Zimbabwe loses $770 million diamond money
ZIMBABWE lost about $770 million in potential revenue between 2008 and 2012 through undervaluation and transfer pricing of its gems from the Marange diamond fields.
SENIOR PARLIAMENTARY REPORTER
A report by Partnership Africa Canada on illicit financial flows in the diamonds industry said the gems were being exported to the United Arab Emirates (UAE), mostly Dubai.
The report was on the agenda of the just-ended Kimberly Process Certification Scheme (KPCS) Intersessional meeting in Shanghai, China.
The three-day meeting ended yesterday.
According to the report, the UAE allegedly imported Zimbabwean diamonds cheaply but exported them at much higher prices.
The report analysed the statistics of exports submitted to the KPCS by Zimbabwe and the statistics of imports and exports by the UAE.
Zimbabwe Environmental Law Society participates in the KPCS meetings as the coordinator of the KPCS Civil Society Coalition.
“Perhaps one of the countries worst affected by transfer pricing and under-valuation of diamonds in is Zimbabwe, which lost an estimated $770 million in taxable revenues on exports to UAE between 2008 and 2012 due to an average 50% undervaluation of its diamonds, ” read the report.
“Zimbabwe lost an average 50% undervaluation of its diamond revenues on exports to UAE. Last year a joint report by the African Development Bank and Global Financial Integrity, a US research and advocacy group, concluded that the illicit haemorrhage of resources from Africa is about four times Africa’s current external debt — or as much as $1,4 trillion between 1980 and 2009.”
The report also said the Democratic Republic of Congo (DRC) last year lost about $66,2 million under similar circumstances.
“In the diamond sector DRC has routinely been identified as a country through which conflict affected diamonds have fraudulently obtained KP certificates for onward travel to trading centres, including Dubai. This was the case with sanctioned Marange diamonds from Zimbabwe that first appeared in Kinshasa in 2008 to 2009,” the report said.
“In 2013 alone, price manipulations due to transfer pricing generated in excess of $1,6 billion in profits for diamond companies in the UAE, and represents a major deprivation for African treasuries which lost much needed tax revenues that could have funded public services.