Diamond miner sucked into tax evasion scandal

FILTHY rich diamond mining outfit Mbada Diamonds and Anjin Investments have been sucked into a tax evasion where they are alleged to be using unconventional channels to sell gems as a way of evading the taxman.

Insiders and government sources named Mbada Diamonds and Anjin INVESTMENTS as among the Marange-based companies selling diamonds unofficially to avoid paying tax.

"The Mbada coffersare now always empty yet there is production, even though it has now been drastically reduced. We are aware that the diamonds are being taken outside the country for sale on what you can call a black market. ZMDC (Zimbabwe Mining Development Corporation) and government officials know about this, but they are turning a blind eye," said a source at Mbada.

Recently, the Zimbabwe Revenue Authority (Zimra) imposed garnishee orders on several diamond miners, which have never honoured their legal obligation to pay various forms of tax.

The Zimra raids forced the companies to find other means of survival and, according to a government source in the mines ministry, the most effective way to do that was to produce and sell diamonds away from the glare of government and the Kimberly Process, which had directed that the gems be mined and auctioned in a transparent manner.

"There is a new ZMDC board and it is still trying to find its feet. It is finding it difficult to stamp its authority on the mines because of interference from government departments. To make matters worse, the Minister of Mines seems to have developed cold feet in bringing sanity to the diamond fields," said a ministry official.

This was after Global Witness, an international watchdog, indicated that Zimbabwe could have lost around $2 billion in taxes to illegal smuggling of the gems. However, in recent months, Chidhakwa has been quiet.

Some of our sources say he could be overwhelmed by pressure from politicians and the military who are reported to be benefiting from the opaque extraction of the gems.

It could not be established how much government might have lost in revenue this year due but it is evident that the diamond companies are struggling to break even as the surface gems are drying up.

Both Mbada and Anjin have recently seen industrial action as they fail to pay salaries. A source said Mbada was in the process of acquiring new equipment that would be used to extract conglomerates from below the surface.

Martha Chikata, Anjin Investment public relations officer insisted that her company was up-to-date with its remittances to government as deductions were made from their bank, before they had access to the money.