SIXTY-SECOND REPORT OF STANDING COMMITTEE ON PUBLIC ON PUBLIC ACCOUNTS: SOUTH AFRICAN DIAMOND BOARD, DATED 14 SEPTEMBER 2005:

1. Introduction

The Standing Committee on Public Accounts, having heard and considered evidence on the Annual Report and the Report of the Auditor-General on the financial statements of the South African Diamond Board (Board) for the year ended 31 March 2003/ 2004 tabled in Parliament and reffered to it, reports as follows:

2. Investigation relating to the export and sale of diamonds in terms of the Diamonds Act, 1986 (page 29-31 of the annual report)

The Committee noted with concern the significant weaknesses highlighted in the audit report with regards to the export and sale of diamonds. The following issues were raised:

a) validity of exemptions given under section 63 of the Act to diamond producers and

dealers by virtue of agreements entered into in terms of section 59 of the Act;

b) limited documentation for Section 59 agreements;

c) the drastic decline in export duties;

d) differences and disputes between the Government Diamond Valuator (GDV) and the SA Diamond Board relating to the role and functions of the GD; and

e) The length of time the above issue remain unresolved.

Having heard and considered the views of National Treasury, SA Diamond Board, the Department of Minerals and Energy and the Auditor-General, the Committee is of the view that this matter has been unduly prolonged.

The Committee is aware of the many administrative initiatives to resolve these issues but notes the failure of these to produce positive result.

The Committee therefore recommends that:

a) the relevant state institutions initiate legal proceedings with a view towards resolving the section 59 exemption in question - a special meeting should be convened by the Auditor General for this purpose within 30 days after this report has been adopted by Parliament;

b) the Board ensures that all South African produced diamonds be valued in SA on a fair market basis;

c) the Board strengthens its efforts to increase local beneficiation of SA diamonds; and

d) the Board confers with the Department of Minerals and Energy to finalise and implement the new legislation.

The Committee expresses its disappointment at the inadequate representation from the Department of Minerals and Energy at the hearing and insists that future representation be at an Accounting Officer level.

3. Conclusion

The Committee requests the Board to furnish it with a progress report covering all the above mentioned issues within 60 days after this report has been adopted by Parliament.

Report to be considered.