It was instructive to watch Louis Nchindo laugh. He would break into a loud roar and watched as the whole room shook and took notice.
This was a metaphor for his style of leadership: He was the main attraction and everything else was a side show.
The Debswana Managing Director charisma: he was complicated, articulate and manipulative. Everything that journalists could not get from board members, they got from him.
Where board members were either too ignorant or too suspicious to give open expression to their thoughts, he provided an unstoppable stream of opinions, many of them provocative enough to stir up a bit of dust. No wonder the media coverage was concentrated on him.
Debswana board chairman, Nicky Oppenheimer, however, tenders a different explanation: “The structure of Debswana and the way it operated created a vacuum and the Managing Director of Debswana moved within that vacuum.”
Nchindo was the master of all he surveyed. In an interview with Slaughter & May, De Beers Botswana Chief Executive Officer, Sheila Khama said Nchindo “surrounded himself with runners who did whatever was asked.”
And his board was tame: The Slaughter & May report states that Botswana government representatives on the Debswana board “tend to be disadvantaged as nearly all are professionals from differing disciplines outside of the diamond industry.
This imbalance has been the cause of considerable friction at Debswana, to the extent that Government appointed non-executive directors have been excluded from the major decision making process.
Matters that should have been the preserve of the Board were usurped by the Managing Director, Mr. Nchindo, in some cases with the tacit approval of the De Beers Group appointed Directors.
“The review team has identified a number of areas of concern during the period Mr. Nchindo was Managing Director of Debswana. Interviews were conducted with key members of staff and a number of external contractors.
Internal files have been examined. “The review team concludes that Mr. Nchindo, assisted by a small number of senior executives from Debswana, perpetrated a series of criminal offences on the shareholders of Debswana. Mr. Nchindo and others breached the rules of corporate governance and the terms of the individual contracts of employment.”
So long as the Debswana board was not enforcing oversight and remained smugly complicit through passive ignorance and abdication of fiducial responsibilities, Nchindo was secure as the only power behind the mining company.
An executive bound only by his self-proclaimed fiat in his capacity as commander in chief, he became his own law and stepped into the breach as the board backed down, swept aside by the sheer power of the man.
Not everyone liked Nchindo’s ever growing power. Expatriate staff members were terrified of him. Most believed that crossing paths with him could get them kicked out of the country. Citizen staff members feared for their jobs. But no one complained aloud. Even De Beers’ big shots who were believed to be the real power behind the BDP government were silenced.
De Beers observes in one of its internal documents that Nchindo “was a member of the BDP Executive Committee and is generally credited with being the kingmaker.”
The author of the document, a De Beers insider states that in 1996 she was requested by Nchindo to proof read a document detailing a strategy to stabilize the party by doing away with factions that threatened to divide it.”
“In essence, the strategy took the form of a recommendation to the party (de facto cabinet) to facilitate the departure of former head of state (Sir Ketumile Masire) by introducing an attractive retirement package. The strategy further acknowledged that in his stead the current leader (Festus Mogae) would be installed as is provided in the Constitution and that for the succession planning the then head of the army (Lt Gen Ian Khama) be requested to take early retirement and then brought into the Cabinet as Vice President.”
The de Beers document further states: “As it happens, all this has come to pass proving his intimate involvement in BDP politics.”
Former Debswana Group Financial Manager, Andrew Walters says there were always complaints about Nchindo’s use of the company credit card ‘for the purchase of personal items and he used to run up huge debts to the company going back to the time he started. My two predecessors found this the most worrying aspect of their job.
They were under pressure to clear these debts but were frightened to tackle Nchindo about it because dire consequences would follow and they would get little support De Beers or anyone else.”
Walters further told the Slaughter & May team that “everyone knew about Nchindo ÔÇô Anglo American and De Beers had huge files on him, but were frightened to take any action, because they thought he was a very close friend of the president and they didn’t want to rock the boat with their operations in Botswana.
Nchindo only had to drop President Mogae’s name, and everyone would do his bidding. De Beers seemed only too happy to cut him slack because he gave the mining giant unfettered control over Botswana’s diamond largesse.
Andrew Walters says, Nchindo who was a De Beers nominee ran Debswana with De Beers shareholder “and the board was sidelined.” Nchindo implemented a bonus scheme that was supported by De Beers without running it through the Debswana board. Walters says Nchindo told him to remove reference to the bonus scheme in company accounts supplied to the board.
Former De Beers Botswana CEO and Debswana Group Services Manager, Rob Burnham has was close to Nchindo explained that although the use of Debswana company credit card for personal benefit was against company policy “ Nchindo was in a unique position.
