HomeLocal NewsDiamond looting: Govt ignored damning report

Diamond looting: Govt ignored damning report

GOVERNMENT swept under the carpet a damning report exposing the executive’s failure to account for diamond operations in the country as well as to combat gross corruption and malpractices in the diamond sector, particularly at the Marange fields.

Taurai Mangudhla

As the report, which was done during the Seventh Parliament session covering the period 2010 to 2013 by the Parliamentary Portfolio Committee on Mines and Energy then chaired by the late Edward Chindori-Chininga, gathers dust, President Robert Mugabe said recently the country could have lost as much as US$15 billion due to leakages and underhand dealings in the diamond sector.

The report, which among other things exposed mineral leakages, maladministration and poor monitoring and supervision of the sector on the part of government, also says that government may have been prejudiced through opaque and overstated amount of investments that were made by its joint venture partners.

“Since the inception of formalised mining in Chiadzwa, the committee observed that the sector has been dogged with issues of transparency and accountability in the production, marketing, fiscal contributions and general administration. The committee noted with concern that there was lot of work that still needed to be done to improve on transparency and accountability in the entire value chain of the country’s diamonds,” the report says.

“The key areas that the Committee observed which touched on transparency and accountability include: the aborted auction sale (of Mbada Diamonds which was conducted without the knowledge of the police and other government monitoring arms as well as most directors of the company), the selection process of joint venture partners, corporate governance systems in the joint venture companies, the smuggling and leakages of diamonds from Marange as well the mining contracts signed by government.

“During the four-year period of the enquiry, the committee observed with concern that executive and its officers were generally not willing to be held accountable by parliament.”

Over a period of two years, the report notes, the committee was denied entry to conduct on-site inspections of the mining companies operating in Marange. Permission to tour Marange was finally granted in April 2012.

The report also says the committee noted with concern mineral leakages and huge disparities between what companies claim to have remitted to the state and what government reports to have received.

“In one of its hearings in 2010, the committee was disheartened to hear that two senior security officers employed by Canadile Miners were found in possession of 57 pieces of diamonds at a ZRP road block at Hot Springs,” the report says.

“In June 2012, the chairman of Mbada Diamonds, the largest producer of diamonds in the country, informed the committee that their company had remitted over US$293 million to Treasury.

“However, the Minister of Finance (Tendai Biti) in the 2013 budget statement lamented the low proceeds to Treasury and in 2012 government only received a total dividend of US$41 million.”

The report adds that there is need for a comprehensive mining taxation law for the diamond mining sector to improve revenue and accountability.

“Because of the discrepancies that exists between the amount that companies pay to government and what government report to have receive, companies are encouraged to publish what they pay to government and government is equally encouraged to publish what it received from companies,” the report recommends.

Warren Park MP Elias Mudzuri, who was part of the Chindori-Chininga-led committee, said yesterday government ignored their findings.

“The ministry did not respond to the outcome of the report findings,” he said.

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