Thursday, February 25, 2021

Nchindo doctored Debswana records in favour of De Beers ÔÇô confidential report

De Beers may have partnered with Louis Nchindo in Debswana corruption, which involved doctoring company records and falsifying board minutes to keep Botswana government representatives out of the information loop ÔÇô a confidential report has suggested.

The Slaughter & May report revealed that former Debswana Managing Director ÔÇô a De Beers representative ÔÇô doctored Debswana financial records to sneak in executive bonus schemes, which were “heavily slanted towards the De Beers Group senior management and are going to be an expensive cost for De beers.”

The scheme was not approved by the Debswana board although it was supported by Debswana Chairman Nicky Oppenheimer. The Slaughter & May report states that, ‘we do not accept the suggestion from Mr. Oppenheimer that he has acted in an even handed manner”.

Former Debswana Group Finance Manager told investigators that Debswana “was run by De Beers shareholders and the board was sidelined”. He cited the example where Nchindo told him to doctor the company records to keep information about the executive bonuses away from the board. He says Nchindo told him to remove reference to the bonus scheme in company accounts supplied to the board.

The report quotes former Permanent Secretary, Dr Akolang Tombale, explaining that the “De Beers bonus schemes (share options) was a major concern because it was based on production levels”. The De Beers nominees in Debswana were driving up production while the carat/Dollar ratio was falling, “a move against the interest of the government of Botswana”.

The report states that a number of De Beers executives who had been seconded to Debswana reported that they were under pressure from head office to show bias to De Beers. It is reported that executives who did not show bias towards De Beers had their careers frustrated.

The report further revealed how Debswana board minutes were falsified to keep board members in the dark about the De Beers delisting transaction in 2001. The minutes record had an entry which reads, “The Secretary reports that the relevant directors had been given notice of the proposal and that the necessary number of directors was available to authorize this resolution.”

Pressed by investigators, the Secretary admitted that “contrary to the wording of the resolution, the directors had not been provided with any notice, nor had he arranged for them to receive any supporting information”.

The report states that Oppenheimer, who is also Chairman of Debswana, was biased towards De Beers during transactions of the controversial de-listing deal.

“Our view is that Mr. Oppenheimer was in a difficult position bearing in mind his very strong affiliation to the De Beers Group. Nonetheless, his role as Chairman of Debswana required a more neutral position than appears to have been the case.”

The report raised concern that the doctoring of board minutes and resolutions exposed Debswana directors to individual and collective risk. For example, warranties on behalf of DDC directors were given in the De Beers circular dated 10th April 2001. The resolution held Debswana board members individually and collectively responsible to statement made ‘without the knowledge of the board or the knowledge or permission of individual directors”.

A De Beers internal discussion paper revealed that some De Beers high ranking executives are unhappy with the way it was conducted and felt that the government approach suggested lack of trust between the shareholders of Debswana and, by so doing, positioned De Beers as a potential partner to the MD (Nchindo)’s alleged misconduct and the GRB (Government of the Republic of Botswana) as the victim.

The De Beers document further states that “perhaps the consultants who carried out the investigations were prejudiced by the government’s brief, views and belief by the government of Botswana that De Beers or its Chairman, Nicky Oppenheimer, were party to or privy to Nchindo’s conduct. The tone of the report appears to fault De Beers without concrete evidence”.


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