South Africa

amaBhungane and Scorpio #GuptaLeaks: A tale of two captures – Alexkor, Gupta Inc and ‘WMC’

By amaBhungane & Scorpio 13 December 2017

The legendary Grootslang of the Richtersveld is a primordial cross between an elephant and a snake. Now the Richtersveld seems beset by the massive dominance, on the one hand, of the Alexkor elephant and, on the other, by a shelf-company whose corporate coils seem to lead back inexorably to the Guptas. And in the background lurks the presence of a Grootslang that survived: Trans Hex, the company controlled by that old giant of White Monopoly Capital, Christo Wiese. By AMABHUNGANE and SCORPIO.

There’s a legendary creature that inhabits the Richtersveld, the land of deserts and diamonds along South Africa’s north-west coast.

The Grootslang, a primordial cross between an elephant and a snake, is both wily and deadly and guards a cave filled with gems, dispatching unwary treasure-hunters either with guile or overwhelming power.

The myth might be a metaphor for Alexkor and the “resource curse” that the state-owned diamond company presides over.

In 2007, the Land Claims Court awarded the Richtersvelders land and mining rights expropriated by the state during the colonial era – including the diamond-rich area controlled by Alexkor.

Under a settlement agreement with the state, the assets were consolidated in a community trust structure for the Richtersveld Sida !Hub Communal Property Association (CPA).

The community acquired rights to mine diamonds on the land while Alexkor retained its rights to diamonds on the seabed. Both onshore and offshore rights were pooled in a joint venture company owned 51% by Alexkor and 49% by the Richtersveld Mining Company (RMC).

In the Grootslang legend, the Gods realised the beast was too powerful and split it in two to create the elephant and the snake.

Now the Richtersveld seems still beset by the massive dominance, on the one hand, of the Alexkor elephant and, on the other, by a shelf-company whose corporate coils seem to lead back inexorably to the Guptas.

And in the background lurks the presence of a Grootslang that survived: Trans Hex, the company controlled by that old giant of White Monopoly Capital, Christo Wiese (the billionaire currently embroiled in the Steinhof saga).

The set-up – primed for capture

Our story begins in October 2014, when the Alexkor RMC joint venture issued a tender to sell Alexkor’s diamonds.

While the joint venture is supposed to balance the interests of Alexkor with those of the Richtersveld community, the reality is that the community is fractured and dominated by its big corporate brother. Alexkor is effectively the biggest employer in the Richtersveld.

The promise of access to jobs and influence in poor communities ensures that such structures remain beset by competition and strife: at best easy to manipulate, at worst dysfunctional.

The Richtersveld Mining Company, through which the community exercises its interest in the joint venture with Alexkor, was no exception.

Indeed, in September 2014, a month before the diamond marketing tender was issued, the Western Cape High Court issued a judgment removing all the RMC directors who purported to act on its behalf, though the ruling was suspended by the lodging of an appeal.

Although structures like the RMC were supposed to be answerable to the CPA, in practice they served their own interests or were satellites of Alexkor.

In May 2016, citing the infighting, Alexkor applied successfully to have a court appoint three temporary RMC directors – chosen by Alexkor – to represent the community.

As recently as November 2017, a report to Parliament by the office of the chief land claims commissioner noted:

It is also clear that Alexkor continues to play a major role in the continuous infighting between the community members and the CPA leadership.”

The Alexkor side of the joint venture with the RMC was also somewhat bizarre, given that the joint venture agreement assigned the Alexkor chair to also be the chair of the joint venture, while denying any Alexkor executive director a seat on the board.

In effect, the chief executive of Alexkor was accountable for the 51% held joint venture, but had no formal influence over its operations, worth R758-million in the 2016/17 financial year.

In part, this stems from the legacy of the 2007 land restitution settlement, which provides for Alexkor to exit its 51% holding in the joint venture at some future point should the community exercise its “call option” to purchase Alexkor’s share.

This has led Alexkor to cast around for some reason to justify its continued existence – and the ludicrous situation whereby it maintains an expensive corporate headquarters in Johannesburg, 1,400 kilometres away from its only operating division at the mouth of the Orange river.

One option was for Alexkor to explore branching out into coal, potentially via a sweetheart deal with Eskom – a decision that necessitated expanding the Johannesburg office and drafting in a chief executive with coal experience.

