‘Gross negligence’ as R6.7m diamonds ‘vanish’

A FORENSIC auditor detected “gross negligence” during his investigation into the disappearance of 1 429 carats worth of diamonds valued at R6.7 million from a safe at the Kimberley International Diamond and Jewellery Academy (Kidja).

The diamonds were purchased for a diamond cutting and polishing training programme in 2011 from the late diamond dealer Dean Snyders.

No insurance cover was obtained for theft or loss of the unpolished diamonds, which were reported stolen in 2012.

The accused in the matter - the former head (HOD) of the Northern Cape Department of Finance, Economic Development and Tourism, Patrick Seboko, the former chief financial officer (CFO), Kuberin Packirisamy, the senior project team manager, Tebogo Basil Gaborone, and the chief director of trade and sector development, Lizette Wyngaard - pleaded not guilty to the charges in the Specialised Commercial Crime Court this week.

They are standing trial on charges of fraud and contravening the Diamond Act as well as the Public Finance Management Act.

According to the charges, Wyngaard recommended the purchasing of the diamonds on behalf of Kidja, while Gaborone drafted the memorandum to procure the rough diamonds and to deviate from inviting competitive bids.

Seboko approved the purchase of the diamonds from Uniteam Investments, without following proper procurement processes.

Packirisamy was charged for failing to prevent unauthorised, irregular, fruitless and wasteful expenditure and losses resulting from criminal conduct and effectively managing the working capital of the department.

State advocate Willie Els indicated that the diamonds were purchased from Uniteam Investments 18 CC, which was owned by Snyders, without following proper procurement procedures.

“The rough diamonds were of a better quality than was required for training and polishing purposes. The diamonds were bought without a licence or permit and were not valuated before they were purchased.”

Els explained that there was no need to purchase the diamonds, as the diamonds used for training purposes were supplied by a Polokwane-based company, Zurel Brothers (Pty) Ltd, that was hired to train the students.

Forensic auditor Jabulani Mahlangu pointed out that no steps were taken to safeguard the diamonds.

“An indemnity was signed by Snyders, the CFO and the HOD to exonerate Uniteam Investments of any liability in the event of any theft or losses.”

He added that no proof or confirmation was obtained that the diamonds were kept in the custody of Uniteam Investments or Snyders.

Mahlangu further stated that no quotations were sourced from any competitive suppliers, while the department directly approached Uniteam Investments to supply the diamonds.

“Uniteam Investments did not have enough stock on hand when the unpolished diamonds were procured.”

Mahlangu said that according to a CFO’s report, the diamonds were never used for training purposes.

“The diamonds were placed in a safe after they were valuated. There was no movement of the goods.”

He indicated that three service providers were appointed to valuate the diamonds after they were purchased.

“The diamonds were temporarily stored in a vault at Kidja that was equipped with an alarm system and 24-hour security.`”

He said that the theft was reported in 2012 when the auditor-general conducted a random inspection to verify the diamonds.

“Packirisamy opened a criminal case when Snyders informed him that the diamonds were missing.”

Mahlangu added that a memorandum of agreement was entered into between the department and Uniteam Investments to lease the Kidja premises to train students in the cutting and polishing of diamonds.

He explained that the lease that was signed by Snyders and Seboko was concluded for five years, from May 2009 to March 2014.

“Rent was charged at R12, R24, R36, R48 and R60 for each consecutive year.”

Mahlangu stated that it was agreed that rates and taxes, water and lights would be provided at the premises - 25 Villiers Street, Kimberley - at a discounted rate.

The trial continues before Magistrate Vernon Smith.