Tanzania shuts down its UK diamond office

Tanzania has closed down the London offices of its diamond sorting firm and transferred its operations to Dar es Salaam.

Commissioner of Minerals in the Ministry of Energy and Minerals Dr Peter Dalaly Kafumu said the closure is necessary following Petra Diamonds’ purchase of De Beers’s interest in the Williamson Diamond mine.

Dr Kafumu said that since Petra sells directly to the overseas market, the function of Tanzania Diamond Sorting (Tansort) in London has become redundant.

Four staff members who served at Tansort will be transferred to his docket while another employee, who was working under contract, retired some time back.

“Financial experts are in London to sort out payment and other terminal benefits,” he said.

Petra bought a 75 per cent stake in Williamson Diamond Mine from De Beers Societe Anonyme subsidiary Willcroft Company Ltd in 2008 for $10 million and changed the firm’s name to Williamson Diamond Ltd. The government owns the remaining 25 per cent.

According to Dr Kafumu, the law stipulates that if a mineral [diamond] company is selling via a third party then a government agency is needed to work out the prices.

However, if the firm sells direct to the market, there is no need for the agency.

Tansort was tasked to assess the price of diamonds that were exported to the UK from Williamson Diamond mine in Mwadui, Shinyanga region and collect five per cent royalty on behalf of the government.

Tansort, which was established in 1966, came into the limelight when it failed to disclose its accounts forcing the parliamentary Public Accounts Committee (PAC), to investigate its activities in 2004.

The committee suggested its immediate closure to save on misuse of public funds.

Between 1994 and 2000, De Beers paid $4.05 million to Tansort for the sorting of 901,300 carats of diamond. De Beers pays Tansort $4.5 per carat.

Nothing gets to Treasury

But according to 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’s activities and methods of payment of royalties from diamond sales.

The investigation revealed gross misappropriation of funds but the government is yet to give a detailed explanation on the firm’s activities and why it does not remit money to the Treasury.

A human rights lawyer Tundu Lissu, told The EastAfrican in Dar es Salaam last week that the closure of Tansort does not mean the corruption allegations are also closed for the firm.

Mr Lissu said to do so is a grave mistake because the law does not stipulate that.

However, PAC chairman John Cheyo said his committee wanted the firm to be closed long ago and gave “full blessing” the closure as price checking and quality control was directed by 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,” Mr Cheyo, a Member of Parliament for United Democratic Party, said.

Hansard records indicate that on July 17, 2006 when tabling the budget for the Ministry of Energy and Minerals, the then minister Dr Ibrahim Msabaha, said Tansort was to be allocated $1 million for the training of its officials.

The sum was also meant to meet office rent expenses for the company, which, according to the minister, was to be moved to Tanzania.

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 report says that the processing of the diamonds before they are handed over to Tansort for sorting is undertaken entirely by Williamson Diamond Ltd.

“What a Tansort officer checks is only the weight and seal — but the existing system does not allow the officer to determine whether the size and quality of diamonds he has received are the same as that sent from the mine,” says the report.

The committee also looked into the establishment of Tansort and why $2.5 billion accruing from sorting of diamonds were not remitted to the Treasury.

The committee found that Tansort does not legally exist since its creation in 1966.

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