Diamonds and soiled dealings: Alexkor whistleblower testifies

Gavin Craythorne, a marine diamond diver working alongside the north-west coast of South Africa from Alexander Bay to Port Nolloth, testified on the Zondo Fee of Inquiry into state seize on February eight and 11.

Proof chief Carol Sibiya stated Craythorne had approached the fee with allegations of state seize and corruption inside Alexkor, the state-owned diamond miner.

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She thanked him for doing so, saying: “It takes a courageous particular person to try this and we thanks for that.”

Marine diamond miners

All marine diamond mining associated to Alexkor is carried out beneath contract with the Pooling and Sharing Joint Enterprise (PSJV), which is 49% owned by the Richtersveld Group and 51% by Alexkor. The PSJV was shaped beneath the Alexander Deed of Settlement after a profitable declare by the Richtersveld Group by way of the Restitution of Land Rights Act.

Alexkor owns the marine rights, and the Richtersveld Group owns the land rights.

Marine diamond divers extract diamond-bearing gravel from the shallow seabed. The world to be mined by a diver is registered, they will solely dive in very particular calm climate situations, and 50 tons of gravel would possibly solely produce a couple of grams of tough diamonds.

The gravel mined is handed over to the PSJV on the Alexander Bay Harbour.

Every miner’s gravel is stored separate because it goes by the assorted phases of sorting, after which the tough diamonds are saved within the PSJV’s protected custody for which the contractor is given a receipt.

A receipt is nonetheless meaningless at this stage because the tough diamonds haven’t been sorted by way of dimension, form, high quality, and color; in different phrases, there isn’t any indication of the worth of the diamonds.

Scarlett Sky Investments (SSI)

The appointment of SSI was lined by Moneyweb on Monday (January 11) in ‘Zondo Commission has Alexkor in the cross hairs‘.

Earlier than transporting the tough diamonds to SSI, an Alexkor worker ‘values’ the stones.

In response to Craythorne the worker “makes a really inaccurate evaluation of what the worth is” for “insurance coverage functions”.

The valuation relies on the carat weight (ignoring the form, high quality and color).

SSI shops the diamonds in a safe space known as the Knox Vault in Johannesburg the place SSI director Daniel Nathan has his premises.

In response to Craythorne the vault “is under the place [where businessman] Kuben Moodley has his security deposit field”.

SSI prepares the tough diamonds for viewing by the State Diamond Dealer, throughout which the latter selects its 10% consultant pattern.

SSI selects 5% for beneficiation (chopping and sprucing), and the remaining 85% goes on public sale at SSI’s premises.

Valuing diamonds a la SSI

Craythorne defined that the value of a tough diamond is ascertained by “value discovery”, the place there may be aggressive bidding as at an public sale: “…however the public sale must be an trustworthy public sale”.

He elaborated: “You probably have collusion then you aren’t going to have value discovery. So whether it is an public sale that’s designed to permit for sharing of crucial value data, then you definitely defeat the entire value discovery mechanism.”

Craythorne stated that at Alexkor “contractors have by no means been allowed to critically analyse the worth of their diamonds”.

He defined that within the case of SSI: “ … the corporate that’s conducting the public sale can also be the corporate that’s doing the valuations, so if there may be collusion happening throughout auctions and the costs achieved on public sale are extraordinarily low, there are not any security measures in place to stop the sale of the diamonds … ”

The reserve value is ready by SSI.

When Craythorne began querying the costs acquired for tough diamonds, his contract was cancelled and his entry to the mine was blocked for the interval November 7, 2017 to March 19, 2019.

Is Scarlett Sky an instrument of state seize?

Craythorne commenced his personal analysis and investigations, discovering that Kuben Moodley was a director of SSI: “He featured as a detailed lieutenant of the Gupta household.”

Additional, SSI had no monitor report till Nathan, who had 20 years’ expertise throughout the diamond business, was appointed as a director of the corporate in 2014.

Fee chair Deputy Chief Justice Raymond Zondo famous: “The truth that at some stage a person received concerned within the firm who had 20 years’ expertise doesn’t give the corporate 20 years’ expertise monitor report.”

In response to Craythorne the choice panel that appointed SSI as the only advertising and marketing agent of the Alexkor tough diamonds comprised Rafique Bagus (unbiased non-executive chair, appointed 2012), Duncan Korabie (an lawyer who represented the Richtersveld Group and the Alexander Deed of Settlement) and Dr Roger Paul (Alexkor non-executive director).

Korabie awarded SSI a 100% rating even though it had no monitor report and no licence to market and promote diamonds.

Craythorne testified in his affidavit that: “Having gained the tender, SSI went from being a dormant shelf firm to out of the blue showing on the native diamond buying and selling scene because the PSJV’s new advertising and marketing and gross sales service supplier, taking supply of its first tranche of multi-million rand tough diamonds on March 15, 2015.”

‘Properly-known people’ within the state seize undertaking

Craythorne: “While you have a look at the people which can be concerned with the end result of SSI being inserted in Alexkor’s diamond worth chain, they’re very well-known people within the public discourse round state seize … Malusi Gigaba, Mosebenzi Zwane, Rafique Bagus, Mervyn Carstens, Kuben Moodley, Percy Khoza, Zarina Kellerman, Hantsi Matseke, Daniel Nathan, Selwyn Nathan, Marc Chipkin and Salim Essa.”

Proof chief Carol Sibiya famous that “the tender was awarded in March 2015″ and that Gigaba “was not a minister [in] the Division of Public Enterprises at the moment”.

Craythorne replied: “The state seize undertaking [related to Alexkor] truly started with the appointment of Malusi Gigaba and him gaining affect over the strategic way forward for Alexkor … in my thoughts he was concerned … circuitously … however he was actually laying the groundwork for what was to come back later.…”

Learn: Alexkor, another broken SOE

Craythorne confirmed that Alexkor chair Hantsi Matseke was additionally chair of the PSJV from August 2015 to October 2018, and was on the identical time chair of the Free State Growth Company.

Craythorne referred to the “Melrose Arch centre of gravity” in relation to state seize, saying it “appeared like there was a constellation of satellite tv for pc entities revolving round Salim Essa’s workplace in Melrose Arch, even Scarlet Sky’s workplaces on the time that the tender was positioned was proper subsequent door to Salim Essa.…”

Craythorne has been subjected to plenty of ‘Slapp’ (strategic litigation in opposition to public participation) fits. These are authorized fits introduced in opposition to an activist to silence their public criticism.

Craythorne continues to make his voice heard.