When diamonds lose their sparkle

This time it was not Leonardo DiCaprio portraying a muscular and fearless ex-mercenary dealing in blood diamonds which irked the DeBeers establishment, but a report compiled by a bearded and bespectacled academic, David van Wyk. The report came at a time when the diamond industry is struggling to come to terms with the global economic meltdown.

Criticism and bad publicity is not good for any business, particularly now for a struggling diamond industry. The global economic meltdown caused havoc for an industry that was just beginning to shed the negative image that followed the exposé of widespread unethical procurement practices which, for example, led to the introduction of the Kimberley process to halt so-called blood diamonds from entering the market. No wonder De Beers was quick out of the blocks to refute the accusations levelled against the mining giant in the BMF report.

The BMF report, which can be described as comprehensive, proposes that Botswana’s dependence on diamonds produced by a single corporation, De Beers, allows the latter to act with impunity. It claims that very few are prepared to speak out against any real or perceived transgressions by De Beers out of fear of retaliation.

The report quotes a former Botswanan minister who alleges that former president Quett Masire once remarked it was as a result of the De Beers discovery of diamonds that Botswana has become one of the envied countries in Africa, and to criticise De Beers would be a sign of ingratitude.

De Beers is portrayed as “untouchable” and the relationship between De Beers and Debswana described as a "marriage", which creates the perception of a dominant relationship that exists "at the expense of communities, human rights, the environment and sustainable local economic development".

The BMF report warns that unless the Botswanan government takes the necessary steps to assert its independence and its responsibility to its people as a whole, and not only its major corporate citizen, corporate social responsibility campaigns will continue to be ineffective.

As a further example of De Beers' and Debswana’s profiles as bad corporate citizens, the BMF report alleges that communities living in the areas where mining activities are taking place are exploited, marginalised and excluded from sharing in the riches extracted from their ancestral lands.

Added to the list of concerns is the highly emotional and controversial issue of mineral prospecting and mining in national parks and conservation areas and the consequent negative impact thereof. The report concludes that the threat posed to the Central Kalahari Game Reserve (CKGR) by prospecting, and the potential threats to the Okavango Delta, are matters of serious international concern.

In a 22-page rebuttal, De Beers and its co-accused Debswana and the Botswanan government question the validity of the report and reject it as unbalanced. De Beers charged that the BMF report does not reflect their experience in Botswana nor the findings of numerous reputable independent studies by academics and bodies ranging from the UN Development Programme to the World Bank, which "highlight Botswana's unique success in using its diamond wealth to drive sustainable development at both a community and national level as well as the role played by Botswana's exceptional governance record in this process".

De Beers further suggested some sloppy research pointing out simple factual inaccuracies in the report which could have been corrected with a visit to the official Botswanan government website or by correlating facts with the relevant authorities. A De Beers spokesperson even hinted that the report dealt selectively with information that the company provided.

Countering suggestions that they are a bad corporate citizen, De Beers refers to the fact that Botswana was an extremely poor country at independence, but that it has become independent of foreign aid – implying that it is mainly the result of mining activities, in particular diamond mining.

The contribution of De Beers to the well-being of Botswana is, according to De Beers, considerable considering the dividends from its 50% shareholding in Debswana and additional revenues generated through royalties and taxation. Adding the 80% of all income realised by Debswana which goes into government revenue, De Beers is of the opinion that its contribution vastly exceeds even the most stringent benchmarks for social investment.

It is to be expected that when a multinational company with the stature of De Beers is confronted in its own backyard, no mercy is to be expected and emotions can easily run high. This appears to be the case in this debate when it even seems as if both sides to some extent used similar information to substantiate and support their views.  The BMF acknowledged that it focused its research on what it perceived to be the affected communities and declares that "Bench Marks takes pride in reflecting the silenced voices of ordinary members of communities, rural peasants, workers, the poorest of the poor; those people global institutions talk about, but don't talk to."  It comes as no surprise that De Beers zoomed in on this acknowledgement and argued with some justification that the result of the BMF report is predictable.

This may well be a case of David versus Goliath, but it is highly unlikely that David will surprise in this battle. The best for which sympathisers of reports in the BMF mould could hope, is that De Beers and other large mining companies operating in Botswana will take notice that their actions and activities are monitored and that they will be held accountable to fulfill their social responsibilities. This is perhaps the best outcome for all who can benefit from such scrutiny.

SOURCES

De Beers slammed on Botswana mines  Busrep.co.za: 25 September 2009

De Beers, gov't ‘marriage of convenience’ pulled Botswana out of poverty Sunday Standard, 27 September 2009

Bench Marks, Researcher stick by controversial SADC report Sunday Standard, 27 September 2009

BOTSWANA: San controversy rekindled
Irinnews.org: 25 September 2009  De Beers concerned over ‘distorted’ Bench Marks Foundation report  Miningweekly.com: 24 September 2009  De Beers concerned about 'distorted' report   Sapa: 23 September 2009  Corporate Social Responsibility in the Diamond Mining Industry in Botswana: De Beers, Botswana and the Control of a Country. The Bench Marks Foundation Report  Corporate Social Responsibility in the Diamond Mining Industry in Botswana: De Beers, Botswana and the Control of a Country. The De Beers/Debswana response document