Widen probe into inefficient companies

diamondsTHE move by Government to send top management at the State-owned diamond miner, Marange Resources, on forced leave to allow an audit team to conduct a special probe of the company amid allegations of malpractice and poor corporate governance is a step in the right direction in a wide ranging effort to bring sanity in the diamond industry.
In addition, Government has also suspended the Zimbabwe Mining Development Corporation general manager Engineer Jerry Ndlovu, replacing him with Wilson Chonzi.

It is hoped that the cracking of the whip would soon be extended to senior management at these and other mining-related firms in which government has majority shares. The government should be commended for such efforts in trying to nip malpractice in the bud.

Since the discovery of diamonds in Marange and the beginning of formal mining activities there, it has been suspected that Government was losing substantial amounts of money to leakages in the system.

While there have been strenuous denials of looting, an audit of the country’s diamond sector, such as the one being rolled out, is imperative to expose any goings-on if they exist or to clear those wrongly accused of corruption.

The Ministry of Mines and Mining Development has said the probe into Marange Resources, a wholly State-owned diamond mining firm operating at Chiadzwa, would among other issues centre on diamond sales, production, technical and operational management.

The audit team will also investigate if management was conducting its duties “effectively and efficiently as guided by its job description, the key result areas and company policies and procedures manuals.”

We look forward to a broad probe focusing not only on ZMDC and Marange Resources but other firms as well and the entire conspiracy beyond the miners. The Government is the majority shareholder in the other five or so entities mining at Chiadzwa.  We don’t think if any malpractices exist, they only exist at ZMDC and Marange Resources.

Ndlovu’s suspension and the sending on forced leave of the Marange top brass is an escalation of a drive that Mines and Mining Development Minister Walter Chidhakwa started last month. He dissolved the boards of ZMDC, Marange Resources and the Minerals Marketing Corporation of Zimbabwe (MMCZ) shortly after President Mugabe had expressed reservations on the manner in which they were conducting their operations at Chiadzwa, and for MMCZ on the marketing side of it.  It was felt the boards were failing to provide strategic direction to management as well as play their oversight role in a more robust manner.

Furthermore, the probe into diamond producing companies in which government owns shares is in line with the Zimbabwe Diamond Policy unveiled in November 2012.  The policy seeks to promote the sustainable development of the diamond industry for the benefit of all Zimbabweans.

Therefore, it is imperative for the Government to set measures aimed at bringing order in the production and marketing of the gemstones consistent with the policy.

Tightening of screws in the extraction and marketing of diamonds to optimise value of proceeds from the sector is important for the benefit of Zimbabwe’s citizens.

Ensuring that there are no loopholes in accountability in the value chain of the gems is also critical particularly at a time when the country is anticipating a surge in the value of its gems following the re-engagement with the Antwerp World Diamond Council in Belgium towards the end of last year.

Diamond proceeds are crucial especially at this juncture when the economy is faced by serious liquidity challenges to stimulate productivity in industries.

Minister  Chidhakwa met diamond players, among them officials from ZMDC and Marange Resources recently to read the riot act and outline his vision for the ministry.

“We will not tolerate corruption; we will deal with issues of corruption historically, the things that have happened. Systems will be refined to ensure transparency. At the end of the day, that part that is due to government must reach government.  I am going around . . . to look at the systems. If you want to call that an audit (it’s entirely up to you, but) I will call it understanding the systems, how they can be improved and ensuring that there are no loopholes,” he said.

He spoke really tough and has already taken radical action to back that up by dissolving the three boards. Let us see an honest probe that must end up with recommendations to hand over corrupt elements to law enforcement agencies.

The first sale of diamonds from Marange on the international scene attracted an overwhelming response, achieving total sales of almost US$10,5 million after 279 723 carats were auctioned in a trial tender held at Antwerp.

Estimates suggest that Zimbabwe could earn up to US$2 billion a year from the Marange diamonds.
The Marange diamond fields have been hailed as “the greatest find of the century” and said to hold 25 percent of global rough diamonds by Israeli diamond watchdog, Tacy Limited.

If exploited transparently and efficiently the deposit can transform the economy in a big way, but simply touting figures on paper, while corruption eats at the centre of the system cannot bring about that transformation Zimbabwe sorely expects.

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