DTC relocation-A golden era part 2
Correspondent | Friday December 20, 2013 13:08
The recent Okavango Diamond Company first trial sales published results shows a 51 percent premium over the reserve prices. The reserve prices could not have been below the DTC prices. What the tender therefore proved is that the price paid for Debswana diamonds was less than the market prices at most given times. This was the trend in the past 42 years of Botswana diamond production. When some of us advocated many years ago, for a minimum of 10 percent independent sale of Botswana diamonds to monitor their performance in the international rough market, we were seen as destroyers of the industry and hated by some, who had been completely captured by the Old De Beers indoctrination. They did not have the foresight, but sadly, had the authority to refuse taking this route. We had the foresight, but did not the authority! However, though terribly belated, we thank God that it is now happening.
Over and above the 80-85 percent DTCI reserved allocations for sightholders, they also have unlimited access to the Okavango allocations, where they compete for diamonds with all those outside their priviledged positions, including emerging citizen entrepreneurs. Thus, the DTC sightholders were, and are indeed still in very priviledged positions, more than other diamond dealers in the world.
Old Beers and Zohar versus
New De Beers and Mellier
The De Beers described above, is the De Beers that I think the New De Beers see Varda Shine as still belonging to. That is also the De Beers Zohar seem to have been comfortable with -the De Beers whose pricing system was unfavourable to producer shareholders.
The current situation is that the New De Beers (Anglo led) want to maximise shareholders returns and therefore creating a pricing system that is more market related or close. It doesn’t look like the New De Beers is into price manipulation like its predecessor. Zohar seem to have issues with the New De Beers on this issues and many others. He amongst other things, bitterly label the New De Beers as having no skills and knowledge of the industry, and presumably of diamond pricing etc, which made Old De Beers and sightholders very happy in the past. Could he be talking here about the knowledge and skills the Old de Beers employed in the past to manipulate and transfer prices? Given De Beers drive for shareholders returns, I do not expect that any old fashioned De Beers executive or their supporters would support such a move. Given Varda’s inclination in this regard, it is possible she may have differed with Anglo on the matter and they may have rightly saw her conservative nature as a restraining factor in the re-branding of De Beers, as a truly African company committed to giving back and restoring the losses incurred by Africa over many centuries ago.
To my understanding what Mellier is simply saying here, is that the sight holders have benefitted a lot from African diamonds over many years and gave nothing back. It was time they showed their humane side and give back to the continent that has enriched them so much over centuries. And the giving he is talking about here is the conducting of sales in Botswana. Recently we have heard of multiple benefits that the New De Beers has brought to Botswana’s economy, including; spending P2, 000,000 in one week supporting local companies, a new venture to promote small businesses, as well as supporting the government Economic Diversification Drive and other good initiatives. This is a lead by example management style, which we need here in Botswana.
Zohar quotes Mellier rather disapprovingly as thus; ….”Philippe Mellier – before rushing off to the airport to catch a flight to Singapore – basically told clients (sightholders) that the London past is over and we now look at the African future.” Zohar seem to be incensed by this statement because he has never heard it uttered by his old friends at the Old De Beers before, or anyone in the industry, outside Africa. These are the kind of people who see Africa as nothing but supplier of raw minerals to their world. What is unpalatable about Mellier’s statement in the light of so much giving that Africa has made in the past centuries?
Zohar further goes on to say that De Beers is in turmoil, not because of DTCI relocation to Botswana, but its new centralistic management style. The fact of the matter, as I see it, is that the New De Beers is under attack because of its inclination towards Africa’s development, which its predecessor and associates did not care a hoot about. And perhaps the centralistic management style is a result of resistance to change by those whose mindsets are tuned to the old way of doing business in Africa.
Whilst everyone is talking about the excitement of having DTCI sales in Botswana for the first time in history, and its successful conclusion, all what Zohar is talking about is the indispensability of Varda Shine and Mellier’s destructive management style. This was the time that Zohar should have joined in the excitement of Botswana’s historic moment and report it to the world if he believed it was a good thing. But he did not do that. Instead he dwells on the 40 percent downwardness of the sight and attributes it to the silent protestations of the sightholders. This is not a good statement about the sightholders, as it could imply sabotage of the sales. We all know that it was mainly because of Diwali that this was so. I doubt if the sightholders had anything to do with what Zohar said here.
He also goes on further to tell us of one major Israeli sightholder who had written Melliers and Varda a letter expressing his decision to relinquish his sightholder status. He blames Melliers for telling him, “Then don’t be a sightholder. For every client that leaves there are three others eager to join.” It is true as I have said earlier on that many out there envies DTC sightholders and would jump at the opportunity of being one. Mellier and his team must be commended for telling their detractors the raw truth. I must say that his statement resonated well with African visionaries who are concerned about Africa’s diamond returns. The statement from De Beers is the best Africa has ever heard since De Beers was established. It may be that we are probably becoming of one accord with De Beers at last.
Zohar’s further obsession with Varda
Zohar quotes a lot of negative statements as coming out of the concerned sightholders and leading banks, whose identities’ he does not reveal. But one thing for sure is that Zohar’s article clearly shows symptoms of his own personal grudge with De Beers over Varda Shine’s exit. He is playing an advocate role for Varda that he has never played for any De Beers executive. Yes, as he says, he is a friend of Varda. They are also both Israelis, and that is fine, but that should not cloud his judgment as a professional journalist to this excessive point.