Around this fat beast, hobbled by its tangled governance, circled at least two predators: Trans Hex and Gupta Inc.

Dramatis Personae

Before we get to the Guptas and their associates, it is worth taking a moment to introduce the key players involved at the time the diamond marketing contract was put up for grabs at the end of 2014.

The chair of Alexkor – and of the Alexkor RMC joint venture – was Rafique Bagus.

Bagus is an accomplished corporate operator, a devout Muslim and a serious surfer.

He was previously the chief executive of Trade and Investment South Africa, deputy director-general of the Department of Trade and Industry, and special adviser to Alec Erwin when he was public enterprises minister.

Bagus came to public attention in 2011 when he was linked to making political introductions for Uruguayan businessman Gaston Savoi, who is still battling corruption charges relating to government tender awards.

Bagus was appointed chair of Alexkor by Malusi Gigaba in September 2012. He was central to the events, but his role is shrouded in contradictions.

At his side was advocate Zarina Kellerman, Alexkor’s chief legal officer, of whom also more later.

The chief executive of Alexkor was Percy Khoza, a seasoned mining executive with both diamond and coal experience. He was hired, in part, to pursue the “coal strategy” approved by Gigaba.

All three would depart amid changes to the board made by a new minister, Lynne Brown, in August 2015 – but by that time, round one of the diamond marketing contract was sealed.

The Alexkor-RMC joint venture had its own chief executive, Mervyn Carstens, a 16-year veteran of Trans Hex, where he rose to serve as executive director of land operations until his departure in April 2012. In August 2012 he was appointed to manage the joint venture, reporting to Bagus.

Of perceptions raised by his long association with Trans Hex, Carstens says:

I deny that I am aligned with Trans Hex or Mr Christo Wiese. I have never met Mr Wiese nor had any dealings with him. Since my departure from Trans Hex, I have had no further business connections or dealings with that company.”

One more figure is key: Duncan Korabie, an attorney based in Wellington in the Western Cape and a feisty combatant in the factional battles that have plagued the community.

During 2014, Korabie was accepted by Alexkor as one of the independent RMC directors representing the community on the board of the joint venture.

Since then, he has fallen out with Alexkor. The joint venture board now rubbishes his credibility, claiming he “only represents a few members” of the Richtersveld community and pointing to a recent High Court judgment that criticised Korabie’s conduct, saying it was “opportunistic… borders on unethical” and “unbecoming of an officer of court”.

The contract factory

Alexkor is a small operation that in some ways exists to award and manage contracts.

Its shallow ocean concessions (up to 30 metres in depth) are mined by about 60 small-scale marine contractors, who use divers to manhandle large vacuum hoses to suck up the diamond-baring gravel and sand for processing. The companies bare the costs and risks – and for that they get a 50% share of the diamond revenue.

The more shy bearing onshore excavations are handled by another, much smaller group of contractors, while the deeper ocean excavation is handled by a specialised company, International Mining and Dredging South Africa (IMDSA).

IMDSA is responsible for the major portion of diamond recoveries. In the last financial year 112,047 carats came from deep-sea operations, whereas 50,125 carats were produced from the other concession areas.

The deep ocean mining requires expensive, specialised vessels, and because of the atrocious sea conditions on the Richtersveld coast, sea days can be severely limited. IMDSA keeps about 85% of the diamond revenue.

From 2000 until 2006 Alexkor’s production was sold via the De Beers company Diamdel. Unhappiness about the prices fetched was reportedly behind the termination of this arrangement.

Then the sales were handled by Diamond Marketing Consultants, whose principal, Menachem Pelleg, was a diamond valuator for the South African government. In January 2014 Pelleg’s contract was abruptly terminated – and is still subject to his legal claim for compensation.

A new marketing company called Diamond Realisations was appointed on a temporary basis, and by all accounts performed well. Marketers generally take a 1.5% commission on sales, but the prices they get also determine what the contract miners get, so in theory everyone wins.

Then, in October 2014, came the formal marketing tender.

Enter the Guptas – or do they?

Circumstantial evidence suggests that in 2014 the Guptas opened up a new front in their State Capture project via Alexkor. The fingerprints of the family and their fellow-travellers are faint, but visible.

