Guest Column: Mukasiri Sibanda
Diamonds are forever, right? Wrong. Seven executive managers of the Zimbabwe Consolidated Diamond Company (ZCDC), including the chief executive officer (CEO), were fired by the board on May 17, 2019. The ZCDC is a State-owned enterprise (SOE). The entity was created in 2015 and started operations in 2016 after seven diamond mining companies were booted out in the name of bringing transparency and accountability to the murky Marange diamond mining activities.
The dismissal, according to the board, was necessitated by the desire to restore market and public confidence following several allegations of corruption and abuse of office.
Since no granular details were shared, it is important not to take things at face value, but to try to dig deeper for possible clues and to help with suggestions on what it takes to bring back public confidence in the management of Marange diamonds. I shudder to say rebuilding public confidence as opined by the ZCDC board because from the onset, Marange diamond mining operations dismally failed to inspire public confidence.
The ZCDC experienced a spate of armed robberies of diamonds. We have not heard of any public report on diamond robberies at Murowa Diamonds. Consequently, one can argue that a spate of diamond robberies might have robbed the senior management of their jobs. Speaking of armed diamond robberies; could it be that the ZCDC management closed loopholes for the powerful and well-connected individuals who were used to looting diamonds from Marange. Perhaps out of frustration and desperation, the clique became so daring to make a statement to ZCDC by organising several armed robberies. This sounds like stretching facts a bit far, but the former permanent secretary, Francis Gudyanga, warned: “… when it comes to diamond, there are syndicates that are very sophisticated in the country and outside the country, and many people get involved. Many beneficiaries get involved to ensure that the truth never comes out.”
Allegations of corruption and abuse of power
Before the board’s announcement of the dismissal of the ZCDC senior management, the CEO was arrested for recommending diamond sales to a blacklisted person under the Kimberly Process. Allegations surfaced on the abuse of power by the chief financial officer, who allegedly bought 1 200 bags of cement from Lafarge on a ZCDC account, but for his own personal use. Looking on the rear-view mirror, the Office of the Auditor-General (OAG)’s report on ZCDC in 2016 raised several damning issues on poor corporate governance. The board must openly discuss the steps it took to implement the OAG’s recommendations.
People feel good when hunting with their own dogs There were strong allegations that the ZCDC was created to close revenue streams for one Zanu PF faction, the Lacoste, which allegedly had the military backing. The ZCDC was created when Walter Chidakwa, allegedly aligned to the Generation 40 faction in Zanu PF, oversaw the Ministry of Mines and Mining Development. The military had a stake in one of the biggest diamond mines in Marange, Anjin Investments, which was also booted out along with other entities — Mbada, Jinan, Diamond Mining Corporation (DMC), Kusena, Gye Nyame and Marange Resources. Companies like Anjin Investments failed to have their books audited year-in, year-out. The Auditor-General had trouble verifying taxes paid by Anjin due to its failure to produce audited financial statements.
While speculation was strong that factional fights created the ZCDC, transparency was one of the main reasons given for creating ZCDC. Considering that Anjin’s books were never subjected to an audit, the transparency card was genuine although other motives could not be ruled out. So, when the Lacoste faction emerged supreme after the November 2017 events which reshaped Zimbabwe’s political landscape, arguably, it was only a matter of time before changes were made. People feel good when hunting with their own dogs. Always, the ZCDC management, which was dismissed, was skating on thin political ice.
Failure to manage expectations
The ZCDC mostly painted a robust outlook in terms of diamond production and earnings in Zimbabwe. Now that the country is facing severe foreign currency shortages, could it be that authorities in government were disappointed that diamonds were not bringing the anticipated cash? In its five-year strategic plan, ZCDC has a target of producing 10 million carats, generating $1 billion annually in foreign currency and thus contributing $250 million in taxes to government and $20 million to the Marange-Zimunya Community Share Ownership Trust. In 2018, the ZCDC surpassed its targeted diamond production, producing 2,8 million carats against a projected 2,4 million carats. Between 2016 and 2018, ZCDC generated $22,9 million according to MMCZ. Diamonds, including gold and platinum, used to be top performers in terms of foreign currency earnings, at one-point generating US$740 million.
It is too early to celebrate whether the ZCDC’ board made a good move to restore market and public confidence by firing the entire ZCDC management aside from the chief operating officer.
Parliament’s Portfolio Committee on Mines and Mining Development must dig deeper to unmask the real challenges at ZCDC. The board must understand that given past chronicles of corruption concerning Marange diamonds, openness is the pillar to rebuilding public confidence.
Anything short of that will always attract scepticism on whether the move by the board was well intentioned or not.
Mukasiri Sibanda writes in his personal capacity