Living up to
Mail & Guardian
Nic Dawes: PROFILE
09 December 2005 07:00
|‘The diamond,” says De
Beers chairperson Nicky Oppenheimer, “is a fantastic control of
At Montessori schools, he explains, children are given a cognitive
development exercise that involves trying to fit tubes of varying
sizes into a series of holes.
“The control of error is that if you get the wrong tube it doesn’t
fit in the hole. It teaches children immediately, and you don’t have
to have a teacher standing over them saying ‘That’s wrong. Do it
For De Beers, he argues, diamonds, exert a similar kind of
self-regulating ethical force.
“We have to live up to the diamond. We can’t afford to do anything
that is going to sully that fact of the diamond, and if we did we
would be shooting ourselves not it the foot, but in the heart.”
Father and son:
Jonathan (left) and Nicky Oppenheimer
are gearing up for a series of new projects in Africa and elsewhere.
(Photograph: Oupa Nkosi)
It is a claim that
provokes guffaws among the company’s critics, who range from
human rights activitists angry about the expulsion of Bushmen from
diamond prospects in the central Kalahari, to anti-trust hawks,
mining regulators, environmentalists and local small polishers.
When Minister of Minerals and Energy Lulu Xingwana (then deputy
minister) railed in Parliament against “rich white cartels that
are continuing even today to loot our diamonds, taking them to
London”, it was pretty clear who she had in mind.
Nicky sounds sanguine in the face of what he describes as the
inevitable “baggage” of a company with extraordinary longevity
and dominance in its industry, but it is clear that dealing with
risks to reputation is close to being a core business for De
Beers, and for the Oppenheimers.
His son Jonathan puts the case with more zeal, his irritation a
little closer to the surface. “What we sell in De Beers is a
memento, which captures significant events in people’s lives,
significant events that have a very positive connotation. The
worst thing that could happen is if you went to investigate the
chain that resulted in that memento and found a really ugly smell
along the way.
“We need retailers who are upstanding and honest, we need
manufacturers who don’t use child labour, we need a selling
system that is legitimate, transparent and has the support of the
producers and the buyers, we need a mining environment where we
don’t fight our employees, and we don’t destroy our
To hear the Oppenheimers tell it, there is simply a massive gulf
between perceptions of their record on these issues, and reality.
“If you can find me an instance where De Beers has behaved in a
way that is materially, concretely extraordinary in a negative
sense, and De Beers has not taken action I’ll eat my hat,
because I know it never happens,” Jonathan avers.
In the sandy, impossibly remote Central Kalahari Game Reserve,
where Bushman groups are facing forced expulsion by the Botswana
government, Survival International believes it has smelly evidence
Survival has organised a series of protests against De Beers,
saying the expulsions are designed to facilitate mining prospects.
Iman famously quit as the face of De Beers -- although the company
says she had simply come to the end of her contract — Julie
Christie has urged a boycott, and stores have been picketed.
This is one issue on which Nicky gives a glimpse of the steel
behind the beard and the diminutive name.
“When I talk to Stephen Corry of Survival he’s realising he
has to be more careful than he used to be because he realises that
he is going to get himself into a legal and factual debate if he
says this is all down to De Beers. Whenever he says that, I say,
‘Well really Stephen, could you give me some evidence?’ You
see the evidence he produces is a Bushman, whose name he doesn’t
know, was told by a Botswana government official, whose name he
doesn’t know, that the Bushmen are being expelled to make way
No one who has ever visited the area, Nicky insists, has ever been
able to produce any evidence of De Beers’ role.
In any event, Jonathan adds, mining activity will have a footprint
so tiny that it will amount to a pin-prick in the 52 000km2
All this is disputed by Corry himself, who maintains that Cabinet
ministers have, as in the past, spoken publically of the
relationship between diamonds and the expulsions, and that De
Beers shares responsibility because it and the Botswana government
are partners in Debswana, the diamond company that accounts for
the biggest single slice of the country’s revenues.