There is almost nothing about Alexkor in the #GuptaLeaks, bar one strange email from March 2013.

The email to Gupta factotum Ashu Chawla is from a Gupta associate in Saharanpur, who is purporting to relay a message from one Deepak Mittal.

He asks that Chawla forward the mail to “the Chairman”.

It states:

Hi Mr. Bagus… as I had words with you before (to bid in Diamond tender auction of your company) we are a global company from India, I gave you an introduction about ourselves and the work we do.”

Bagus does not recall ever receiving such a mail or the alleged contact.

In response to the allegation that he knew the Guptas and had been a frequent visitor to their Saxonwold home, Bagus stated:

During my time as CEO of Trade and Investment SA and DDG of DTI, I served on the International Marketing Council (IMC) where I met Mr Ajay Gupta.”

Evidence of the Gupta connection to the diamond marketing contract has emerged slowly, but the award of the contract was controversial, almost from day one.

Bagus himself says the award was above board, but his assurances are undermined both by documentary evidence and by some sources close to the process, including the activist lawyer Korabie.

Alexkor points to an investigation carried out in 2015 by the Alexkor audit and risk committee at the behest of minister Brown which could not find “any fundamental breach of procurement procedures”.

But the report to Brown, which was made public by Alexkor for the first time in response to our questions, itself discloses red flags about the process – and the company that won the contract: Scarlet Sky Investments 60, which is now the sole agent to sell Alexkor’s diamond production.

First, Carstens, the chief executive of the joint venture, outsourced the shortlisting of bids.

Given that there were only seven bids, this seems unnecessary – and some of the scoring for the short-listing appears inconsistent.

Carstens told us:

A company called Gamiro Advisory Services was appointed to conduct an evaluation of the proposals and to do the shortlisting. They shortlisted three companies, namely [Scarlet Sky], CS Diamonds and Diamond Realisations, who were all invited to make further presentations to the tender committee.”

Gamiro is part of the Gamiro group, controlled by Heather Sonn.

Sonn is a director in Steinhof with Wiese, although there was no apparent conflict of interest in 2014 because Wiese took control of Trans Hex only in August 2016.

Trans Hex bid for the Alexkor marketing contract in 2014, but was not short-listed, mainly because of scoring zero in the category: Richtersveld community economic development, which was worth 30 points out of 100, for which they rather carelessly made no commitment at all, according to Gamiro.

On the shortlist, Diamond Realisations – the company that held the interim contract – scored the highest with 75 points, Scarlet Sky came in second with 71.5 and CS third with 67.

But there were already red flags for Scarlet Sky, for anyone who cared to look more closely.

The company sent an expression of interest on 6 November 2014 on a letterhead that indicated the directors were Daniel Nathan and Kuben Moodley.

At that date, however, the directors were actually still shelf company stand-ins.

Online company records reflect that Nathan and Moodley only became directors on 4 December, while Scarlet Sky’s own share register, obtained by amaBhungane, shows that they became shareholders on 20 November (through their respective companies Daniel Nathan Trading and Kimomode).

Scarlet Sky also held no diamond licence, though one of Nathan’s companies did. Moodley, the purported 60% BEE shareholder, had no diamond industry background at all.

When it came to the final selection on 11 December 2014, only three people sat on the panel at Alexkor’s Rosebank, Johannesburg head office: Bagus, Korabie and a veteran Alexkor director, Dr Roger Paul.

The scoring should also have raised red flags, given that Korabie awarded Scarlet Sky a full 100% mark, which is normally regarded as an attempt to skew a panel score in favour of one bidder.

That 100% score gained greater significance when Korabie later turned on Alexkor – as we shall see.

Despite all three adjudicators awarding Scarlet Sky the highest points, it appears there was a significant lack of clarity about their proposal.

After significant to-ing and fro-ing about what exactly Scarlet Sky had committed to in terms of funding, pricing, beneficiation and community investment, the final award was made at the end of February 2015.

Korabie’s unguided missile

By March 2015, there was already some consternation among the Contractors Representative Body, representing the small miners whose returns would be based on the prices achieved by Scarlet Sky.

By September 2015 Korabie had sent a letter of complaint to then public protector Thuli Madonsela about the award process. He copied it to Alexkor management and the Department of Public Enterprises.

