Diamonds are Swapo's best friends
“Not only does NDTC pay substantial taxes and royalties to government, but it also generates significant employment benefits”
A Namibian empowerment scheme aimed at supplying rough diamonds worth billions of rands to beef up the local diamond industry appears overwhelmingly to serve the interests of individuals close to state power.
An amaBhungane investigation has found that politicians, their children and businesspeople affiliated with ruling party Swapo dominate the list of hand-picked recipients, known as “sightholders”, who have benefited from more than R12-billion in diamonds over the past six years.
Beneficiaries include relatives of former president Sam Nujoma and Belgian-American diamond magnate Maurice Tempelsman.
Only one sightholder company is wholly Namibian owned; most are local subsidiaries of international operations, with Namibian partners.
Namibia is a leading high-quality diamond producer, with marine reserves estimated at around 80-million carats. De Beers dominates the diamond industry in Namibia, and the diamond trade is controlled by Namdeb Diamond Corporation, a joint venture of the government and De Beers.
In 2007 Namdeb launched a subsidiary, the Namibia Diamond Trading Company (NDTC), to supply rough diamonds at a discount to selected sightholders 10 times a year for a period of three and a half years.
There are currently 11 sightholders, who receive 10% of Namibia’s gem-quality diamond output. Namdeb exports the remaining 90% though De Beer’s diamond hub in Botswana.
Window-dressing and elite enrichment
Critics complain that the sightholder system was created as a sweetener for Namibia’s ruling elite to deter thoughts of breaking up De Beers’s diamond cartel.
There are also questions about the local economic benefits, including allegations that some sightholders have no interest in processing the diamonds locally.
Kennedy Hamutenya, Namibia’s diamond commissioner and the government’s chief diamond negotiator, said recently: “We know some people just want to get their hands on the rough [diamonds] to trade and make quick margins, while others want to send them for cutting and polishing to other countries where labour is much cheaper.”
He said some dealers only wanted local partners as window-dressing. Elite enrichment is an issue in Namibia, one of the world’s most economically unequal nations.
Prime Minister Hage Geingob admitted last year that 10% of its 2.1-million citizens control the country’s wealth.
NDTC chief executive Shihaleni Ndjaba said that since 2007 the company has handed out rough diamonds worth more than R2-billion to sightholders each year.
Ndjaba defended the selection process, saying it considered factors such as beneficiation performance, financial status, the quality of gems requested and their availability.
“Not only does NDTC pay substantial taxes and royalties to government, but it also generates significant employment benefits.” He said the cutting and polishing industry supported by the sightholder system employs about 1?000 workers.
Ndjaba told the government-owned New Era newspaper that sightholders are compelled to “involve local shareholders”, but he told amaBhungane there is no pressure to choose particular partners.
The sightholders are Almod Diamonds, Ankit Gems, Crossworks Manufacturing, Diacor International, Hard Stone Processing, Julius Klein Diamonds, Laurelton Diamonds, Lazare Kaplan International, Schachter & Namdar, Pluczenik Diamond Company and Trau Bros NV. Existing contracts run from 2012 to 2015.
Namdeb declined to give details of the sightholders, including their shareholding, saying they should be approached directly.
An amaBhungane investigation found that members or close associates of Namibia’s ruling elite have ties with at least nine of the current beneficiary firms, and that most are members of the Aawambo (formerly Owambo) tribe, who dominate the Swapo leadership.
Maurice Tempelsman and Aaron Mushimba
American diamond tycoon Maurice Tempelsman is a sightholder through Lazare Kaplan Diamonds Namibia, which has a stake in Namdeb’s sightholder subsidiary, NamGem.
Tempelsman, the chairperson of New York-based global diamond empire Lazare Kaplan International, has strong connections with Namibia’s political kingpins, including its first president, Sam Nujoma.
His Namibian business partner was Nujoma’s late brother-in-law Aaron Mushimba, an empowerment magnate who died last month. In 2002 the government signalled that it would implement legislation to open up the diamond market.
In her 2007 book Glitter and Greed: The Secret World of the Diamond Cartel, British investigative journalist Janine Roberts reproduces a letter allegedly written by Tempelsman to Nujoma offering a loan of R500-million or more if the government dropped plans for independent checks of the prices De Beers paid Namibia for diamond exports.
The plan was quietly shelved.
Roberts says Tempelsman met Nujoma before 1990 and continued the relationship after independence as an adviser to government officials.
In 2003, Tempelsman and the late Mushimba formed Lazare Kaplan Namibia, of which Tempelsman’s son, Leon, is also a director. Tempelsman continues to court Namibia’s political leaders.
