By Tendai Sahondo
Hailed for its unique qualities, Zimbabwe’s black granite is on-demand the world over. The famed black diamond adorns majestic buildings such as the Royal Danish Library; however, the glitzy stone has also been exploited as a means to siphon millions, illicitly, through trade misinvoicing.
According to Global Financial Integrity (GFI), Trade misinvoicing is a method of moving money illicitly across borders through deliberate falsification of the value, volume, or quality of an international commercial transaction of goods or services. Trade misinvoicing is the largest component of Illicit Financial Flows, robbing Zimbabwe of over $1 billion in the past decade, as measured by GFI.
The reputable institution notes that value gaps when analysing trade figures raise red flags, and unsurprisingly, a plethora of flags spring up when considering Zimbabwe’s black granite trade.
An assessment of trade figures on the Observatory of Economic Complexity, a data visualisation portal reveals that Zimbabwe exported granite worth $34.5 million in 2018, making it the 9th largest exporter of granite in the world.
However, a comparison with trade figures from the Minerals Marketing Corporation of Zimbabwe (MMCZ) shows that $29 million worth of granite was exported in the same period, creating a value gap of $5.5 million, a good chunk of which could have been channelled towards economic development.
Robbing a nation
In an interview, Centre for Natural Resource Governance (CNRG) director and founder, Farai Maguwu said trade misinvoicing is rife in the black granite industry.
“A lot of terrible things are happening with the black granite from Mutoko. Trade misinvoicing is one way, but we also have outright tax avoidance whereby some stones are leaving the country undeclared.
There are some politicians who hail from Mutoko who are facilitating these corrupt deals,” he said.
Speaking at a recent tour of black granite mines in Mutoko, Chairperson of the mines parliamentary portfolio committee, Edmond Mukaratigwa expressed concern at the worrying trend.
“We stumbled upon allegations of trade misinvoicing in the sector at the alternative mining indaba, which inspired this familiarization tour. As we were engaging the mining companies we enquired about their export returns and production returns so as to reconcile figures and ascertain if there is any trade misinvoicing in the sector. This is part of illicit financial flows, which is quite topical these days, “he said.
Although the parliamentarians visited three granite firms, only Chinese owned Digmao Suawin granite were open for business. However, officials at the Chinese owned Digmao Suawin Granite Company refused to release figures insisting they are collated in China.
Speaking at the same tour, Chairperson of the finance committee at Mutoko Rural District Council, Kwanisai Dende said the council is being short-changed owing to trade misinvoicing.
“Council is worried as the weight of the blocks which are declared by our mining companies is hardly ever accurate as they know we do not have weighbridges for verification. A block that is said to weigh 20 tonnes might actually weigh 28 tonnes. In addition, the mines subtract 5cm on every block which is considered a shell and therefore undeclared. It is very difficult to deal with the weighing of black granite and come up with the actual mass, “he said.
In an interview, Mineral Economist and World Bank Consultant, Norman Mukwakwami said trade misinvoicing robs the country of the much-needed export and tax revenues.
“At the end of the day, the economy suffers because funds that should have been channelled towards development are siphoned out of the country. Mining workers are paid less as the companies will be misrepresenting their earnings,” he said.
Questioned on trade misinvoicing allegations in the black granite trade, Tony Garden, Managing Director of Italian owned CRG Granite, dismissed the accusations, as black granite firms have never received any complaints from the relevant authorities.
“The allegations are baseless; otherwise we would have been sanctioned by the relevant authorities. We stick to the minimum prices that are recognised by MMCZ and they have never complained to us,” he said.
Questioned on the disparity in figures, Garden said this could be attributable to transition extras that would balloon the landing price of granite.
“It is a big industry, it is possible that there are extras which can bump up the cost, these include transport, commissions and handling fees,” he said.
In addressing the challenge, Mukwakwami called on the government to harmonise the valuation process by various entities so as to minimise leakages.
Mukaratigwa highlighted the need for greater transparency in the black granite trade.
On the other hand, local Non-Governmental Organisation, Zimbabwe Economic and Research Unit (ZEPARU) in a report urged the government to set clear parameters on how multinational companies operate as foreign-owned firms were identified as the major drivers of trade misinvoicing.
“Ensuring macroeconomic and political stability and enacting clear policies on how multinational companies operate are key to curbing capital flight,” read the report.
This story was produced by The Business Connect
It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.