It made a clear allegation that Bagus had influenced the process, noting:

On the 11th of December [2014] the chief legal officer [Kellerman] and chairperson at the time [Bagus] took Korabie and Dr. Roger Paul, an Alexkor representative, into his office and discussed what he viewed as the new direction the [joint venture] must take in appointing the service provider. He mentioned that only one candidate that will be interviewed met the new direction he proposes. He then mentioned [Scarlet Sky].”

The committee reporting to minister Brown said Bagus told them “that he has no recollection of the meeting taking place”.

Korabie has expanded on this allegation, telling amaBhungane that during a separate private conversation, Bagus told him that the instruction to appoint Scarlet Sky came “right from the top”.

Bagus told us:

I have never had a conversation with Mr Korabie regarding the appointment of [Scarlet Sky] as the marketing company… The appointment of all service providers is done via a tender committee, which is a subcommittee of the board. This committee has both community representatives and Alexkor board representatives.”

Bagus did confirm to us that the tender committee had been given “guidelines”.

He noted:

Historically the relationship with the marketing companies and the [joint venture] was purely transactional. They sold the diamonds… and paid the company less the commission. Neither the [joint venture] nor the community derived any other benefit from this relationship. The board requested the tender committee explore the opportunity to ensure the training and upskilling of young community members in the art of diamond cutting… The company selected complied with all these objectives.”

Nevertheless, Korabie’s 100% score is consistent with an understanding, misguided or not, that Scarlet Sky had to be appointed.

And there is one source close to Bagus who tells a story that supports Korabie’s version.

The source, who asked not to be identified, told amaBhungane:

Look, [Gupta business partner Salim Essa] went to Bagus and said [Scarlet Sky] must get the tender… They said, this comes from the very top… He said, no ways. So they said, then you must go.”

Bagus did go.

He told us:

For the record, I resigned from my position, chairman of the Alexkor board… I was requested to stay on and extend my tenure but declined.”

Kellerman, the legal adviser, told us:

I recall a [joint venture] tender committee meeting, which took place late in 2014. I was present at the meeting as an Alexkor management observer. I recall completing a score card, but this score card was not included in the scoring of the candidates… I did not score the candidates and I was not involved in the discussion or recommendation of any of the candidates… I did not have a private meeting with Dr Paul, Mr Korabie and Mr Bagus.”

Paul did not respond independently except to identify himself with Alexkor’s response, which disclosed the audit and risk committee report compiled after a “detailed investigation” and which found no irregularities in the tender award.

Carstens, the joint venture chief executive, noted:

Ironically, Mr Korabie, who is now raising objections to [Scarlet Sky’s] appointment, allocated the highest score (100%) to [Scarlet Sky].”

Korabie’s 2015 complaint further alleged that the award to Scarlet Sky was supposed to have been subject to the completion of due diligence.

He wrote:

The CEO [Carstens] never reported to the tender committee on the due diligence he was directed to conduct… It is clear to us that [Scarlet Sky] was created specifically for this tender. We do not know who the shareholders are of [Scarlet Sky] and their relationship, if any, with any of the… board members.”

Korabie’s complaint was turned away by the public protector’s office, ostensibly due to a combination of doubts about its jurisdiction and a commitment from Alexkor that the matter would be investigated.

Korabie fell from grace and the matter sank from view – until the #GuptaLeaks.

The fingerprints of Gupta Inc.

In November 2014, when Scarlet Sky responded to the diamond marketing tender, their expression of interest noted that all communication should flow through their “corporate advisers”, addressed to one Marc Chipkin of Integrated Capital Management.

Alexkor was not to know it then, but Integrated Capital was later intimately involved with Essa, the Gupta lieutenant, and the establishment of Trillian, the consulting firm used to capture consulting work from Transnet and Eskom from the end of 2015.

When joint venture chief executive Carstens demanded that Scarlet Sky provide a R50-million funding guarantee, it was Integrated Capital chairman Selwyn Nathan who submitted a letter of comfort, committing Integrated Capital to secure the guarantee, should Scarlet Sky win the bid.

Daniel Nathan, the 40% shareholder of Scarlet Sky, is the son of Selwyn Nathan.

