Where have all the diamonds gone?


In April 1908, a poor labourer by the name of Zacharias Lewala was walking along the beach near Luderitz when he saw something glittering in the sunshine. He bent down to have a closer look and picked up the shiny stone. He had found the first diamond in Namibia.


It was not long before the rush to find diamonds was on. In the years that followed, the finest diamonds the world has ever seen were discovered beneath the hot sands of Namibia. The colour, shape and quality of these diamonds are so perfect, that they are among the most expensive on earth.


The profits from mining diamonds in Namibia are enormous — in the past fifty years, about R20 billion has been made from the sale of diamonds. But it was not Zacharias Lewala or his fellow Namibians who got rich. At first the profits went to mining companies from Germany, who got the rights to mine the precious stones.


After the First World War, the fortunes made from Namibia’s diamonds went — and still go — to one mining company, Consolidated Diamond Mines (CDM). This company belongs to De Beers in South Africa — a giant mining corporation that controls the world’s diamond market.


De Beers, in turn, is controlled by the Oppenheimer family, who are the biggest shareholders of the Anglo American Corporation, which produces more than half of all the gold mined in the world.


ERNEST TAKES CONTROL


The story of how CDM came to control Namibia’s diamonds begins in 1918 — the year Germany lost the war and had to give up its colonies in Africa. One of these colonies was Namibia, which was given to the British Empire. Three years later, Britain handed control of Namibia to South Africa, which was meant to prepare the country for independence.


At around this time, one man saw the opportunity to make a fortune for himself in Namibia. His name was Ernest Oppenheimer, the man who already controlled the Kimberley diamond fields in South Africa.


Oppenheimer opened shop in Namibia by forming a new company — Consolidated Diamond Mines. He made a deal with the nine German mine owners who owned mining rights in Namibia, and who were worried about the future of their mines now that Germany had lost its colony. They signed over their land to him in return for a share in CDM.


Next, Oppenheimer managed to get the South African government to sign over to him a huge piece of diamond- rich land in Namibia. The area stretched more than 300 kilometres from the Orange River to the north and one hundred kilometres inland from the coast. It is known as Sperrgebiet — the forbidden place.


Oppenheimer’s company got the sole rights to this land for 50 years. These rights have now been extended to the year 2010. For this he paid a rent of 130 pounds a year — a rent which has not been increased to this very day.


Lastly, Oppenheimer got South Africa to give up all forms of control over the mining and the sale of diamonds in Namibia. In return, he promised to set up an independent diamond board to watch over the diamond industry.


SOME UGLY DISCOVERIES


One of the first things Oppenheimer did was to put up “No Entry” signs all over his huge diamond fields in Namibia. These signs are still there.


So for many years, nobody knew what was really going on at the mine. It was only in 1982 that the truth about CDM’s mining practices slowly began to come out.


In that year, a Namibian businessman, Mr Eric Lang, started to think about the future of his country. Would there be anything left, he wondered, for the people in Namibia when they finally won their independence?


He started asking questions about the mines — and found that he could not get answers. The South African government could not help him and there was no public information about mining in Namibia.


But little by little, he started collecting the information he wanted. And he made some very ugly discoveries.

“I found that there was no control over the export of minerals,” says Lang. “I worked out that between 20 to 25 percent of minerals were being taken out of the country without any controls whatsoever. When I tried to get the government to listen, they would not. They were quite happy to allow these mining houses to get away with it.


“So I held a public meeting where 1 threatened to tell everything I knew — what Namibia’s mineral statistics were, which countries they were being sold to and at what prices.”


THE SHOCKING FACTS


In the same year, a Supreme Court judge, Mr Justice Pieter Thirion, was busy investigating corruption in Namibia’s administration. Lang wanted the judge to also look into mining in Namibia.


The government tried to stop Lang — but in the end, the businessman won out and the judge agreed to start an investigation into the mining of diamonds and other minerals.


Four years later, in 1986, the Thirion Commission came to an end. Judge Thirion’s report told the world the shocking facts about the mining companies in Namibia.


At the British-owned Tsumeb mine, lead and copper containing gold and silver were sent out of the country — without the gold and silver being declared. And the British South West Africa Company had exported over R20 million of minerals — without paying a single cent in tax!


But what was happening in CDM’s diamond mines was perhaps the biggest crime of all. It was one of CDM’s own managers who spilt the beans to the judge.


