The news that Namibia Diamond Trading Company (NDTC) had turned down Lev Leviev Diamonds (LLD) Namibia’s bid to renew its sightholder contract for the next three years came as a shocker.
It was so, because Rough & Polished had on May 24 this year conducted a wide ranging interview with the company’s managing director Kombadayedu Kampwanga.
The company said then that the factory was operating at “full throttle”.
So when the news broke that LLD had failed to make the grade, I picked up the phone and called Kampwanga to confirm the veracity of the media reports.
He said the reports were true and said he knew of the problem since January but could not reveal it during the May interview as he thought that they would reach a consensus with NDTC.
Vague reason(s)
Media reports quoted NDTC spokesperson Brent Eiseb as saying that the diamond trader was not in a position to meet the needs of all companies wishing to receive rough diamonds due to intense competition.
He said they ran a selection process last year which was aimed at the long-term viability and sustainability of the cutting and polishing industry in Namibia.
LLD managing director Kombadayedu Kampwanga appeared puzzled with the reasoning behind the rejection of their application.
“Firstly, it should be emphasized that only 16 percent of the Namibian diamonds sold by NDTC are sold to factories in Namibia, while the remaining diamonds are purchased directly by DTC and sent to London, so the finite number of diamonds cannot be the reason for rejection of the application submitted by LLD Diamonds Namibia,” he said.
Any right thinking person would surely see that the reason given by NDTC was weak.
This would have made sense had it been that eight or so applicants had been turned down, but as we gather it was only LLD’s application that was rejected.
So this leaves us with an unbridled quest to establish what was the real reason behind this move?
Before we try to answer that question it is interesting to see what LLD thinks, was the motive behind its snubbing.
Pushing a political line
Kampwanga said his company was out-competed due to the fact that it was a Namibian company, while other applicants applied via international companies.
To support his argument he claimed that a “certain Namibian company” did not apply directly to become a sightholder but instead applied and received a site though an international company on their behalf.
Kampwanga said that LLD had in the past several months conducted negotiations with NDTC, “in good faith” to find a solution to allow it continue operating the diamond cutting and polishing factory.
“In the framework of such negotiations, LLD Diamonds Namibia emphasizes the national importance to continue operating the diamond cutting and polishing factory,” he said.
There is no doubt that LLD was trying to get sympathy through a jingoistic approach, which in this case will not work.
Firstly, a look at the ownership structure of LLD Diamonds Namibia shows that the company was not 100 percent Namibian.
The Leviev group had a 70 percent stake in Sakawe Mining Corporation, which in turn wholly owned LLD Diamonds Namibia.
The fact that the Leviev group (of Israel) owns a controlling stake in Sakawe meant that it owned LLD Diamonds Namibia.
Possible reason
What appears to be the possible reason for NDTC’s refusal to renew LLD Diamonds Namibia’s sightholder contract was the fact that the company had been embroiled in controversy since January last year when the police confiscated 1 825 diamonds.
The police suspected that the stones were not polished in Namibia because LLD employees could not present their manufacturing history.
LLD accused an expatriate Israeli employee, Gabi Shitrit, of being behind the questionable package, saying he wanted to steal the diamonds.
Shitrit denied wanting to steal or having stolen diamonds.
According to media reports LLD bought six boxes of rough diamonds (weighing 3 371 carats) from NDTC, in December 2010 but the entire parcel of unpolished diamonds was exported to Israel unopened.
However, in a bid to cover up the shortage caused by the “illegal” export of the rough stones (with an estimated value of about $2.7 million), the LLD management in Israel allegedly smuggled into the country some polished diamonds in January last year.
Shitrit admitted he received diamonds that were allegedly smuggled into Namibia, but insists he acted on the instructions of the Tel Aviv-based company’s management.
He claimed that the company bought him a ticket to leave Namibia on the day of the Police raid.
The Israeli citizen had offered to return to Namibia to testify against LLD management if the Namibian authorities provided him immunity against criminal prosecution.
He was yet to receive a response to this offer.
Clearly, there is no doubt that such shady dealings had infuriated NDTC, which does not want its name to be associated with dodgy business characters.
This also bolstered my earlier argument that the real owners of LLD Diamonds Namibia were not Namibians but the Israelis.
If the company was local, why would they receive instructions from Tel Aviv?
It remains to be seen whether the negotiations, Kampwanga said, LLD was having with NDTC would yield any positive results.
If not he said a legal route would also be explored.
It’s a pity that 150 workers were left in the cold owing to reckless decisions of a few managers.
Before LLD entertain thoughts of getting a new contract, it needs to explain what really happened with the rough stones that it allegedly “exported” to Israel, as this appeared to be the only acceptable reason why NDTC turned down its application.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