Daniel told us:

I have no personal involvement in Integrated Capital, only utilising them for admin assistance at the time of the tender submission. This included a letter signed by my father, which agreed to source the necessary funding, if required. The funds were never required.”

I am not connected to either Integrated Capital Management or Salim Essa. I have never met with him and he played no role in setting up Scarlet Sky. Mr Moodley’s 60% shareholding was disclosed in the 2014 tender.”

Moodley was supposedly the majority shareholder via a company called Kimomode, though Daniel Nathan told amaBhungane that Moodley never contributed a cent to the business, nor derived any benefit whatsoever, suggesting he was merely a place-holder.

Daniel told us:

Mr Moodley was not a front. He genuinely intended to be involved in Scarlet Sky, but left when he realised that he could not contribute in a meaningful way to it… Scarlet Sky has never had any relationship to the Guptas.”

Moodley, though, is deeply enmeshed in the Gupta scandal.

Moodley refused to engage with us about his role at Scarlet Sky, but evidence flowing from recent litigation, the #GuptaLeaks and former public protector Madonsela’s State of Capture report all portray him as a cat’s-paw of Gupta lieutenant Essa and the Gupta family.

Moodley was a business associate and sometime golfing partner of Essa.

Neither Essa nor the Guptas responded to requests for comment.

By March 2015 – the same month Scarlet Sky was awarded the Alexkor contract – Moodley was entangled in what appears to be a R122-million simulated transaction with the Guptas’ Sahara Computers.

Moodley previously told the Sunday Times that the payments would have been for “the procurement of IT equipment and services”, but the #GuptaLeaks suggest otherwise.

Leaked emails show that on 27 June 2015, Sahara chief executive and the Gupta factotum Ashu Chawla sent an email to Moodley with a single line, stating: “Hi Kuben here is the invoice for your reference”.

The attached invoice to Moodley’s company Albatime simply stated it was for “Admin IT services… contract 2012-2014” – but the figures were simply too large and got cut off, so the R122-million was reflected as R22-million.

Moodley wrote back, saying, “Please call me, your invoice does not make sense to me.”

Eventually, on 3 July, the invoice was sorted out to reflect R122-million, plus R17-million VAT, “payable quarterly” for a supposed contract due to run from March 2015 to February 2017.

Moodley paid over R52,155 000 the same day, Sahara’s bank records show.

Only on 8 July did Sahara director Ronica Ragavan think to create an underlying contract.

On that day she emailed a document titled “Service Level Agreement – Albatime – March 2015” for everyone to sign.

That this contract was merely a fig leaf to disguise a commission payment is suggested by another leaked document, a spreadsheet tracking gross profit in the Sahara business, which booked the R122-million as income at zero cost to the business.

There is nothing to show this transaction relates to the award of the Alexkor marketing contract to Scarlet Sky, but the timing is intriguing.

Moodley resigned as a director of Scarlet Sky when he was appointed as a special adviser to Mineral Resources Minister Mosebenzi Zwane in October 2015, but he retained his shareholding until April 2017 – long enough for Scarlet Sky to be reappointed for five years in a new Alexkor-RMC tender in 2016.

Kellerman also joined Zwane’s office.

When Bagus departed and the new board was appointed by minister Brown in August 2015, Kellerman resigned from Alexkor, emerging this year as the secretary to Zwane’s so-called inter-ministerial committee inquiry into banks’ withdrawal of services to the Gupta group.

Kellerman told us:

After my resignation [from Alexkor], I met with the new chairperson who asked me to reconsider. Whilst I was giving thought to this request, late in September 2015, I received a call from Kuben Moodley, who I had met through the [Scarlet Sky] negotiations, who asked if I would be interested in interviewing for a position as an adviser to the newly appointed minister of mineral resources [Zwane]… However, I only officially joined the minister’s team in April 2016.

As the minister’s adviser, with company secretarial and corporate governance experience, I assisted as the secretary to the [inter-ministerial committee]. There is nothing sinister about this.”

Carstens, on behalf of the Alexkor-RMC joint venture, told us:

The [joint venture] is not aware of any connection between Kuben Moodley and/or [Scarlet Sky] on the one hand and the Gupta family on the other.”

