SW Radio Africa (London)

Zimbabwe: Zim Diamonds Sold for U.S.$10 Million Amid Industry Scandal

A stockpile of 300,000 carats of Zimbabwe's controversial diamonds have sold for almost $10 million in Belgium, amid ongoing questions about the illicit trade scandal revealed this month.

Mines and Minerals Development secretary Professor Francis Gudyanga was quoted by the Herald newspaper as saying that out of the total sales at least US$1.5 million would find its way to the national Treasury.

Gudyanga said the parcels of diamonds offered for sale did not reflect the true potential of firms mining in the Marange region, saying the majority of the stones put up for auction were low-quality, industrial goods.

The diamonds were supplied by five companies mining at the Chiadzwa diamond fields, and the auction was the first since the European Union (EU) lifted targeted, restrictive measures from the Zimbabwe Mining Development Corporation (ZMDC).

The decision has been criticised for appearing to condone Zimbabwe's diamond industry, which remains clouded by uninvestigated human rights atrocities and serious corruption.

The auction has also coincided with a damning report on the international diamond trade, published this month by the World Policy Institute. The report has revealed a complex structure of international diamond deals that have resulted in some of Africa's most controversial diamond producers, including Zimbabwe, being 'looted'.

In March a Belgian firm called Omega Diamonds was handed a record breaking $195 million fine for tax evasion, but escaped any further sanction, possibly because the firm's former attorney was appointed as the Belgian Finance Minister days before. Investigators claimed that close to $4 billion in international diamond profits had simply 'vanished' as a result of Omega's 'tri-continental' diamond dealings.

The deals saw diamond shipments from Angola, the Democratic Republic of Congo and Zimbabwe being undervalued, bought and then mixed together and certified by Omega's subsidiaries in Dubai. The stones were certified under the Kimberley Process Certification Scheme, of which Dubai is a member, as stones of 'mixed origin', thereby removing any concerns that the shipments were 'conflict diamonds'. From Dubai, the prices for the diamonds were then inflated and sent to Antwerp for international auction.

Farai Maguwu, who heads the Centre for Natural Resource Governance in Zimbabwe, said Belgium's role in this scandal is not surprising.

"The Belgian's are not all that transparent... the company that was responsible for the financially flawed sales is Belgian, and the attorney is now the Minister of Finance. So let's not expect much from Belgium. The Belgians are in it for profit," Maguwu told SW Radio Africa

He said the responsibility to ensure that Zimbabwe's diamonds are not undervalued or that the local trade is not 'fleeced' rests with the government.

"The real deal is in Zimbabwe. We need our government to guard our resources jealously and not mortgage our resources for a song," Maguwu added.

The World Policy Institute report has also revealed the extent to which Zimbabwe's diamonds have been illegally sold for many years, despite a ban by the Kimberley Process from 2009.

The report quotes a diplomatic cable from the US Embassy in Belgium leaked online by WikiLeaks, which states: "Belgium very recently has begun to take steps to monitor the flow of Zimbabwe-sourced diamonds through Antwerp's Diamond Office ... but those involved in the Zimbabwean illicit trade were savvy enough to mingle diamonds with those from other countries such as the DR-Congo, and then send them to other diamond trading centers in ... Dubai where they could receive legitimately-issued Kimberley certificates that indicated the source was 'mixed,' and then be sent on to Antwerp."

The report also quotes the late Chindori Chininga, the former chair of the Zimbabwe Portfolio Committee on Mines, who died in a car accident earlier this year. He questioned: "What is the value of the KP certificate if it comes from places that are also tax havens?" referring to Dubai's ability to issue mixed origin certificates, eliminating the sources entirely.

"Chininga, considered a moderate Zimbabwe politician and member of the ruling ZANU party, cautioned that fingering those responsible for establishing or profiting from this corrupt system won't work if the corruptors are never held accountable. Chininga, who headed an investigation into the economic activities of diamond companies, was killed in a car accident ahead of forthcoming elections. At his funeral, some family members claimed he was murdered," the report says.

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