In 2007, the year he landed a sightholders’ licence, he visited President Hifikepunye Pohamba at State House in Windhoek.
Tempelsman: The ‘influential American’
Roberts said the American has been influential in other diamond-rich African countries such as Angola and Botswana.
His lawyer in Southern Africa, Christian Merkling, said Tempelsman was privileged to know Nujoma before and after independence and to work with Mushimba on various business deals.
He said it would be an insult to Mushimba’s memory and tarnish the “enormous contributions” the late businessman made to Namibia to imply that he and Tempelsman were connected only as cronies.
Merkling doubled as Tempelsman’s lawyer and the Namibian government’s legal consultant when the current Diamond Act of 1999 was drafted.
“Tempelsman is privileged to have been asked for advice by senior Namibian decision-makers from time to time on various matters, some diamond-related and many others not, which he provided in good faith, with a full disclosure of interests, and in confidence. It is not for him to discuss such consultations publicly,” Merkling said.
He branded reports that Tempelsman had been a De Beers negotiator as “entirely untrue and would be legally actionable”. Tempelsman himself has denied links with De Beers.
“Tempelsman’s view is that in the area of diamond governance … Namibia’s course has been wise, and has delivered exceptional, progressively increasing rewards for the nation since 1990,” Merkling said.
Zachariahs “Zacky” Nujoma
Nujoma’s youngest son, Zacky Nujoma, owns Nu Diamond, which has a stake in sightholder Crossworks Manufacturing.
The ex-secretary of the national tender board, Meriam Onesmus, is also a director. Zacky was a partner in a diamond company with convicted mafioso Vito Palazzolo.
Nujoma’s oldest son, Utoni Nujoma, is also a diamond dealer but amaBhungane could not establish whether he is a sightholder. Utoni, the minister of justice, declared to Parliament in 2009 that he had owned 10% of Namibia Diamond House since 2006.
John Nauta, personal assistant to Nujoma, denied that Zacky had been favoured, adding that it was his constitutional right to apply for mineral rights, like anybody else.
“Zacky is a geologist by profession. What will he survive on if he does not get opportunities like any other person?” he asked.
Namibia’s first deputy minister of energy, Angula is also a sightholder through his 45% stake in Dinamo Diamonds, which he declared to Parliament.
Dinamo is the local partner of the New York-based Julius Klein Diamond Group, which holds the sightholder’s licence. Angula has also owned 10% of Namibia Diamond Holdings since 2006.
Angula served in five Cabinet portfolios from 1990 to 2009. He has brought his daughter, Phillipine Angula, into his business empire as a director in Dinamo Diamonds and oil company Eco Namibia.
The chief executive of August 26, the state-owned defence company, Brigadier General Auala is a sightholder through Hard Stone Processing, which he chairs.
Colonel David Ndatipo, a liberation struggle commander and Soviet-trained intelligence officer, is a director and co-owner of the company.
The other co-owners are Benjamin Thobias, a senior police official in the security ministry, and Turkish national Burhan Seber, who was appointed to the advisory Namibian Diamond Board by the mines minister, Isak Katali, in 2013.
Dr Kalumbi Shangula
Chairperson of the ruling party’s business empire, Kalahari Holdings, Shangula is a director of Ankit Gems and a sightholder through Ankit Gems Namibia.
Shangula is the former permanent secretary in the health ministry and chairs the Swapo think-tank. Ankit Gem’s managing director is former ministerial assistant Mikka Asino.
Businessman Nepela, a sightholder through Israeli-owned diamond firm Schachter and Namdar, is the son of one of the founders of the Owambo People’s Organisation (now Swapo).
His father, Lucas Nepela, was the first OPO chairperson in 1959. Sadike is a former assistant to both the mine and trade ministers.
The chief executive of the state-owned telecommunications company, Telecom Namibia, Ndoroma is a sightholder through Laurelton Diamonds, the Namibian arm of international company Laurelton Reign Diamonds.
Ndoroma was a board member of De Beers Marine Namibia, a Namdeb sister company. He worked at De Beers from 1981 to 2002.
Shikongo is a director of Duiker Investment 142, the Namibian subsidiary of New York-based sightholder Almod Diamonds.
Shikongo’s political connections are through her husband, Mateus Shikongo, who served as Windhoek mayor for 17 years on a Swapo ticket.
Former beneficiaries of the sightholder system also include Dantagob Gurirab and Hanganee Gurirab, sons of National Assembly speaker and former prime minister Theo-Ben Gurirab.
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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.