Audit on diamond companies looms

Source: Audit on diamond companies looms – The Zimbabwe Independent June 17, 2016

GOVERNMENT will on June 29 formally close the tender for independent chartered accounting firms to audit seven diamond mining companies suspected of prejudicing the country of billions of United States dollars in Chiadzwa in taxes and royalties through opague operations.

By Elias Mambo

Mbada Diamonds, Anjin, Marange Resources, Diamond Mining Company, Kusena Diamonds, Jinan and GyeNyame operated in Chiadzwa under 50-50 joint ventures with the State-owned Zimbabwe Mining Development Corporation, but paid negligible dividends to treasury which were decried by former Finance Minister Tendai Biti and his successor Patrick Chinamasa.

Official figures from the Kimberly Process Certification Scheme show that Zimbabwe earned US$2,5 billion in Chiadzwa, but President Robert Mugabe claimed in March that as much as US$15 billion had been made at the diamond fields.

He, however, said most of the money had been lost to treasury through the web of dogy operations that enabled the companies to evade remitting significant amounts to treasury.

“We have not received much from the diamond industry at all. Not much by the way of earnings. I don’t think we have exceeded US$2 billion, no and yet we think that well over US$15 billion or so have been earned in that area,” Mugabe said.

Although many people believe the figures given by Mugabe were inflated, his statements resulted in an outcry from ordinary Zimbabweans, civil society and opposition parties who have always questioned the lack of transparency and accountability in the diamond industry sector.

Mugabe’s statement prompted government to audit diamond mining firms.

Auditor General Mildred Chiri was given the task to identify a private audit firm to conduct the audit.

Chiri told Zimbabwe Independent government flighted a special formal tender scouting for accounting firms to carry out the audit of the mining companies, adding the tender would close on June 29.

“We are still collecting bids and we will get to know which companies have submitted their bids when we close,” Chiri said.

“A special formal tender is a process where we get permission from the State Procurement Board (SPB) to approach certain companies we feel can do the job we want. In this case we wanted audit firms with four or more partners to carry out the forensic audit.

“The terms of reference will ask the auditors look into how the companies operated from an administrative point of view and also from a financial point of view. They will also look at how cash was being managed and also all receipts of payments and other financial matters,” she said.

The government in February ordered diamond mining firms to cease operations to pave ay for the establishment of the Zimbabwe Consolidated Diamond Corporation, citing lack of transparency and accountability among other things.
The audit is expected to establish how much was produced in Chiadzwa and how the revenue was used.