Diamondgate: Auditors stifled

via Diamondgate: Auditors stifled – NewsDay Zimbabwe by Charles Laiton October 8, 2013

The disappearance of over 1,3 million carats of diamonds worth over $130 million at Marange Resources has once opened a Pandora’s box as it emerged that the auditors, Grant Thornton, battled to compile a report on the operations of the now defunct Canadile Miners.

The diamonds went missing following the disbandment of a joint venture deal between Core Mining and Mineral Resources and Marange Resources through the Zimbabwe Mining Development Corporation (ZMDC).

According to a report for the 13 months to October 5 2010 which was compiled by Grant Thornton and produced in court at the request of defence lawyers in a trial where Core Mining director Lovemore Kurotwi is accused of causing government a $2 billion potential prejudice in investment, the auditors lamented the lack of ZMDC’s co-operation to provide them with all the necessary books of accounts and inventories to facilitate their (auditors) operations.

“We were unable to observe the amount of physical inventories stated at $8 728 484 as at 5 October, since the date was prior to the date we were engaged as auditors for the company.

“The company’s records did not permit the application of alternative procedures regarding the inventories.

“Consequently, we did not obtain sufficient appropriate audit evidence to satisfy ourselves as to the existence of inventories,” Grant Thornton auditors said in the report.

The auditors said between September 1 and October 5, the now-defunct Canadile Miners rented operating assets from suppliers under operating leases at an amount of $643 546.

“The company has not disclosed this information as required by International Accounting Standard 17, “Leases”. We could not obtain the lease agreement in respect of the leased equipment from suppliers. Therefore, we could not determine the extent of obligation arising therefrom,” Grant Thornton Camelsa said.

The auditors said there was no proper accounting system at Canadile, thereby making auditing difficult.

“As stated in Note 20 to the financial statements, there were inadequate systems of accounting and internal control in place to ensure that the transactions were accounted for completely in the accounting records. In these circumstances, we were unable to carry out all auditing procedures we consider necessary for our audit,” the auditors said.

Due to the inadequate information during the audit, Grant Thornton Camelsa said they were not able to express an opinion on the financial statements.

Impeccable sources told NewsDay  last week that a police probe team tasked to investigate the $6 million diamond saga involving former ZMDC board chairman Godwills Masimirembwa was keen on establishing what became of the 1,3 million carats of the gems following the termination of the joint venture.

In a report compiled by ZMDC and submitted to Kimberley Process (KP) monitor Abbey Chikane sometime in 2010, the government confirmed that Canadile Miners had left 1 347 636,35 carats of diamonds in stock.

Chikane was at the time responsible for checking the country’s diamond production, storage and accumulative quantity and would also check what the diamond firms would produce on a monthly basis.