He could get things done when there was conflict between De Beers and the government of Botswana and was invaluable to the company in terms of its difficult relationships.”
told the Slaughter & May investigating team that, “ the main shareholders were fully aware of the scheme prior to it being implemented.” He claimed that President Festus Mogae had approved the bonus scheme.
Slaughter & May pointed out to him that President Mogae was not a board member, to which Burnham responded:” President approval is the same as Government of Botswana approval.” Asked he personally was given any assurance by the president, he said it was Nchindo who had a meeting with Mogae.
The report reveals a pattern: whenever Nchindo wanted his way, he dropped Mogae’s name. The Debswana MD was so close to the bosom of De Beers and the Botswana government administration that when De Beers decided to delist from the Johannesburg Stock exchange, he was the second to know after Nicky Oppenheimer.
In late 1999, Nchindo and Oppenheimer met President Mogae to brief him on the planned de-listing.
In October 2000 Nchindo met the Permanent Secretary in the Ministry of Minerals Energy and Water Resources. The perm ant Secretary says he was told that only four people at the time knew about the proposed delisting, the two of them, the president and the finance minister.
Nchindo claimed that Mogae had given him the power of attorney to act on behalf of the Botswana government. The Slaughter & May report suggests that Nchindo used Mogae’s name to bypass the normal channels for discussions of the delisting transactions. “The apparent acceptance by certain officials that this transaction was both highly confidential and approved at the highest levels had the effect of by-passing and undermining the essential roles of key government ministers and their officials in considering the merits of the transaction.
The then minister of Minerals Energy and Water Affairs, Boometswe Mokgothu and other government officials were kept in the dark.” As a result, the government of Botswana did not have independent legal and financial advice on the deal, and depended on De beers who had different objectives.
Both independent legal advisors and financial advisors were appointed in November 2000 and were proposed to Nchindo (A De Beers representative in Debswana) by De Beers financial advisors without going through a tender process. This was before other board members new of the transaction, and the appointment was not formally approved by the board.
The Slaughter & May report expresses concern that Debswana Board Chairperson, Nicky Oppenheimer, never raised the De Beers privatization transaction at the Debswana board meeting, although he has extensive board experience.
“In fact it appears from the board minutes that this very complex and important transaction was not discussed in detail at any board meeting.”
Oppenheimer plays a very curious role in the whole deception by Nchindo, raising suspicions that he may have been complicit. Although he must have been aware of the potential conflict because there was never any disclosure to the Debswana board in respect of the De Beers share options held by Nchindo. The options valued at US $ 6 million were to be paid out as part of the de-listing transaction.
The Slaughter & May report also highlights the potentially conflicting interest of Oppenheimer, a shareholder in De Beers, executive Chairman of De Beers and Chairman of Debswana. In fact the report goes as far as to suggest that as chairman of Debswana, Oppenheimer was not neutral as was biased in favour of De Beers.
A De Beers internal discussion paper on the other hand states that Oppenheimer may be implicated in Nchindo’s deception ‘by reason of the meeting of the threesome.”
No sooner had the ink on the delisting deal dried than Nchindo’s empire unravelled. There was a growing feeling that Nchindo had pocketed millions of Pula while Botswana was duped into a De Beers delisting deal. Mogae became the fall guy.
The Slaughter & May report states that “it has been suggested to us that the Botswana government authority for this transaction was given at a meeting between President Mogae, Louis Nchindo and Nicky Oppenheimer in 2000.
The Slaughter & May team has never interviewed Nchindo so it was naturally assumed that this impression had been created by Oppenheimer. Besides, Oppenheimer is quoted in the report stating that he was “very clear that Nchindo represented the government of Botswana.
Mogae then set out to clear his name. In 2004 Mogae convened a meeting ( at which Debswana board members were present) to set the record straight, including expressing the view that he held the board fully accountable for the decision to endorse the privatization of De beers.
Mogae went further and appointed the Slaughter & May team to investigate corporate governance at Debswana. A De Beers discussion paper suggests that the Slaughter & May investigation may have been a witch- hunt against Nchindo was discriminatory and conducted in bad faith.
The paper states that the government approach suggested “lack of trust between the shareholders of Debswana and by so doing positioned De Beers as the potential partner to the alleged misconduct and the government of Botswana as the victim.
It further states that, “the tone and content of the interviews themselves clearly show that the object of the exercise was to audit the former MD’s conduct and much less the operations of the company in any commercial material fashion.
The paper states that ‘instead of focusing on the longer-term issues of good governance, it appears that the exercise gave way to a short-term process of proving criminal culpability.
