An instruction from the Namibian Cabinet to Mines and Energy Minister Jesaya Nyamu three months ago to implement Section 59 of the Diamond Act and sell 10% of the country’s annual production outside of the De Beers monopoly appears set to cause a major showdown.
With Namdeb’s second-quarter production — believed to be a healthy 320000 carats — ready to be evaluated and exported next week, the government is under intense pressure. But top officials involved in both Namibia’s diamond industry and exports via De Beers deny knowing about the implementation of Section 59.
Nyamu, in a letter in August last year to De Beers managing director Gary Ralfe, said the government was unhappy with the exclusive marketing deal because of poor prices and production cutbacks imposed by De Beers.
The Cabinet issued an official instruction to implement Section 59 in Action Letter MME017. Later, on April 30, the government officially told De Beers of its intention to implement Section 59.
De Beers is understood to have given no official response. But a week later, American diamantaire Maurice Tempelsman flew to Windhoek to lobby President Sam Nujoma not to implement Section 59. Tempelsman was once said to be a close friend of Nujoma, and remains a partner in North Bank Diamonds (Bahamas) with Nujoma’s brother-in-law, Aaron Mushimba.
Later, in a letter to Nujoma dated May 27, Tempelsman offered a secret off-shore loan of N$800-million (US$80-million), of which N$500-million (US$50-million) would flow into the government’s coffers. This was to be pre-payment from De Beers via Namdeb for future diamond production to the same value. How the balance of N$300-million (US$30-million) was to be paid out was not specified.
Tempelsman suggested that interest payments and fees for arranging the loan would be paid by joint venture Namdeb, but not until the end of Nujoma’s term in 2004. This would mean that the state, which owns half of Namdeb, would foot 50% of the bill.
Tempelsman also offered a refund from De Beers for a dud mining vessel if the Namibian government abandoned its plans for an independent check on the prices it was getting for its diamonds.
But Nujoma is understood on August 7 to have told Tempelsman’s representatives, Jim Barnes and Mushimba, that the offer had not been accepted.
Nyamu appears, however, to have since lost his appetite for implementing Section 59. Well-placed sources say he has refused to give effect to the Cabinet Action Letter.
There are now indications of serious local political pressures being applied on government officials involved in the diamond industry.
Nyamu, meanwhile, appears to have committed political suicide by opposing Nujoma at a recent South West Africa People’s Organisation (Swapo) Politburo meeting.
After Nujoma had said he wanted Swapo secretary general Hifekepunye Pohamba to succeed him, Nyamu nominated Trade and Industry Minister Hidipo Hamutenya. But Hamutenya withdrew his candidacy, leaving Nyamu exposed.
Nyamu is now expected to be removed from office — which would free him of responsibility to implement Section 59.
That Nyamu should choose to end his own career rather than defy diamond traders is instructive. At a meeting in July with parties interested in opening up the trade, he said: “They [international diamond dealers] are the law in Namibia.”
Nyamu could not be reached for comment. But party sources said the matter was sure to surface at Swapo’s congress, which ends on Sunday.
Mines and Energy Permanent Secretary Joseph Iita (who sits on the De Beers AG Board of Directors) denied knowing of the decision to implement Section 59. Acting Diamond Commissioner Kennedy Hamutenya insisted he had not received any instructions on the matter.
The question is: will the Namibian government allow next week’s export of the quarterly production to go ahead or not? It will be crucial test of the government’s ability to bend De Beers to Namibian law.
Tracey Peterson, a De Beers spokesperson in Johannesburg, said De Beers had nothing to add to its statement of August 2, relevant parts of which were published by the Mail & Guardian on the same date.