Report: Zimbabwe government stealing diamond funds

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Mr. Mpofu, the mines minister since 2009, amassed an unexplained personal fortune and is linked to a “small and tight group of political and military elites who have been in charge of Marange from the very beginning” and who are personally benefiting from the diamond sales, the report says.

In 2010, leading industry insiders, including Filip van Loere, a Belgian diamond specialist working for the Mugabe government, forecast the country could produce as much as 30 million to 40 million carats a year, worth about $2 billion annually, the report says.

The diamonds are being mined and sold, but the funds are not reaching the Zimbabwean treasury, according to the report.

Most of the diamond revenue is lost through a lack of transparency in accounting for how many diamonds are mined, how much is earned from their sales, the underpricing of gems on world markets, smuggling and a “high level of collusion” by government officials.

Records show that 10 million carats of Marange diamonds were exported to Dubai in late 2012 for $600 million. The report calls the sales an artificially low price because the same stones were sold for double their original price when they left Dubai for Surat, India – the world’s biggest diamond-cutting center. It added that the gems should have been valued at $1.2 billion.

‘Totally false’

The low valuation lost the Zimbabwe nation considerable money and “underscores a price-manipulation scheme perpetrated by Indian buyers and their Zimbabwe allies, with whom they are believed to share the spoils,” the report says.

In addition, the report’s researchers were unable to locate a 2.5 million carat stockpile, valued at around $200 million, which mysteriously disappeared in November 2011.

It also charges that $300 million in diamond sales never made it to the Zimbabwe treasury in 2011.

The report’s allegations are “totally false,” said the chairman of one of the state-run diamond mining companies in Marange. Goodwills Masimirembwa, chief of Zimbabwe Mining Development Co., told The Associated Press that he was unaware of charges of diamonds disappearing.

“No diamonds have ever gone missing,” said Mr. Masimirembwa.

“When we are selling our diamonds, all stakeholders – the police, revenue board and the country’s mineral marketing body – come together. So are they saying all these institutions are in collusion? Instead, let them come up with specific allegations, then the police will investigate.”

The watchdog report also criticizes the Kimberley Process for allowing Zimbabwe’s diamonds to be mined and sold in way that avoided scrutiny.

“Calls for greater transparency have been dismissed within the Kimberley Process,” it said.

“The lack of transparency surrounding Zimbabwe’s diamond revenue is a matter of critical public interest and amplifies concerns for some time that these revenues are funding a parallel government” of police, military officers and government officials loyal to Mr. Mugabe, the report says.

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