Furthermore, Zohar seems to be appealing to the Botswana government’s intervention in the retention of Varda in De Beers or any other way. He says; “Forcing the last diamond captain in the company off the boat should sound alarm bells from Gaborone straight into Anglo’s boardroom”. What is alarming about expired contracts that are not renewed? Who on earth is indispensable? Varda has a successor, in the name of Paul Rawly, whom she has publicly endorsed as competent to carry DTCI mandate through. This is a man we are told has extensive experience of doing De Beers’s business in Africa. So what is Zohar communicating here?
Zohar also talks about the enormity of the commitment on De Beers to deliver, as contained in the provisions of the Botswana/De Beers “super confidential Marketing Agreement”, which he has had access to. He attributes its success to Varda.
If she did well it is indeed commendable, but that was what she was expected to deliver. That was what she was paid to do. What I find most mind boggling, is when he say, “But she carried the brunt – and felt personally responsible for the government of Botswana.” What a misplaced advocacy! How could she have personalised her role, when the project delivery was a De Beers collective role and she was one of its employees? If indeed (and it is doubtful) Varda felt “personally responsible for Botswana government as a De Beers employee, then her allegiance was misplaced. Zohar is not doing Varda any good by these excesses!
Seeds of Fear and discord?
Could it be that Zohar is trying to put Botswana government on a panic mode to intervene in the retention of Varda in De Beers, for fear of revenue losses because of De Beers’s lack of skills, as he puts it? If not why does he quote horror stories supposedly coming from faceless people close to De Beers and some sightholders? He quotes a London insider as saying,”….the issue isn’t just her (Varda) departure – that it is just a major symptom of a management style that gradually but consistently put the company and the whole diamond trade in jeopardy.” And an employee in Mellier’s office is quoted as saying, “The long and awaited fear and nightmare has come true! Varda is leaving! I have people saying if they had a choice they would leave the diamond industry altogether!” The unidentified senior insider is further quoted saying, “….the problem is that a De Beers without Varda and the ‘Diamond People’ is no longer De Beers. Our clients are going to build stronger ties with the Russians Alrosa as the Russians will become the Suppliers of Choice”. Astonishing!
If indeed all these horror stories came from people within De Beers and its associates, the timing of their release is suspect. Why was the story made to coincide with the historic DTC sight in Botswana? Why did he not sound the alarm bells at the time when only one ‘captain of the ship’ was left in De Beers? Would he have told us all these if De Beers had extended Varda’s contract? Zohar’s motives can only be inferred as wanting to cause panic and pit Botswana against De Beers, particularly Melliers? And that his article is a campaign for Varda is without question.
This is what he says, “Varda is still in the middle of what so far has been a brilliant diamond career. At the age of 50 (sorry for disclosing that) Varda’s best professional years are still ahead.” He also went on to say that Varda informed her employer she wanted to extend her contract for another two years and that she would relocate to Botswana.
Why is Zohar telling us all these, if not to campaign for Varda’s retention or absorption somewhere in the Botswana system? Why Is Zohar so desperate to retain Varda in De Beers that he would seek to attract Botswana’s attention to De Beers’s internal matters because Varda is leaving? Could Zohar be lamenting the fact that all his old friends at De Beers are gone and he is faced with a new team that does not really recognise him?
And does he think he can continue to use Botswana government to advance the cause of the Old De Beers? He obviously is not aware that Botswana people are no longer the fearful and laid back people they used to toss around at will in the past. They are now more knowledgeable and intuitive than ever before.
Gaborone diamond
conference 2011
Zohar’s obsession with Varda also showed itself at one of the Diamond Manufactures conference in Gaborone two years ago, which I walked out of in protest at his attitude in the handling of the conference. Some people were indirectly denied rights of participation.
Those are people that Zohar knew would ask difficult questions. Obviously, Zohar and his Old De Beers friends had done ‘conference mapping’, and knew exactly where these people were seated. That is how Zohar managed to use the conference (that the government had paid for) to abuse citizens and belittle Botswana. The murmurings of disapproval amongst citizens, who formed about 80 percent of the conference attendants was loud during tea and lunch breaks as is typical of Batswana. Their passive nature does not allow them to address issues at source.
Zohar mentioned contemptuously during the conference that had it not been for Varda Shine, Botswana would not have been where it was with diamond beneficiation. It was about Varda Shine and not our political leaders or civil servants, as well as others at De Beers, who worked so hard to make sure the initiative succeeded.
Throughout the conference Zohar praised sightholders, Varda Shine and the Old De Beers, to the extent of saying that had it not been because of De Beers, Botswana would have been like Angola. That can basically be interpreted as meaning that Botswana’s economic success is attributable to the Old De Beers. Zohar is privy to information that we ordinary electorate have no access to. The De Beers/Botswana sales agreement is one such example. It could be that he knows something we do not know and therefore may be right. If that the be case I owe him an apology, as I sincerely thought it was our government did that. Zohar seem to now be spitting venom at the New De Beers because of the departure of his Old De Beers friends, the exiting of the ‘last captain’ Varda and the triumphant entering of Anglo American driven De Beers, which is coming with a new pro African development approach, Zohar. Zohar! If you are a true descendent of Abraham and son of the God of Israel (like me), you should know that when Yahweh speaks, it is yes and Amen! Yahweh has spoken for Africa and you seem to have missed His voice. Anglo American and Mellier are obediently following Yahweh’s call!
Do likewise for your own good! Let Varda Shine leave in peace and be remembered for the good she did and not for the tears she left with! Take heed of Melliers words, “…the London past is over and we now look at the African future.” God bless you!
*Todd Majaye is a diamond expert.