Tuesday, September 29, 2020

Oppenheimer implicated in misuse of Mogae’s name in De Beers shady deal?

What does De Beers Executive Chairman, Nicky Oppenheimer, know about former Debswana Managing Director Louis Nchindo’s plan to use former President Festus Mogae’s name to hoodwink the Debswana board into signing authorization for the privatisation of De Beers and when did he know it?

This is the question that is troubling De Beers as it emerges that President Mogae may not have given Nchindo the power to negotiate on behalf of the Botswana government, at a secret meeting the two held with Oppenheimer.

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 former President Festus Mogae, Louis Nchindo and Nicky Oppenheimer in late 2000. We understand that as neither HE’s Permanent Secretary nor representatives from the Ministry of Minerals, Energy and Water Resources were present at the meeting no notes were made.”

Oppenheimer is quoted in the Slaughter & May report saying “he was very clear that Mr Nchindo represented the government of Botswana”. A De Beers confidential report, a copy of which has been passed to The Telegraph, however, reveals that “the paper is incorrect in alleging that HE (Mogae) gave the former MD (Louis Nchindo) the powers of attorney. The former MD may have alleged this but HE could not because his powers pertain to national executive matters and not Debswana corporate affairs. More to the point, in 2004 HE apparently convened a meeting (at which the Debswana board members were present) to set the record straight, including expressing the view that he holds the board fully accountable for the decision to endorse “the privatisation of De Beers”.

The De Beers internal document states that Oppenheimer may be implicated by reason of the meeting of the threesome.
The Slaughter & May report suggests that Nchindo used the meeting to bypass the normal channels for discussions of the delisting transaction.

“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 this transaction.

“By bypassing official channels in this way may have limited the number of people who had knowledge of price sensitive information but it appears to have led officials not to have questioned the proposal in a proper manner.

The then Minister of Mineral, Energy and Water Affairs, Boometswe Mokgothu and “most other relevant 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.

This was before other board members outside Oppenheimer knew of the transaction, and the appointment was not formally approved by the board.
The Slaughter & May report expresses concern that Debswana Board Chairman, Nicky Oppenheimer, never raised the De Beers privatisation transaction at Debswana board meetings, 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.”

Although Oppenheimer must have been aware of the potential for conflict 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 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.
De Beers is unhappy that the way the investigation was conducted suggests that the government of Botswana does not trust De beers, and has positioned “De Beers as the potential partner to Nchindo’s alleged misconduct and the government of Botswana as a victim”.

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The Telegraph September 30

Digital edition of The Telegraph, September 30, 2020.