The suspension and eventual removal of Victor Sibiya as CEO of the Diamond Board was preceded by an extraordinary deterioration in the relationship between Sibiya and board members, some of whom he accused of complicity in illegal diamond deals.
Sibiya was suspended in May on the instruction of Minister of Minerals and Energy Phumzile Mlambo-Ngcuka, after representations by the board.
Serious conflict-of-interest charges were last month belatedly added to a charge sheet against Sibiya, which originally included allegations that he had not performed satisfactorily in his job.
But last Friday Sibiya was finally forced out of the job without any of the charges being formally heard at a scheduled disciplinary hearing — instead, a settlement was reached that included Sibiya vacating the post in exchange for a R500 000 handshake.
The Diamond Board is a government body that licenses and oversees players in South Africa’s diamond industry, among other functions.
New documents confirm that the board’s, and eventually the ministry’s, displeasure with Sibiya followed serious allegations he had levelled at industry players, some of whom were represented on the board.
The fact that a settlement was reached with Sibiya last week without the charges against him being weighed at a hearing fuelled claims that he had been acted against not because he was guilty, but because he was a thorn in the side of powerful interests.
The documents also highlight the extraordinary dire managerial and financial situation the board found itself in earlier this year — some internal correspondence went as far as suggesting the board, which had its bank account attached after a court application, was insolvent.
The documents show the financial crisis at the board erupted long before Sibiya was seconded to the regulator. He was deployed after a short stint as adviser to Mlambo-Ngcuka.
In February Martin Grote, who represents the national Treasury on the board, asked Auditor General Shauket Fakie to conduct a comprehensive audit of the board, saying trail balances seemed to indicate the board ”is indeed insolvent”.
Documents show Sibiya informed Mlambo-Ngcuka about the board’s financial and management crisis a few days after he started working at the board in March. In the same month Sibiya complained about the illegal diamond dealing in the country and fingered some board members.
In a letter to Mlambo-Ngcuka dated March 11 Sibiya said ”there have been and are serious indications that illegal diamond dealing in the country has gotten out of control.
”The involvement of a certain foreign person with some of the people licensed by the Diamond Board appears to have contributed to a huge upsurge in illegal diamond imports and exports.
”If indeed the Diamond Board is extracting some of its income from export of such diamonds, the matter is extremely grave and warrants the most urgent of your attention as the minister. I continue to attribute such disquieting incidents to the unchecked conflicts of interest in the board.”
Sibiya’s letter came days after he clashed with a major diamond dealer. He blocked a diamond shipment from being exported on the grounds that the dealer had not followed proper regulations.
Sibiya was slated in the media for introducing new regulations that hampered diamonds exports.
Diamond Board chairperson Abbey Chikane and Sibiya clashed after the dealer complained about the matter. Chikane slated Sibiya of upsetting the industry players by changing regulations without consulting the board. Sibiya hit back, accusing his chairperson of ignorance, and said he was merely enforcing existing regulations.
”You [Chikane] may wish to note that there are several people who have attempted to export diamonds without complying with certain provisions of the Act. There have been cases of outright illegal dealings and the destruction of the pertinent information,” Sibiya wrote to Chikane.
Shortly after the Sibiya/Chikane debacle Mlambo-Ngcuka suspended Sibiya ”pending the outcome of an investigation and possible hearing concerning your conduct and performance as executive officer of the board”.
Charges against Sibiya included that he antagonised the business industry ”to the extent that open public criticism has been made against yourself and the shortcomings of the board” and that he ”arbitrarily changed rules without the consent of the board, which has further antagonised the businessmen in the industry”.
Last week the M&G reported that the board had laid additional charges of conflict of interest against Sibiya [New charges against diamond boss].
The board charged that Sibiya acquired a house through a close corporation, Shelftan Twenty Two, belonging to Brian Frank, one of the directors of diamond valuer DVIC. At the time Sibiya was involved in negotiations with DVIC. The valuer won the R8-million-a-year contract in 1999.
Documents show that some of the rivalry between Sibiya and the board arose from the fact that Sibiya was perceived to be close to DVIC, while many on the board were at loggerheads with the diamond valuator, which has been giving diamond giant De Beers a much rougher ride than it is used to.
This week Sibiya showed the M&G bank and insurance documents in an effort to prove that he paid for his lavish house in Sandown, north of Johannesburg. The documents show he acquired a loan in 1999 to purchase the house and insurance premiums for the house were being deducted from his personal bank account.