Tanzania charges officials with economic sabotage over seized diamonds

By Fumbuka Ng'wanakilala DAR ES SALAAM (Reuters) - Tanzanian prosecutors charged two government officials on Friday with economic sabotage after they were accused of undervaluing an export-bound consignment of diamonds seized from a mine majority owned by London-listed Petra Diamonds. Archard Kalugendo, director of the state-run diamond and gemstone valuation unit, and government gemstone valuer Edward Rweyemamu were jointly charged with being responsible for $1.1 million of lost tax revenue. The court case is the latest twist in a government crackdown on the minerals industry this year, with President John Magufuli accusing the sector of not giving the government a fair share of Tanzania's mineral wealth. Kalugendo, 49, and Rweyemamu, 50, are both employees of the Ministry of Energy and Minerals. They were not allowed to enter pleas at the Kisutu Resident Magistrate's court in Tanzania's commercial capital, Dar es Salaam. Lawyers said the two officials will enter their pleas when the case is transferred to the high court, which has jurisdiction to hear economic sabotage trials. The accused were denied bail and will be held on remand until the next hearing on Sept. 29. The pair face maximum jail terms of 20 years if found guilty. The diamonds were seized as they were being exported to Antwerp, Belgium, from Tanzania's main airport in Dar es Salaam on Aug. 31. Petra Diamonds said on Monday that it had halted operations at its Williamson mine after the government seized the diamonds and questioned some of its employees. Petra owns 75 percent of the mine, with the Tanzanian government holding the remaining shares. Petra has denied that it under-declares its diamond exports, saying that it follows all government laws and procedures in its business. The government said it will nationalise the diamonds, the value of which it puts at $29.5 million, twice the provisional value approved by the two government officials charged in court. The government has not disclosed how it came to its $29.5 million valuation. Magufuli had ordered the examination of exports by individual companies after a parliamentary investigation found that the country's diamonds and other precious gemstone exports were under-declared. Mining accounts for about 4 percent of Tanzania's GDP. (Editing by Katharine Houreld and David Goodman)