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Parly, ZACC to probe missing diamonds and US$400mil from ZCDC

Parly, ZACC to probe missing diamonds and US$400mil from ZCDC

Edmond Mkaratigwa

The Parliament of Zimbabwe will follow up on the Auditor’s report with reinforcement from the Zimbabwe Anti-Corruption Commission (ZACC) among other arms of government to ensure that the country recovers its fortune as the first option, Chairperson for Parliamentary Portfolio Committee on Mines and Mining Development Hon Edmond Mkaratigwa has said.

Rudairo Mapuranga

In her 2019 report on state enterprises, Auditor-General Mildred Chiri discovered that the Zimbabwe Consolidated Diamond Company (ZCDC) has failed to account for the use of money exceeding US$400 million, while also failing to properly account for 352 583.11 carats of diamonds worth about US$146.3 million which were in stock.

According to Mkaratigwa, there is a need to make sure accountability and transparency issues are raised and recommended by parliament to avoid situations where the state will lose its wealth through accountability and lack of transparency.

“Failure to fully account may mean week and risk unconscious legal, administrative and policy frameworks. There is, therefore, a need to relook at those institutional frameworks and fully come up with recommendations.

“Matters of wealth are high-risk areas with the first hazards being institutional components. So, we will take it up from the Auditor’s findings and ensure the much-needed resource are always secure for the public good,” he said.

There is a lot of controversy on diamonds mining in Zimbabwe with the late President Robert Gabriel Mugabe claiming that there was US$15 Billion lost diamond revenue, an allegation which proves that indeed Zimbabwe is losing billions of dollars in the diamond sector.

In her report, Chiri said ZCDC failed to conduct a stock count of diamonds held at the Minerals Marketing Corporation of Zimbabwe (MMCZ), a situation that could have led to the country losing millions of dollars.

“There was no evidence of a documented formal process of reconciling physical stock counted to theoretical stock. For instance, the following anomalies were noted in respect of diamond stocks which then necessitated post-year-end adjustments to the financial statements which had been presented for audit,

“In 2019, 297 660.41 carats of diamond stock held at MMCZ (Minerals Marketing Corporation of Zimbabwe) was not counted at the time of the stock count. These parcels were packed for customers and held at MMCZ. However, at year-end, during the stock count, these stocks were not included in closing inventories; and in 2018, 41 699.85 carats of diamond stocks held at MMCZ were excluded from the stock count. It was assumed at the time that these stocks had been sold to customers.

“An additional 13 222.85 carats were excluded from the final stock sheet in error,” Chiri said.

According to Chiri by the time of the audit in April 2020, diamonds have been sold to local customers in September of the previous year which were not paid for or collected nearly eight months after-sale breaching tender rules which state that a customer should pay for their parcels within three days of winning a tender.

She was of the opinion and concerned that a “possible pilferage of inventories may occur and go undetected.”

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The Auditor-General also said material variances between physical stock and theoretical stock may go undetected. The audit was not able to verify the valuation (recoverability) of amounts owed by related parties with a balance exceeding US$300 million on the company’s statement of financial position.

“I was not able to verify the valuation (recoverability) of amounts owed by related parties with a balance of $304 258 953 on the company’s statement of financial position. Some of the amounts are owed by companies that have since closed down whilst ZMDC has not acknowledged the amount due. Management failed to provide persuasive audit evidence on how and when these amounts would be recovered. Consequently, I was unable to determine whether any adjustments to the above-stated amounts were necessary,” she said.

“I was not able to verify the valuation (recoverability) of amounts owed by related parties with a balance of $24 347 454 on the Company’s statement of financial position. The amounts are owed by companies that have since closed down. Management has failed to provide us with persuasive audit evidence on how and when these amounts would be recovered.”

“Consequently, I was unable to determine whether any adjustments to the above-stated amounts were necessary,” Chiri said.

“I was not able to verify the valuation of accruals with a balance of $51 613 628  (US$51.6 million) and trade creditors with a debit balance of $82 686 279 (US$82.7 million) and the rights and obligations of the company thereon. Delays in the recording of invoices into individual supplier accounts meant that as at the time of our report, management had not provided me with sufficient and appropriate evidence to support these amounts.”

“In addition, the CCTV video footages could not be retrieved as there was an internal control system failure,” the Auditor-General said.

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