Continuity and consolidation

A former close associate of the Guptas told us the family tried to capture Alexkor in order to take their money out in diamonds: “They wanted the sole marketing rights for [Alexkor] diamonds… They wanted the mobility of diamonds.”

(A suggestive hint of this came when amaBhungane reported that shortly after the Gupta family infamously “fled” South Africa in 2016, a second Gupta plane tried to leave with a box believed to have been full of diamonds. The Gupta family later claimed the items were “nuts”.)

The former associate said Bagus fell from favour and was pushed out.

Brown appointed Hantsi Matseke as the new Alexkor chair. Matseke also became chair of the Alexkor-RMC joint venture.

Like other boards appointed under Brown, the August 2015 Alexkor board added to an emerging impression of an approach of cynical accommodation.

Matseke is married to K.O.P. (Peter) Matseke, an Essa associate who was going to be part of Moxisign, an Essa-linked company that was going to sell drugs to the department of health. The company never got off the ground.

She is also the chair of the Free State Development Corporation. She is regarded as close to Ace Magashule, and through him to a Free State axis that includes mining minister Zwane and public enterprises director-general Richard Seleke.

Magashule, Zwane and Seleke have all been linked to the Guptas, who also reportedly put forward Matseke’s name when they sought (unsuccessfully) to restructure the boards falling under then transport minister Ben Martins.

Matseke told us:

To my knowledge Dr Matseke does not have any existing business relationship with Mr Essa; I am a board member of the Free State Development Corporation and thus have various associations with various individuals in the Free State and South Africa in general; I am not aware of any board nominations made by the Guptas.”

Through her spokesperson, Brown defended her board appointments and told us:

The present climate of allegations and contentiousness surrounding the boards has a negative effect on business and public confidence, and the economy.”

A former Alexkor director, who asked not to be named, said the new board seemed to have a mandate to remove the Alexkor chief executive, Percy Khoza:

They made it clear they were not prepared to work with Percy although he was an experienced mining engineer.”

Alexkor says Khoza took a voluntary retrenchment package and the parting was amicable.

Khoza has declined to comment, though it is known that he raised concerns about the appointment of Scarlet Sky and had delivered a detailed memorandum to minister Brown’s adviser, Annelize van Wyk.

But, significantly, he was also seen as an impediment to the plans of other powerful interests.

It is an open secret that a consortium led by Wiese wanted to consolidate the west coast mining industry. Wiese said so himself when he bought into Trans Hex in 2016.

Marine miner Gavin Craythorne, who is something of a spokesman for the Alexkor contractors, believes Khoza was an obstacle to Wiese’s plans.

In a recent memorandum to Parliament setting out his concerns, Craythorne wrote:

The audacious ambitions of this [Wiese] consortium were set out in a presentation dated 8 August 2014, prepared by Questco, a corporate advisory firm based in Johannesburg, wherein a bold plan was unveiled to monopolise the entire Namaqualand Diamond Industry under the control of white monopoly capital…”

Craythorne said an incident in February 2016 seemed to confirm his suspicions. At a meeting with Khoza and others, Khoza informed them that he would be leaving Alexkor soon.

Craythorne wrote:

He [Khoza] then offered that the Richtersveld community has some very powerful partners and as the community has a first option to purchase the whole of Alexkor, these powerful partners are trying to drive Alexkor’s value down in order that they can purchase Alexkor for a bargain through the community.

He further said that he has not allowed this and has opposed the efforts of these very powerful partners and that he was leaving ‘before things get very difficult or nasty’.”

Khoza confirmed the meeting but said he could not recall the exact conversation.

Wiese did not respond to questions.

Although the Steinhoff collapse might have put paid to Wiese’s Trans Hex ambitions, it’s notable that as recently as October, Trans Hex increased its stake in West Coast Resources, a diamond mining company with operations adjacent to Alexkor.

It seems even the Guptas perceived the threat.

In June this year, the then Gupta-owned ANN7 television channel (the Guptas financed a buy-out by spin-doctor Mzwanele Manyi in August) broadcast a surprisingly solid piece of reportage, headlined: “Namaqualand: A coastline ‘raped’”.

The accompanying print story noted: “A mining company operating along the ecologically sensitive west coast started building massive sea walls before the environmental impact assessment had been approved, an ANN7 investigation has found.

