Stephen Lussier has issues with coffee. The De Beers Executive Director, External and Corporate Affairs, needed a pick me up after the gruesome eating and drinking habits of the Christmas period. He decided on a restorative diet of water and vegetables to kick start the new season. As we sat for the interview over cups of coffee, he settled for a glass of water.
Lussier’s plan to flush out his impurities is a metaphor for his current task at De Beers. A crop of new faces in the De Beers boardroom has inherited the company with a chequred past. As they roll back their sleeves and try to get down to business, legacy issues keep getting in the way. It is time for De Beers to go into detox, says Lussier although not in so many words.
This, however, will involve more than just a glass of water at tea time and a plate of salad for lunch. For starters, all the executives who used to run the company are either dead or on retirement. As reports of how De Beers bought out former President Sir Ketumile Masire and made secret donations to the ruling Botswana Democratic Party made national headlines, the company’s new leadership, hardly four years in office, had no one to turn to. It has been a crisis month as they rummaged through the company files and visited retired executives in search for answers.
“I saw the name Philip Leyden for the first time in your questionnaire, and I thought you were mistaken. De Beers never had anyone by that name on its board,” said Sheila Khama of De Beers Botswana.
Leyden, the man who helped mastermind the De Beers secret funding had long retired by the time the new De Beers leadership took over in 2007.
It is not just the strange names they have to get their heads around, but also the web of subsidiaries that made up the De Beers group.
“At some point we had about a hundred De Beers subsidiaries,” remembers Khama.
And this partly explains the intricate and long winded paper trail of the De Beers secret money. It is also a function of the company’s murky past.
For example, there was Guyerzeller, the Swiss bank through which De Beers directed donations to the BDP for close to 20 years. This was a secret vehicle used by the mining group to hide the movement of secret funds throughout the world.
It is partly owned by the UK Midland Bank, now HSBC, which helped restructure the De Beers diamond empire through Guyerzeller, the bank it co-owns with De Beers. The restructuring process helped De Beers set up its base in Switzerland after the British government imposed sanctions on Apartheid South Africa and was planning to bring its anti-cartel laws into line with those of what was then the European Economic Community.
Under the laws, De Beers would face heavy fines for its price-fixing arrangements with the Botswana government. These laws did not apply in Switzerland as it was outside the community. The cartel thus moved the paperwork of its many operations to Switzerland.
De Beers also routed the BDP secret funding from Guyerzeller through Marine Midland Bank N.A New York in which it also has an interest, before the money was finally credited to the BDP.
The Guyerzeller bank played a key role in helping to set up a web of European companies by Oppenheimer’s gold and diamond empire. The links between the web of companies were carefully hidden to allow South African investors during the Apartheid era to hide the politically and commercially embarrassing origin of funds they wished to plough into European ventures.
Another company at the center of the De Beers secret movement of embarrassing money was Vadep. Guyerzeller Bank and Vadep both invested in companies with South African connections, without revealing the ultimate beneficiary. Both had strong Oppenheimer links.
Guyerzeller’s role in the Oppenheimer network stretched far beyond Switzerland. The name of the bank – spelled differently but with the same address – appears as the principle shareholder of SCT (Manx), one of a number of companies established by De Beers in the Isle of Man. For years De Beers had been quietly building up a major presence on the island and the companies were mostly owned in Panama.
De Beers used one of its many ghost companies in Panama to transfer close to P 4 000 000 to former president Ketumile Masire’s company, GM Five, under the pretext that they were buying into the company. It is understood that De Beers was using the money to buy Masire out of the presidency.
The deal came after De Beers had funded a consultancy by University of Natal and Markdata director, Professor Lawrence Schlemmer, to help the Botswana Democratic Party (BDP) win the 1999 elections. The consultancy recommended transfer of power from Masire. It is understood that Masire was, however, reluctant to step down because he was heavily in debt. De Beers used its company in Panama under the name Clairemont Corporation. A fictitious sale of shares between GM Five and Clairemont Corporation was staged to help transfer P 3 700 000 which would be used to settle GM Five debts.
Proceeds from the fictitious sale were used to settle GM Five’s loans with Standard Chartered Bank, National Development Bank, Botswana Agricultural Marketing Board and other sundry liabilities.
Lussier told The Telegraph that they are still trying to piece together the information, and once they have all the facts they would be willing to give a full account of what happened. The company is determined to make a clean break with its questionable past in set itself firmly of a path of good corporate governance is pursued when the new leadership took over in 2006.
There are, however, still questions about how far De Beers is prepared to break with its past. The company came under fire a few years ago after the then Permanent Secretary in the ministry of Mineral Resources, Blacky Marole, signed his employment contract with De Beers even before he signed his retirement documents with government. The mood was that there was something very wrong with an official moving directly from the government side of the negotiating table to the De Beers’ side without going through a cooling off period.
The new De Beers leadership seems to have taken a leaf from the old book.
The company recently appointed former Minister of Trade and Industry Neo Moroka as its new Resident Director and CEO of De Beers Botswana without allowing him a cooling off period first.
The move comes as De Beers is entering into negotiations with the Botswana Government over the renewal of its diamond sales contract. Once again, De Beers thought nothing of sacrificing corporate best practices on the alter of political capital.
