Saturday, September 25, 2021

De Beers rigs Botswana sales contract negotiations

The De Beers Group has scored a major coup against (DTCB) Diamond Trading Company Botswana, rigging the odds against Botswana as the country prepares to re-negotiate the Diamond Sales Agreement which lapses in 2020 and reversing achievements of the De Beers relocation from London to Gaborone.

Sunday Standard can reveal that against all advice from his technical team, the Managing Director of DTCB, Tabake Kobedi has taken sides with De Beers to relocate the Information Technology Systems of DTCB from Gaborone to Johannesburg.

Professionals at DTCB have railed at what they perceive as continued “capture” of DTCB by De Beers.

“This capture of DTCB leadership by De Beers brings to question DTCB independence regarding the valuing of diamonds,” Botswana based professionals at DTCB state in a confidential report.

Other than usurping the power and influence of Botswana based professionals in determining the price of diamonds sales, the new development effectively reverses by many years, the achievements that Botswana had slowly and painstakingly achieved to take ultimate control of the country’s diamond operations from the mine to the market.

It is feared that the De Beers apparent fancy footwork which has caused a major rift between management and professionals at DTCB will undermine benefits of the much vaunted relocations of DTC operations from London to Botswana.

Lengthy missives exchanged between De Beers engineers and their Botswana counterparts at DTCB which have been made available to the Sunday Standard provide a peep show into the heated debate in which De Beers argues that Botswana was not the appropriate host for DTCB’s sophisticated IT systems while the counter-arguments however is that the Botswana system is about to undergo a massively expensive upgrading.

For their part, Batswana technical professionals stood their ground ÔÇô bullet by bullet shooting down the De Beers storyline.

But when a final decision had to be made, the DTCB Managing Director took sides with De Beers.

The biggest source of gripe and frustration for professionals is that the decision to relocate the system to Johannesburg was not taken by the Board and certainly not by the executive of DTCB, but rather by Kobedi alone.

“He effectively told us that the decision was final. And that the matter was closed. That was after he had a meeting with De Beers’ executives,” said a DTCB technical professional close to the debate.

This according to IT professionals happened after the Managing Director had walked out of a meeting that was debating the advantages and disadvantages of relocating the system to Johannesburg.

For DTCB, the IT system at the centre of the controversy is the hub and backbone of business and relocating it to South Africa where it will be at the exclusive management and control of De Beers is a technical error of judgment a political blunder.

This is because the IT system is not peripheral to the big decisions that led to DTC relocating from London to Gaborone. Rather it is at the centre of those decisions.

Put simply, relocating the IT System is effectively the same as reversing the relocation of DTCB, said another DTCB professional.

It is this system that is used to determine prices of diamonds based on size, colour, quality, cut, shape and other key variations including clarity.

The system captures such key components of the business like inventory, stock, movement, pricing, value and sorting processes. 

Most importantly it is this system that also determines how much money Botswana Government can make as proceeds from diamond sales.

Among other things, De Beers argued in favour of centralizing and relocating the IT system in Johannesburg, citing such issues like security, speed, costs, architecture, support and governance.

In their report, Botswana professionals have argued that Botswana Government has after many years, “successfully relocated the De Beers midstream processes to Botswana. This decision to centralize the information hub in Johannesburg works against the Government efforts to bring skills and jobs to Botswana.’

They report further adds that “the decision is counter government efforts” as it has denied Batswana employment opportunities because of its relocation to South Africa.

“The current diamond sales agreement comes to an end in 2020. What impact will the diamond sorting support system, now relocated in South Africa have on the new sales agreement? This looks like an effort to make it difficult to reduce dependence on De Beers and also push for more of Debswana diamonds to be sold through Okavango Diamonds.”

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