STRIPPING THE DIAMONDS


Gordon Brown worked for 15 years at CDM, first as a supervisor and then as a technical assistant to the mine manager. He knew what was going on at the mines was wrong, and he decided to talk.


He told the judge how CDM had been overmining for twenty years — by stripping Namibia of its best diamonds in a hurry to make quick profits before the country became independent.


Brown compared the way CDM was mining to the way a greedy person eats a cream cake. “Usually, people cut only one slice of cake at a time,” said Brown. “They get a piece of cake with a bit of cream on the top. Now that is proper mining practice, taking out the rich with the poor. In this case, in the case of overmining, what .happens is that the cream is all scraped off the top before you even get to the cake.”


In other words, CDM was practising bad mining. Good mining is when you mine the good parts — those with a lot of diamonds — and the bad parts — those with few or small diamonds — at the same time. This is called working the average grade. If you mine in this way, the mines last longer.


Brown produced documents which showed that CDM was deliberately overmining. In a 1981 company report, a senior mine manager warned that if the mine did not stop overmining, it would be forced to close early.


“AN INSULT”


Judge Thirion attacked CDM for its practice of overmining and for robbing Namibia’s people of their wealth. He said that the minerals in Namibia’s soil belong to the people and that they should get their share. He criticised CDM for not putting some of their huge profits back into Namibia so that all the people of the country could benefit.


The judge also criticised CDM for not paying the tax it was supposed to. The company had done this by declaring false profits. The judge heard evidence that showed that CDM had declared its profits to be as much as one thousand million rands lower than they really were.


Judge Thirion said the Diamond Board was a sham — it was not independent at all! In fact, some of the people on the Board were employed and paid by De Beers. In Windhoek, the Diamond Board and CDM share the same offices. Judge Thirion found that the Board was not doing a proper job of controlling the mining and selling of diamonds in Namibia.


CDM did not give evidence to the Thirion Commission. But they did present one document which denied everything that was being said about them — and said that the investigation was hurting the company’s image!


The judge read the document and tossed it away, saying that it was not based on facts and that it was “an insult to even the lowest form of intelligence”.


THE JUDGE’S RECOMMENDATIONS


At the end of the Commission, the judge made several recommendations. He said that in future mining companies should pay much more tax to the state as well as a “royalty” on all minerals mined. He said that the practice of declaring lower profits should be stopped. New rentals of land must be charged.


The judge said that a new independent Diamond Board should be set up. The state together with experts should be the watchdog over the mining industry.


Foreign companies, the judge said, should put large parts of their profits back into the economy so that the people benefit from the wealth. And mining companies should only be allowed to make reasonable profits and the rest should go to the state.


CDM and other mining houses — like the Tsumeb copper mine — rejected the Thirion Commission’s findings. So did the South African government, which set up a committee to make its own recommendations.


The government committee said that if there were such strict rules about mining, no foreign companies would want to invest in Namibia! And because there was a lot of risk in mining, companies deserved good profits!


THE FUTURE


Three years have passed since the Thirion Commission gave its findings — but not much has changed. CDM is still in Namibia and is still making money.


As we write, Namibia is on the eve of its long-awaited independence. If Namibia had not been robbed of its diamonds, the country would surely be going into the future in a much stronger position.


Seven years ago, it was a country with no debts. Today, it has the second biggest debts in Africa.

A large part of the debt must be blamed on the mining companies in Namibia — and the help they got from the South African government. The mining houses have used every trick in the book to strip Namibia of its wealth.

It is hard to say exactly how much the people of Namibia have lost because of companies like CDM. Gordon Brown has tried. “I calculated how much money CDM made by overmining in the 1970s and got a figure of four billion rand,” says Brown. “Four billion rand that Namibia could have used in the future!”


But it is not only money that has been lost. Because of overmining, the CDM mine may have to close in 1992 — 13 years earlier than it should have. Besides the missing diamonds, what will become of the workers on the mine? Who will feed their children?


Will it be CDM, De Beers or Anglo America? Or will they be long gone, looking to do business in greener pastures?


NOTE: Much of the Information in this article comes from a film called “The Case of the Missing Diamonds” which was made in 1987 by Granada Television in Britain.


NEW WORDS statistics – facts and figures to declare goods – if you send goods out of the country for sale, you have to declare them and pay tax on them deliberately – on purpose recommendation – a suggestion sham – something that is not real, or not what it seems to be

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