TANZANIA HAS CLOSED DOWN ITS DIAMOND SORTING AGENCY OFFICES IN LONDON FOLLOWING PARLIAMENTARY COMMITTEE INVESTIGATIONS.

Writes Leo Odera Omolo In Kisumu City

REPORTS emerging from the Tanzanian capital, Dar Es Salaam say that country has closed down its diamond sorting firm in the UK and transferred its operation to Dar.

The Commissioner of Minerals in the Ministry of Energy and Minerals, Dr Peter Dalaly Kafumu, has confirmed the report by saying that the closure was necessary, following Petra Diamond’s purchase of De Beers interest in the Williamson Diamonds mines, which are located in Mwadui, Shinyanga in Central Tanzania.

He explained that since Petra Diamonds sells its mineral products directly to the overseas markets, the functions of Tanzania Diamond Sorting {Tansort} in London has become irrelevant and redundant.

Petra bought a 75 per cent stake at Williamson Diamond Mines from De Beers Societe Anonyme subsidiary Willcroft Company Ltd in 2008 for USD 10 million, and changed the firm’s name to Williamson Diamond Ltd. The government of Tanzania retains the remaining 25 per cent of the shares.

According to Dr Kafumu, Tanzania law stipulates that if a mineral {diamond} company is selling its products via a third party, then the government agency is needed to work out the prices. However, if the firm sells direct to the market, there is no need for any government agency coming in the picture as a go-between.

Tansort, which was established in 1966, came into limelight when it was reported to have failed to disclose its financial accounts, forcing the Parliamentary Public Account Committee {PAC} to launch investigations on its activities in 2004. The committee suggested its immediate closure to save its misuse of public funds.

Pac investigations had revealed that between 1994 and 2000, De Beers had paid USD 4.05 million to Tansort for the sorting of 901,300 carats of diamond. De Beers pays Tansort USD 4.5 per carat.

But according to the government officials, no money paid by De Beers to Tansort has been remitted to the Treasury. Thus in 2004, PAC was allowed to investigate Tansort activities and methods of payment of royalties from diamond sales.

The PAC investigations reported gross misappropriation of funds, but the government is yet to give detailed explanations on the firm’s activities and why it does not remit money to the Treasury.

A human rights lawyer, Tindu Lissiu was recently quoted by the EASTAFRICAN as saying that the closure of Tansort does not mean the corruption allegations are also closed for the firm.

However, the PAC chairman, John Cheyo {UDP}, said his committee wanted the firm to be closed long ago and gave “full blessing “,as price checking and quality control was directed by the De Beers.

“The accountant and audit general will continue to follow the matter in a normal manner and report. We are satisfied with the progress and we hope by end-year things will improve,” Hon Cheyo, a Member of Parliament for the United Democratic Party said.

Parliament’s hansard records indicate that on July 17, 2006, when tabling the budget for the Ministry of Energy and Minerals, the then Minister Dr Ibrahim Msababa said Tansort was allocated one million dollars for the training of its staff and officials.

The sums of money was also meant to meet office rent expenses for the company, which according to the Minister, was to be moved back to Tanzania from the UK.

The PAC in 2004 formed the probe committee, after it found that answers given by the accounts officials from the Ministry of Energy and Minerals were not “satisfactory”.

The reports say the processing of the diamonds before they are handed over to Tansort is undertaken entirely by Williamson Diamonds ltd. “What Tansort office checks is only the weight and seals, but the existing system does not allow the officer to determined whether the size and quality of diamonds he has received are the same as that sent from the mine“, says the report.

The PAC also looked into the establishment of Tansort and why USD 2.5 billion accruing from the sorting of diamonds were not remitted to the Treasury. The committee found that Tansort does not legally exist since its creation in 1966.

The Tanzanian government has failed to explain how it was crated or produce documents to support its creation.

Ends