19 December 2012

Zimbabwe: Diamond Looters Cornered

THE legislative assembly has cast into the spotlight the controversial Chiadzwa diamonds in a bid to plug alleged leakages that are said to be enriching an elite few within ZANU-PF at the expense of the generality of the population, with the Parliamentary Committee on Mines and Energy recommending that lawmakers should have an oversight over all the diamond deals, The Financial Gazette can exclusively reveal.

Accusations and counter-accusations have dogged the handling of revenues from Chiadzwa diamond exp-orts ever since the government seized the hugely prolific fields from the private sector in 2006. The discord worsened following the formation of a coalition government in February 2009, with head of the exchequer, Tendai Biti, suggesting that the country could be losing diamond revenue to some fat cats that might be taking advantage of the secrecy involved in the marketing of the local gems.

The mistrust around the Chiadzwa gemstones have also triggered disputes in the Kimberley Process Certification Scheme (KPCS) where members are divided over the controversial ban on Zimbabwe diamonds by the United States and its allies.

Members of Parliament now want all new mining deals to be approved by the august House first before being endorsed by the Executive to improve accountability and transparency. They have also recommended that government must renegotiate all previous mining deals, amid claims of loses to the nation due to corruption, smuggling and other malpractices.

In their end of year report, members of the Parliamentary Committee on Mines and Energy said government was losing huge sums of money due to corruption, illegal mining, under-declaration of exports by miners and illegal marketing of minerals due to poor monitoring and surveillance.

The MPs said since last year there has been no change with regard to these issues, adding that about US$563 million worth of diamonds were exported and only US$43 million in dividends was remitted to Treasury.

The committee said there is still a vast area in Marange being guarded by security forces, but it was high time government allocated more diamond concessions to ensure that the responsibility of area security is transferred to operating companies as has been done with Diamond Mining Corporation, Mbada, Marange Resources and Anjin.

"A law should be enacted where all major mining contracts should be ratified by Parliament before they become binding. At the same time, all major mining contracts should have a clause, which makes it mandatory for the contract to be reviewed after a certain period of time in order to reflect the socio-economic conditions prevailing at the time," reads part of the report.

The report said government should record progress towards re-negotiating most of the major mining contracts in the country so that they are more beneficial to the nation.

Sanctions imposed on Chiadzwa diamonds by the US and its allies were said to have resulted in loopholes leading to theft and loss as the gems are channelled through informal procedures in order to circumvent the trade embargoes.

While Cabinet had previously resolved that Chiadzwa diamond fields be nationalised to maximise benefits to the State, the decision is still to be implemented by the Executive.

This week, Mines Minister Obert Mpofu said he was still to be presented with the report by the Parliamentary Committee on Mines and Energy. The committee is headed by ZANU-PF Guruve South MP Edward Chindori-Chininga.

"I am on leave. I have not seen the document," he said in a tease response.

Mpofu has insisted in the past that all diamond revenue due to the State was being accounted for. Recently, he found support in Defence Minister Emmerson Mnangagwa who challenged anyone with evidence of the army being funded from diamonds or the funding of a parallel government from the proceeds to come forward.

Despite the denials of any wrongdoing on the part of ZANU-PF ministers, Biti, the Finance Minister, has maintained that there is lingering secrecy in the matter, a development that forced him to cut back his US$4 billion 2012 national budget after the projected US$600 million revenue from diamond sales failed to materialise.

The World Bank (WB) also believes that the government is hoarding massive quantities of diamonds, rough and polished. In an internal document of the WB which was viewed by South African business news website, Fin24, the authors claimed that the state-owned Zimbabwe Mining Development Corporation (ZMDC) had amassed troves of rough diamonds that might amount to up to US$5 billion.

These rough diamonds stored by the ZMDC are said to be of low quality and of lesser dollar value per carat. They are also supposed to have been collected before the KPCS voted to permit the Zimbabwean diamond industry to sell on the global market with Kimberley Process approval.

The WB report also noted that without intervention, Zimbabwe's diamond production will peak at an annual rate of 12 million carats in the years to come, but that this rate can be increased by over 25 percent in the next six years if the country invests US$150 million.

Global Witness also claimed recently in a report that proceeds from Marange diamonds were being used to finance a parallel government in the coalition, imploring the international

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