The Slaughter and May report says Debswana board members are unfit for the job and stops short of calling for their dismissal for failing to act in the best interest of Debswana and securing the best deal during the 2001 de-listing of De Beers from the Johannesburg Stock Exchange.
The transaction violated both the law and the articles of association of Debswana.
The report says former Permanent Secretaries Serwalo Tumelo, from the Ministry of Finance and Development Planning, and Morago Ngidi, from the Ministry of Minerals Energy and Water Resources, “who were prepared to sign round robin resolutions on these very important matters without full discussion having taken place with all directors must share their part of the responsibility for their failure of governance”.
The duo who represented the Botswana government in the Debswana board signed the resolution authorizing Debswana to be part of the De Beers delisting transaction without informing the Botswana government.
The pair was allegedly duped by former Debswana Managing Director, Louis Nchindo, into believing that they were merely rubberstamping a decision that had already been made by former President Festus Mogae.
It is understood that Mogae convened a meeting in 2004 (at which Debswana board members were present) to set the record straight, including expressing the view that he holds the board fully responsible for the decision to endorse “the privatization of De Beers”.
Both Tumelo and Ngidi have since stepped down from the Debswana board. Other board members also come under attack because they “ratified these important board resolutions at subsequent board meetings in the absence of full information. Most of the board members have since resigned except for Bank of Botswana governor Linah Mohohlo and De beers Group Chairman Nicky Oppenheimer who was Debswana Chairman at the time.
Oppenheimer comes under attack on a number of occasions for showing bias to De Beers and failing to act in the best interest of Debswana.
The report states that Debswana directors did not act in the best interest of the company.
“They needed to decide whether the terms of the deal represented best value for Debswana or weather to negotiate for a larger shareholding in” the De Beers which was being privatized.
It emerged in the report that Ngidi and Tumelo, who appended their signatures to give the delisting of De Beers the go ahead, committed Debswana to a deal they did not understand. Slaughter and May stated that they are concerned that no senior executive at Debswana is “sufficiently familiar with the very complex structures through which its investment in De Beers is now held… the only person at Debswana who is aware of these matters has recently resigned”.
It also emerged that even the Ministry of Finance and Development Planning, which was aware of the deal at an early stage, has confirmed “via the Permanent Secretary that it has no records at all in respect of the transaction and does not recall whether or when it provided advice or view on the transaction”.
Slaughter and May has recommended that Botswana government, their advisors and Debswana should review the structure of its investment in De Beers as “a matter of priority and care be taken to ensure that various key documents, agreements and contracts are safeguarded and that there is sufficient knowledge transfer.