President parks Namdia report
State House is dilly-dallying on an explosive report by the ministry of public enterprises into the affairs of the state diamond firm.
22 January 2021 | Business
State House this week floundered on questions why President Hage Geingob has not acted on a damning report dragging two former ministers into how a politically connected entity landed a N$1.5 billion contract at state-owned diamond company Namdia under questionable circumstances.
The investigation report, compiled by the ministry of public enterprises, has been gathering dust on Geingob’s desk since May 2018.
It tells a story of how former mines minister Obeth Kandjoze and then attorney-general Sacky Shanghala exercised their official powers to commit Namdia to a diamond-valuation contract with C-Sixty Investments.
C-Sixty Investments crawled into bed with Namdia boasting only its political capital and no track record as a diamond valuator.
C-Sixty was appointed despite Namdia already having a contracted valuator on its payroll, Neall Haddock, who worked as a consultant.
C-Sixty was only three months old when it landed the lucrative deal that could earn it up to N$1.5 billion in five years.
Millions at stake
Geingob in 2017 instructed public enterprises minister Leon Jooste to investigate claims that Namdia was under-selling its diamonds and the circumstances around the appointment of C-Sixty Investments as Namdia’s diamond valuator.
The Jooste report contains recommendations that the minister believes could save Namdia millions of dollars.
Some of the key recommendations are to cancel the C-Sixty contract at Namdia, and rein in flagrant abuse of ministerial powers.
It also alleges that ministers deliberately leaked information to C-Sixty, so that the then little-known entity could prepare itself to scoop the multimillion-dollar contract.
Presidential spokesperson Alfredo Hengari yesterday morphed into defence mode, listing Geingob’s track record in fighting corruption, regurgitating the cancellation of the airport tender three years ago.
He ducked questions on why the head of state has not acted on the Jooste report.
“President Hage G. Geingob has taken a strong stance against corruption or allegations of corruption, and it is in that vein that the president directed ministers to explain allegations of corruption that were levelled against them and the ministries they were heading,” Hengari said.
Kandjoze and Shanghala were both reshuffled in February 2018, with Geingob asking the Anti-Corruption Commission (ACC) to investigation a myriad of corruption allegations they faced.
Both men have denied the allegations. ACC director-general Paulus Noa in 2019 said he was satisfied with written explanations by the two ministers and stopped the investigation. It is not clear if the ACC has seen the Jooste report.
Shanghala is now in jail after being implicated in the Fishrot scandal, while Kandjoze is now the director-general of the less influential National Planning Commission.
The public enterprises investigation recommended that the C-Sixty partnership with Namdia be terminated because there was no need for the services offered.
C-Sixty is co-owned by businessman and former Swapo Central Committee member John Walenga and Tironenn Kauluma, nephew of former cabinet minister Helmut Angula.
Jooste this week confirmed the report that his office compiled and submitted to the president.
The Jooste report found that C-Sixty was irregularly appointed and that Kandjoze allegedly misled both the Namdia board and the ACC with regard to the timing of the appointment.
C-Sixty is also accused of having had had access to confidential information on the government negotiation process and terms contained in the sales and marketing agreement relating to the Namdia purchase entitlement, even before it was made public.
Walenga flatly denied the allegations this week.
Eyebrows were first raised in January 2016 when C-Sixty was established using an existing sanitation services company, merely changing the name and the main objective to that of diamond-related activities.
The company was called Amalooloo Sanitation Traders (Pty) Ltd, offering sanitation services.
In May 2016, the company was transformed into a diamond valuation entity and scooped the lucrative Namdia tender.
Questions have been raised on how the owners of C-Sixty got to know of this opportunity if the deal was only made public in May 2016.
Various details contained in the sales and marketing agreement, such as the establishment of Namdia, the diamond purchase allocation and other details, only became publicly available on 16 May 2016, when the deal between the government and De Beers was signed.
Fifteen days later, C-Sixty submitted a two-page expression of interest, including reference to its technical partners, to Kandjoze.
“It appears that the acceptance of the ‘offer’ was based on the two-page expression of interest, containing very little detail on the offer and the company and containing no information on demonstrable track record or terms,” the investigation found.
This was done without any negotiation on fees having taken place.
“This valuation service was not opened up to the market to seek the best qualified provider of this service at an appropriate price and we did not see any documentation that justified the direct appointment,” noted the report.
This is in direct breach of the national regulations designed to stop procurement fraud, investigators said.
Kandjoze successfully lobbied the C-Sixty deal knowing full well that Namdia was already paying Haddock big money to valuate, market and sell its diamonds.
“Therefore, there appears to be some overlap of functions, in that selected diamonds that were already valued… are again valued by C-Sixty.
“However, that valuation is not used to optimise sales prices, as that is handled, amongst other services, by Namdia’s marketing and sales consultant Neill Haddock. Therefore, it is not clear what the purpose of the second valuation by C-Sixty is,” the report states.
Haddock is a Dubai- and London-based diamond dealer who has also worked for De Beers and its Namibian subsidiaries.
The term of the exclusive agreement with C Sixty is for five years and renewable for another five years, unless either party serves a notice of termination 12 months before the expiry of the agreement.
This effectively covers the entire 10-year period of the sales and marketing agreement between De Beers and the Namibian government.
“It would seem an overly restrictive agreement that has been entered into, effectively on behalf of the shareholder (government). We cannot identify anything unique and distinguishing in the service being offered that would warrant such restrictive terms, and deny such opportunity to other Namibians with similar skillsets and/or technology, should this service indeed be required,” noted the report.
It also appears, according to the investigation findings, that the “Namdia board and the ACC were misled by Kandjoze with regards to the timing of the appointment and who actually did the appointment.”
Namibian Sun understands Kandjoze had told the ACC that he had conducted due diligence on C Sixty and that he then found that C Sixty had exclusive rights to all Sarine products and services in Namibia.
While ACC believed Kandjoze’s version without verifying it, Jooste was not outrightly convinced and he went on to dig further.
“We have established that there are no exclusive rights on Sarine products in Namibia and that any diamantaire can buy those products from Sarine directly, via their local representative company or from C-Sixty,” the report notes.
Kandjoze did not answer questions sent to him this week about the findings.
“I am advisedly in light of the above not at liberty, nor available to make further pronouncement on such, having already in detail recorded my unambiguous denial of any culpability in any wrongdoing as suggested and which is completely at variance with the facts,” he said.
Kandjoze also said he was not privy to the allegations in the investigation report.
The report also questioned the chronology of events leading up to the appointment.
“If the services of C-Sixty were meant for Namdia, as implied in the expression of interest, the appointing authority should have been the government negotiating team (GTT) or the board.”
Since the board succeeded the GTT in early August 2016, the report notes, there was no reason for Kandjoze to appoint C-Sixty and that it would be a violation of good corporate governance for Kandjoze to strike a deal on behalf of Namdia.
Kandjoze told ACC in January 2017 that he had sought advice from Shanghala to directly appoint C-Sixty. The findings dispute that.
The report states that it is impossible that Kandjoze relied on a legal opinion from Shanghala because the opinion is dated 16 November 2016 while C-Sixty, months after Kandjoze had sanctioned the C-Sixty deal.
*This article is the first of a series of articles looking into the affairs of Namdia.