Biti hunts missing diamond millions

tendai_bitiHARARE - The Zimbabwe Mining Development Corporation has still not remitted $76million to treasury from diamond sales conducted secretly in January. (Pictured: Tendai Biti)

Official documents confirm that the sale, done outside the Kimberley Process Certification Scheme, raised $126.16 million from rough diamonds mined at Marange. The documents do not state exactly how many diamonds were sold and how they arrive at the figures, raising serious accountability questions.

The government was expected to receive 61 percent of that amount, or $76million but the cash has not yet materialised. The ZMDC owned up in a letter to the minister of Mines and Mining Development from its chairman, Goodwills Masimirembwa. It remains unclear if the other beneficiaries have received their funds.

According to documents in our possession, Grandwell Holdings, one of the companies mining the Marange fields in partnership with ZMDC, was entitled to $16million or 13 percent of the sales. The mining companies involved, Mbada and Marange/Canadile, were supposed to get working capital of 13 and 7 percent respectively or $16million and $8million. The ZMDC was entitled to management and depletion fees of $6million while the Minerals Marketing Corporation of Zimbabwe was entitled to $1.1million as a commission.

The document blows holes in the grandiose claims by President Robert Mugabe in Addis Ababa on January 27 that the Minister of Finance, Tendai Biti, had been given $174 223 814.88 from diamond proceeds. According to Biti, he received a total of $48 458 996.78 on December 31, 2010. He denied ever receiving $174 million as claimed by Mugabe.

Biti says he wrote to the minister of Mines and to ZMDC demanding the $174million after Mugabe’s claims. This resulted in payment of $41 631 487.79 being made to the Treasury between February 7 and 16. This was paid directly to the Zimbabwe Revenue Authority (ZIMRA) and consisted of statutory payments that include royalties, corporate tax, VAT and withholding tax – which all companies in Zimbabwe are obliged by law to make.

This means $35million cannot be accounted for from the January sale, brining to $313 million the revenue that cannot be accounted for. Biti says it is “mendacious and dishonest” to claim that statutory payments were diamond revenues. Government has not received the 61 percent to which it is entitled as revenue. It is not clear where this money has gone and who is earning the interest on it.

According to Masimirembwa, ZMDC delayed making payments to treasury because the secret diamond sales it was conducting were being paid for through third party accounts – ostensibly to avoid the funds being frozen by the US Office of Foreign Assets Control, as ZMDC and MMCZ are both on the targeted measures list.

He admitted ZMDC was using a “circuitous method to secure payment” to avoid detection of the money by the US. $2million deposited in Stanbic Bank account was recently frozen. It is not clear where that money is now. Deputy Minister of Mines, Gift Chimanikire, said the measures against ZMDC and MMCZ should be lifted to avert further theft of State cash. Asked if diamonds had been sold outside the KP process, he said: “Its possible. I cannot officially confirm it.

He said in a bizarre twist, the targeted measures were actually providing a veil for Zanu (PF) to siphon off revenue that should rightfully go to the Treasury. The Kimberley Process recently gave Zimbabwe permission to start exporting rough diamonds from the two official concessions in Marange region, but the decision is being vigorously opposed by the US, Canada, Israel and the European Union, who are seeking further clarity on procedural issues. This hold-up means that sales continue on the black market, prejudicing the Treasury.

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