By Richard Wake-WalkerApril 30th, 2019
The De Beers I left exactly twenty five years ago was a very different animal to the mere appendage of Anglo American it is today. De Beers was a genuine monopoly with the mentality to go with it, enjoying control, so they always claimed, over 80 per cent of the rough diamond market. It is doubtful the company’s market share was ever that high, but this is what we were told to say. Today the percentage has fallen to under 40 per cent. De Beers’ management during the late nineties and early noughties, managed to lose producer purchase contracts in Angola, Australia, DR Congo, Russia and Tanzania. The company consequently ended up retreating to its southern African laager, ever more dependent on its Botswana contract for diamond intake, sales volume and profitability.
Rather like quitting the EU, life was made as tricky as possible when I resigned from De Beers. There were threats: “We can make things difficult for you and your family”. Attempted inducements: an envelope was thrust across the lunch table in Simpsons in the Strand of all places by a De Beers director who had told his colleagues: "I know Richard well. I will invite him to lunch and get him back." The envelope was immediately pushed back whence it came. Sweet talking: “The door is always open if you change your mind”, wrote Nicky Oppenheimer in a personal handwritten letter. "I was bouleversé when you told me....” added then CEO GM Ralfe in a similar, characteristically glib note. He was so bouleversé in fact that I thought he was going to fall off his chair. Financial pressure: “Do you realise you will lose your golden handcuffs?” - I am sure my request that the sum I relinquished should go to charity went unfulfilled. And so on. It was disappointing not to be frogmarched out of headquarters between two burly security men, which is what I always thought was meant to happen.
In those days, De Beers was a company you were never meant to leave. You were a lifer. I was not the very first senior executive to jump ship, but my departure was sufficiently newsworthy to make the front page of the Sunday Telegraph business section, the Financial Times and to be the subject of several articles in the Russian and English language Moscow press (where I had been the first general director of the De Beers Russian office). I was astonished at some of the approaches I received, particularly from diamantaires and many an interesting Russian. Demand for independent diamond related skills more than matched my expectations, and I soon realised there was a ready market place for my expertise, especially in Russia. Happily, I had checked my De Beers employment contract with a lawyer before quitting, and he said I could safely ignore the restrictive clauses attempting to prevent me from operating anywhere in the diamond world. As it was, I learnt more about the true diamond business in my first year working in the open market than I had during 18 years within the monopoly.
A year later, Charles Wyndham invited me to lunch, telling me that I had done exactly the right thing and that he too was leaving. I knew Charles well, having worked with him in Zaire and when selling rough in London to the trading and manufacturing markets worldwide. Consequently, WWW International Diamond Consultants (WWW) was born in January 1996. Not long afterwards, we won the groundbreaking valuation contract to be the first Government Valuators for the nascent Canadian diamond production, a position we still hold together with our northern indigenous partners more than twenty years later, with three separate Canadian government contracts. Since we started, 235 million carats worth well over $30 billion dollars have passed through our hands. The Canadians have always been proud that they have been agents for change in the diamond business, citing above all their choice of valuator as being instrumental in helping to transform a moribund and often corrupt international valuation industry.
Twenty years ago, the Canadian government was attracted by our independence, and our objective pricing system based on fair open market prices rather than bogus master samples, easily manipulated for transfer pricing, reduced royalties and overall values for the diamond producer country. Above all, it was our desire to share and transfer knowledge, especially through intensive training courses for our locally employed staff, and government officials. Even then, our former employer put it about that Charles and I were simply "disgruntled ex-employees," whilst some Canadians felt their emerging diamond producing country was being treated like a neo-colonial outpost. Rumours were also spread that our business partnership had broken down, which was certainly never the case.
WWW has worked with over 80 companies and organisations since 1996. In the main, these have been geological prospecting companies with diamond samples to value, financial institutions and banks, governments (federal and regional), mining outfits, trade bodies, NGOs, jewellers, and security organisations including the RCMP. We were one of the first companies to establish truly transparent tendering of rough diamond parcels in Antwerp, and the very first to sell loose polished diamonds at tender, achieving record prices in the process. A sister company successfully providing transparent prices of wholesale polished diamonds, polishedprices.com, was set up by Charles 15 years ago and its subsidiary company has recently become the first European commodity benchmark entity to be recognised by London’s Financial Conduct Authority.
There have been disappointments as well as successes. We unilaterally pulled out after one year of a four year contract in the Democratic Republic of Congo when our Congolese partner was held up at gunpoint outside our Kinshasa office by soldiers sent in by the Ministry of Mines. The Ministry had been pressured by local exporters and dealers, because we were applying reasonable market prices at export for duty calculation purposes. Historically, there had always been a culture of deliberate under valuation to benefit the local trade, mining companies and foreign buyers - but not the populace. In our one year of operation, we had increased government export duties year on year by more than 30 per cent based on the same volume of diamonds, simply by applying fair prices. This was in a country where the Minister of Mines at the time personally charged exporters $1,000 for his Kimberley Process authorising signature, with 12-15 shipments of diamond parcels being made each working day.
WWW was rejected when applying to be the valuators of two other major African producer nations, because we offered to follow our successful Canadian model of training local nationals to become full members of our team, and over time to transfer all our knowledge to them. The true reasons for being turned down can easily be imagined.
I am sure De Beers has altered in the last quarter of a century. The dead wood and rotten eggs have expired or left. The company may not have radically changed its take-it-or-leave-it selling system, but where I personally observe its operations, particularly in Canada, De Beers has become a much more enlightened and responsible outfit. However, in the recent past, the company has made, and is continuing to make obvious mistakes such as the Supplier of Choice fiasco, the abandonment of generic diamond advertising and its risky Lightbox project.
It has been enjoyable watching this rebalancing of the diamond business. In speaking up at conferences, in press and television interviews and articles, in assisting film makers search for the truth, operating in tandem with governments and NGOs when establishing the Kimberley Process system (we have worked as Sworn Experts for the Foreign Office), above all in applying genuine independence to all our activities in an industry which has been so reluctant to change and adjust to fresh realities, WWW has played its part in being a significant force for probity in the diamond world.
Richard A Wake-Walker
Resigned from De Beers 29 April 1994