A fresh scandal is set to engulf the Zimbabwe Consolidated Diamond Company (ZCDC) after its directors’ decision to purchase several top of the range luxury vehicles for themselves worth more than $2 million despite a clear directive by President Emmerson Mnangagwa for government and all parastatals to cut on spending.
Recently, Deputy Chief Secretary for Presidential Communications George Charamba said the country was seized with cutting recurrent expenditure, through a raft of measures including cutting benefits and growing revenue collections.
ZCDC’s multi-million dollar purchase, insiders say, was made using part of the $80 million Government investment which the company claimed it so desperately needed to build capacity and to enable the exploration and mining of conglomerates.
The $80 million came after the diamond producer benefited from a $35 million PTA Bank facility. Similar questionable moves around vehicle procurement and expenses have been made at the Ministry of Mines and Mining Development where at least $1,2 million is being blown on vehicle hiring annually for directors.
Information at hand shows the Ministry in 2017 bought brand new twin cabs for its directors. Six of the twin cabs have, according to a top ministry official, already been sold to the directors for $1 500 each. This is against the requirement that vehicles can only be sold to the users after five years.
“The six directors are PMD Mashonaland Central, PMD Mashonaland East, legal advisor, human resources director and ICT director,” reads part of a dossier gleaned by Business Times.
“Now the ministry is hiring vehicles for the six directors from CMED at a monthly cost of $30 000,” read the report. In total, the ministry has 20 hired vehicles.
Secretary for Mines and Mining Development Onesimo Moyo could not be drawn to comment. “I am in a meeting right now, we can talk maybe later when I finish but this meeting is to prepare for bigger meetings tomorrow,” he said in a telephone conversation.
Moyo listened to all the questions from this publication before he promised to call after his meeting.
Ministry of Mines finance director Morgan Makina could not be reached for comment as his mobile number was on voice mail.
A few weeks after taking oath, President Mnangagwa’s regime reviewed the vehicle scheme to allow permanent secretaries and equivalent grades, one personal issue vehicle while commissioners and equivalent grades would also get one vehicle.
Under the new rules, principal directors, directors and deputy directors and their equivalents get a vehicle loan scheme.
ZCDC CEO Moris Mpofu confirmed the developments saying the purchase of operational vehicles was done in July 2017, but delivery of those vehicles was delayed due to obtaining foreign currency challenges.
“The purchase of these vehicles was done in accordance with approved budgets and clearance from the board of directors, The Ministry of Mines and Mining Development and the Office of the President and Cabinet together with the purchase of the conglomerate plant and complementary earth moving equipment and other operational assets.
(ZCDC has all correspondences to this effect). The types of operational vehicles purchased were benchmarked against local mining industry standards,” said Mpofu.
Out of the total capitalisation of $80 million, Mpofu said, less than $2 million was used to purchase vehicles required for the operation of the business.
“It is important to note that operational vehicles are a necessity in mining business, ZCDC is not an exception, while the greater part of the budget had to be expensed on essential production equipment and operational vehicles were required to support production.
“You would appreciate that management need to travel to and from the mine and the administrative functions of the business has to be capacitated to support operations. Surely you don’t expect support structures of the mine to use excavators and graders to go to strategic business assignments.
Mpofu said when ZCDC was formed in 2015, it did not have operational, production equipment and assets of its own; hence it relied on leasing some assets from Marange Resources.
An intelligence report earlier this year exposed a number of malpractices including diamond leakages. The reports raised a red flag amid serious allegations some top managers and politicians connived with buyers to manipulate prices. A diamond deal to process and market Zimbabweans stones in Botswana which was being pushed by ZCDC has also been at the centre of debate with information it was oversold and will benefit a few individuals.
The Botswana deal was allegedly structured with the heavy involvement of Minerals Marketing Corporation of Zimbabwe’s Israeli consultant Raphael Bitterman and involves individual who are heavily conflicted.
ZCDC publicly dismissed the allegations as baseless. However, a leaked MMCZ internal report in our possession for the country’s January diamond tender has exposed variances averaging 319 percent and as much as 6 389 percent between the ZCDC reserve prices for its diamond parcels and the market bids.
This left questions around competence of ZCDC’s diamond valuators and added to indications of possible salting away of revenues at the diamond miner.
For the January/February 2018 tender, the MMDC report showed that ZCDC expected to fetch $54,4 million at an average reserve price of $85,61 per carat, but instead, the highest bids on all 11 parcels could amount to $17 million at an average price of $26,80 per carat.
Such questionable moves are expected to be addressed through a Diamond Policy – meant to regulate, guide operations and market the precious stones- which President Mnangagwa in June said would be unveiled August. The new policy, some close sources say, could reverse consolidation.
Meanwhile ZCDC is targeting diamond production of 10 million carats in the next five years. Last year, ZCDC produced 1,8 million carats of diamonds; and the target according to the company’s strategic plan is to produce 10 million carats by 2023. This would be increased to 12 million carats by the year 2025.
Earlier this month, the State-owned diamond mining company, announced plans to commission a $100 million conglomerate diamond plant by year end.