value those diamonds are bringing to the economy. Zimbabwe also boasts of large deposits of gold which have been exploited for years, as well as platinum, emeralds, coal, timber and granite, among other precious resources.

Shamiso Mtisi, an environmental lawyer with Zimbabwe Environmental Lawyers Association, which has been critical of the diamond mining operations in Marange, believes there should be more transparency in the way the mineral is being mined.

“There should be transparency in the whole diamond supply chain. The contracting or the licencing process should be transparent. Zimbabweans should know the criteria used in licencing. Production should be transparent, diamond mining companies should be able to declare what they are getting and we should know where the revenue is going,” said Mtisi.

Mtisi said transparency should also be extended to the whole mining sector and other sectors of the economy.

“We should adopt the “publish what you pay” concept, where government should disclose what they are receiving from the mining companies and the companies disclose what they are getting from their operations. I am sure the country could be getting more if there was more transparency. We should commission a research to see what mining has contributed to the fiscus; what is produced by each company; what the value of the minerals is and then come up with a way of curbing the leakages,” Mtisi said.

Mary-Jane Ncube, the executive director of Transparency International Zimbabwe (TIZ) said Zimbabwe ranked low in terms of transparency.

Ncube said: “On a scale of 1 – 10, Zimbabwe’s economic sector transparency would rank as low as one, with one being the lowest score. There is a crisis because many private sector players do not publish their financial statements and annual reports. The crisis is made worse by the largely informal sector in which most of the economic activity occurs.

“There is no requirement or process for demanding, collecting or disseminating information from the informal sector which is arguably now larger than the formal sector. There have also been poor efforts made by the economic sector both from government and the private sector to produce information for public consumption in the public interest.”

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