Trans Hex… along with its mining partner West Coast Resources, started the process of building the walls in the Hondeklipbaai area in 2016… The area, which has the highest unemployment figures for South Africa, has pitifully few job opportunities, mainly in diamond mining, fishing and a small tourism business. The sea walls, or cofferdams as they are technically known, will destroy opportunities in all of these sectors, community activists said…”

AmaBhungane has also reported on the environmental battle over cofferdam mining, a technique which Alexkor pursues with equal vigour.

The bite of the Grootslang

Meanwhile the triple coils of Alexkor, Trans Hex and Scarlet Sky have allegedly been squeezing the life out of small Richtersveld mining business, to the extent that, on 19 November 2017, Craythorne sent an impassioned email to Carstens and the Alexkor-RMC joint venture.

In the email, Craythorne states:

Since November last year, I have been trying in vain to engage meaningfully with Alexkor… to raise awareness regarding legitimate concerns that many [in] the local marine miner community…

The members of the local community who provide the courage, skill, experience, investment, risk tolerance, determination and exceptional hard work that constitutes Alexkor’s most valuable operating segment are now in a de facto state of servitude as the triple challenges of climate change, resource depletion and a lack of equitable access destroy the business case for the industry.

Wedged between an apparent State Capture project depriving us of fair diamond prices on one side, and an apparent white monopoly capital project depriving us of equitable access on the other, we feel we are being exploited in the most cynical way under your stewardship.

Having lived in this special town for almost 20 years and [being] quite intimate with the spiritual, social, economic and infrastructural character, I can say that this community is at an all-time low at this point.

This state of affairs has led me into a desktop study into the State Capture phenomenon and what I have uncovered has given me much reason to be deeply troubled. It is now clear to me that Scarlet Sky and Daniel Nathan are the Alexkor equivalent of Trillian Capital Partners and Mr Eric Wood…

As before, in the case of Diamdel, I have conducted a thorough analysis of the price data and the results are clearly indicative of a criminal racket set up to deprive Alexkor and the small-scale marine miners of a fair diamond price.

In the circumstances, I strongly advise you to suspend the agreement with Scarlet Sky with immediate effect pending a thorough forensic investigation.”

Attached to this email was an analysis by Craythorne which shows that, since transferring the sales to Scarlet Sky, the value returned to Alexkor and the miners has deteriorated.

He also attached an anonymous poll of 39 of the local marine mining contractors who reported overwhelmingly their dissatisfaction with the transparency, prices and fairness of Alexkor’s diamond marketing and sales process.

Craythorne argued that, relative to global diamond prices, “Alexkor’s prices… now in 2017… are back where they were 2006 when Diamdel were ripping us off.”

Scarlet Sky’s Nathan told us:

I deny that the appointment of Scarlet Sky has been negative for Alexkor and the local mining community. The quotes attributed to Mr Craythorne are incorrect and do not apply to the diamond industry in general. His comments are misplaced and limited to only one particular size of diamonds.”

In response to questions about prices, Cartens noted:

Diamond prices are influenced by numerous factors including but not limited to supply and demand, quality and size of production. The [joint venture] production is sold on a tender basis eight times a year [via] a competitive bidding system which is attended by an average of 60 to 80 potential buyers at each sale cycle… The diamonds are at all times sold to the highest bidder. We are price takers and the tender process cannot be manipulated by anyone.”

He said onshore production had increased substantially since 2013. These diamonds were smaller and of a lesser quality than those produced from the sea, influencing the price of diamonds in all categories.

In response to Craythorne himself, his company received the following notification 10 days later:

We regret to inform you that the board of the Alexkor/ RMC joint venture has decided that your contract with the joint venture will not be renewed.”

At least four other companies seen as “trouble-makers” have received similar notifications.

The Grootslang may be an imaginary beast, but for Craythorne – and the broader Richtersveld community – the bite is real. DM

NB: In the initial draft of this story we said: “By November 2014, Chipkin was already a co-director with Essa in another company, Antares Capital.” Chipkin has pointed out that he resigned as a director on 26 March 2015, some three months before Essa became a director. We apologise for the error.

Photo: Alexander Bay, Northern Cape, South Africa. March 2, 2012. (Greg Marinovich)

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One of the largest carp ever caught on record was done so using the ashes of the fisherman's deceased friend.