ZIMBABWE – Finance Minister Tendai Biti is convinced huge public funds realised from the shady sales of Zimbabwe’s diamonds have been looted.

Official documents seen by the SA Sunday Times on the diamond sales and revenues show that Biti is certain there is systematic plundering.

The involvement of the military in diamond mining and deals with the Chinese is seen as exacerbating the situation. Zimbabwe has entered into a $98-million deal with the Chinese over the construction of a state-of-the-art military complex in Harare. The Chinese are also chasing a $3-billion platinum deal with Zimbabwe.

Biti’s concerns over diamonds were echoed on Friday by Minister of State in Prime Minister Morgan Tsvangirai’s office, Jameson Timba, when he slammed the army for getting involved in diamond mining.

“Unlike any other nation, our army is heavily involved in commercial activities with the blessing of Zanu-PF, in particular the mining of diamonds,” Timba told journalists in Sandton, Johannesburg. “This undermines government’s ability to bring fiscal transparency on publicly generated revenues.”

The army is extracting diamonds at the contested Chiadzwa mining fields with a Chinese company Anjin Investment (Pvt) Ltd. Biti is working on a proposed Diamond Control Revenue Bill to regulate the mining of the mineral and control of the revenues in a transparent manner.

Documents presented to cabinet by Biti in March show that he has grave concerns about diamond mining and revenues. “There is no transparency in diamond mining and management of revenues. The inconsistent distribution of diamond proceeds raises a lot of questions,” Biti says.

“There is need for conclusive answers on the following: transparency and full disclosure on the mining and sale of diamonds; clear separation and communication matrices of mining activities and financial activities; development of clear audit trails; ownership and revenue distribution arrangements; the role and position of investors, ZMDC (Zimbabwe Mining Development Corporation) and MMCZ (Mineral Marketing Corporation of Zimbabwe), and a clear legal position codified in an act of parliament.”

President Robert Mugabe and Biti have been fighting over the need to increase civil servants’ salaries. Mugabe says there is money from diamond sales to pay public workers, while Biti says the money is not there. Last week Mugabe again ordered Biti to hike the salaries, but the minister insists there is no money.

“The erratic nature of diamond resources flowing into the exchequer makes planning difficult. February inflows as reflected in the dividend payment table (in the document) relate to 2010 sales and the inflows for January are yet to be remitted. It is, therefore, difficult to run government on resources that are of a sporadic nature,” the document says.

Following the decision by cabinet to sort out revenues in February, Mugabe’s office convened a meeting on the need to reconcile proceeds of $174223814.88 from gross sales of $313 504 567.17 of diamonds. Mugabe’s office, ministries of finance and mines, ZMDC and MMCZ officials met to verify and reconcile the figures. Consultations were made with the Commissioner-General of the Zimbabwe Revenue Authority (Zimra) who also submitted figures on the issue.

ZMDC and Zimra have been reconciling the difference between $174 223814.88 and $169371978 (including VAT refund) which has been attributed to withholding tax deposited directly by producers.

Biti says considering tax revenues on diamonds as diamond revenues is a “misnomer” used to camouflage looting. “Reflecting statutory payments as revenue is a misnomer, as such amounts are paid to Zimra and in turn paid to Treasury,” he says.

By The Times (SA)