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Diamond scam hits Zim

One buyer has been snapping up all parcels at diamond auctions amid concerns some officials from the Zimbabwe Consolidated Diamond Company (ZCDC) and the Minerals Marketing Corporation of Zimbabwe (MMCZ) could be leaking the reserve price in the latest scandal to hit the sector, Business Times can report.

This has consequently taken the high moral ground from President Emmerson Mnangagwa’s government, which three years ago put in place an electronic auction system, in an attempt to instill normalcy in the local diamond sector.

Well-placed government and diamond sector sources this week told Business Times that this possible collusion has significantly enabled one buyer, Jamal Ahmed, to exploit the market unfairly, resulting in him enjoying an untenable monopoly over Zimbabwe diamonds.

The Lebanese businessman is said to have been helped to enjoy a significant presence on the local diamond market to the extent of buying almost “all parcels” of Zimbabwe diamonds.

It is understood that ZCDC evaluators and MMCZ marketers are lining their pockets by leaking diamond prices to prospective buyers, eliminating competition in diamond buying.

There are now concerns that Ahmed was being helped to dominate the local diamond sector.

Well-placed sources at ZCDC told this publication that an internal investigation has since been launched.

“This is a syndicate and there are strong internal indications that there is price collusion and someone is likely leaking prices to buyers and this has seen only one buyer outbidding others on every auction,” a source said.

Another source said: “In the past the auction used to attract a number of buyers including those from Belgium but the latest situation has created disharmony among the buyers.”

Contacted for comment MMCZ general manager Tongai Muzenda said he was yet to get the reports.

“I am yet to get such reports on price collusion,” Muzenda said.

ZCDC chief executive Mark Mabhudhu said the collusion story was difficult to substantiate but told Business Times there were efforts to invite more buyers to participate in the buying of diamonds.

“The guy (Jamal Ahmed) supposedly winning the parcels is the guy offering the highest so I don’t understand where the collusion is coming in unless someone is giving them the reserve value. The collusion story may be very difficult to substantiate,” Mabhudhu said.

“We are getting quite some competitive bids and whoever is claimed to be getting the most is likely going to have competition.”

All efforts to get a comment from Ahmed were futile.

Diamond Beneficiation Association of Zimbabwe chairperson Richard Mvududu told Business Times that he was not aware of the allegations but there were engagements between the association and MMCZ to bring fairness to the trading system.

“We are not privy to who has won and who has not won. That is only done by MMCZ.

What I can tell is they hardly disclose who has gotten the parcel for security reasons.  But as an industry we stand for fairness but unfortunately that particular allegation was not given to us,” Mvududu said.

“Jamal Ahmed is a member of the association and he has been buying stones for a long time.  Therefore, if there is a situation where it is proven and not as a mere allegation, we will engage stakeholders on why such a thing will be happening.”

In 2018, the government introduced online diamond sales—the Zimbabwe Electronic Diamond Trading System (ZEDTS)—in a bid to promote transparency and the ease of doing business.

According to Mines and Mining Development Minister, Winston Chitando, the implementation of the ZEDTS, was supposed to “augur well for future diamond sales and supported the ease of doing business mantra”.

The system, he said, was also meant to ensure that the sale of diamonds through the MMCZ was in line with global best practice.

The diamond trading industry in Zimbabwe has been rocked by scandals, especially in the Marange mining area.

Two years ago, a Lebanese diamond dealer Hussein Robai was deported from Zimbabwe over illegal diamond dealings amid claims by authorities he was working with some officials at the State-owned diamond producer, ZCDC.

The deportation of Robai came after there were concerted efforts by some officials at Foreign Affairs and ZCDC to protect the Lebanese. He was, however, deported after the intervention of State security services.

ZCDC former chief executive officer, Moris Mpofu, was accused of abuse of office by inviting the Lebanese tycoon Robai despite his criminal record.

Mpofu has since been acquitted.

In September 2008, Robai and Yusuf Ossely were arrested in India with rough diamonds worth an estimated US$900 000. They were later sentenced to four years in prison for trading in conflict diamonds.

Government critics say there has been no transparency on Marange diamonds.  In 2016, former Finance minister Tendai Biti called the producers a “cabal of looters” for allegedly spiriting away billions from the gems while little was flowing to government’s coffers.

His comments came after the government had cancelled the licenses of operators in Marange. Business Times

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