“There’s no question of Survival altering its message ... This
issue is not going to go away [until the Bushmen can move freely
in the reserve]; it is going to dog Botswana and it is going to
dog De Beers,” he says.
Whatever happens in the Kalahari, and the generally well-regarded
government of Festus Mogae, it is clear that the neccessity for
partnership with some of Africa’s more dubious rulers
constitutes a persistent set of reputational risks for the
company. But asked how it is possible to live up to diamonds while
restoring ties with an administration like José Eduardo dos
Santos’s profoundly corrupt MPLA regime in Angola, Jonathan is
adamant that this is when the doctrine really matters.
“We could have repaired that relationship in three weeks, by
doing things that we were not prepared to do. You need two to
tango and if one person is holding to a standard which is living
up to diamonds the other person who wants to tango with us also
has to live up to that standard in our domain. And that’s what
the Angolan government has come to.”
The South African government, where a considerable body of opinion
privately shares Xingwana’s views, has required a fair bit of
The empowerment deal that recently saw 26% of De Beers
Consolidated Mines sold to a consortium lead by trusted ruling
party figures such as former Northern Cape Premier Manne Dipico
and former high commissioner to the United Kingdom Cheryl Carolus,
has apparently brought something of a thaw in relations, but some
major challenges remain.
The most immediate is over the shape of legislation designed to
ensure that more rough diamonds are made available for cutting and
But the nature of suspicion in the upper levels of the government
is evident in a discussion of De Beers’ corporate social
investment programme and Oppenheimer family philanthropy.
Nicky relates an effort to convince then minister of minerals
Phumzile Mlambo-Ngcuka of the good De Beers had done in Kimberley.
“That didn’t play into her mindset,” he says, “it’s
something one always has battled with, and will always battle
with. But, as long as we are living up to the diamond we can
always go and have that debate.”
The debate will probably not die down as the family’s other
business interests gear up. Freed by the unbundling of
AngloAmerican of a requirement that it take a slice of equity in
all Anglo projects, its investment company, Ernest Oppenheimer
& Sons, is gearing up for a series of new projects in Africa
and elsewhere that, Jonathan and Nicky say, will bring to bear the
skills they’ve learned in the mining industry.
Just what they are planning to do, they aren’t telling. Ernest
Oppenheimer & Sons is a very private company, and they plan to
keep it that way.
The work of the Brenthurst Foundation, a think-tank, led by former
head of the South African Institute of International Affairs Greg
Mills, is much more public advocacy of open markets and good
Aren’t they concerned that it will be accused of being an
instrument for policy capture in countries where they have
“What’s wrong with policy capture?” Jonathan asks, “if
it’s good policy.”
A last chance for De Beers
to ensure that more rough diamonds are available to local cutters
is about to make the next stop on its journey through Parliament
next week, when the National Council of Provinces (NCOP) considers
the Second Diamonds Amendment Bill.
The original version of the proposed law restructured the Diamond
Board to reduce the influence of the industry, eliminated the
“Section 59” agreements under which De Beers is able to export
much of its production duty free, and reinstated a 15% tariff on
the export of rough stones.
The legislation has now been split into three Bills: the National
Treasury must produce a money Bill dealing with, and possibly
reducing, export levies, while the NCOP considers core provisions
that deal with valuation and the export approvals.
The NCOP has flexed its muscle recently, making significant
changes to the Independent Communications Authority of South
Africa Amendment Bill after it had been through the national
As such, the provincial chamber represents a last chance for De
Beers to win concessions on rules that will seriously complicate
the way it does business in this country.
The Oppenheimers deny abusing Section 59 and hint that eliminating
it may hurt local cutters.
“Each year we have the Section 59 layout, which the government
hates, which determines what is economically polishable in South
Africa. Diamonds by legally binding agreement are then exported
out of South Africa, and equivalent value is brought back. If we
were being strictly compliant with the letter of the law, we would
bring back 100% of the value of the diamonds. The reality is that
we bring back between 108% and 120%,” says Jonathan Oppenheimer.
-- Nic Dawes