Speaking of bears ...
Just continuing to post various media articles which may shed light on the situation. There are some interesting parallels between the current situation, and the situation in '95, as you can see from this article by David Gleason in the FM at that time. Makes interesting reading :-)
Interesting how posting SA media articles that are critical of De Beers causes certain De Beers proponents to get excited and indulge in their usual name-calling (which is essentially name-calling about the SA media, since the articles are just quoted & posted straight from the media).
The following article inevitably reveals parallels and differences between De Beers's role in '95 and '98. It is available online at:
fm.co.za
[The following is quoted from that Financial Mail article in '95]
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De Beers: The bear and the bladder
[by David Gleason, Financial Mail]
A reader has complained that last week's Leading Article on De Beers and the Russians was inconclusive.
"There was some fascinating stuff," he says, "but surely you should have pointed the way out of the problem."
Really? I am not sure about this. Who am I to offer gratuitous advice to so august an assemblage of intellects
as throng De Beers corridors? Indeed, who would listen? On the other hand, since I am not exactly backward
in coming forward, I think it is a proposal with merit. So, here goes.
The De Beers problem is unchanged from a century ago: how to control a market in a manner which keeps it
orderly? By this is meant a market in which prices rise steadily (but not violently) and production and supply
are maintained within strict bounds. Well, you persuade producers to submit to a higher authority. In this case
the headmaster is the Central Selling Organisation (CSO).
And it is worthwhile, since history repeats itself I am told, revisiting the scene of an early Ernest
Oppenheimer triumph. The story of how he took control of De Beers has been told often enough (though I often
wonder with what real degree of accuracy). But the process involved threat, bluff and what we now
charmingly call flexibility.
Oppenheimer held a large parcel of De Beers' equity. He had also acquired German-owned mining interests
in Namibia after World War 1. And he carried it to a logical conclusion by establishing a new syndicate to
oppose the Diamond Syndicate. The process is fascinating because Oppenheimer was both inside and outside
the sacred tent. Inevitably, the balance of power shifted. In 1929, he became chairman of De Beers.
My, how the parallels stand out. Here is Russia, threatening to upset the apple cart. It is a major producer and
produces some good quality diamonds, just the sort of stuff which carries most profit. What's more (worse), it
can increase this production. It has deposits around Archangel (Russia proper) and in Siberia (Sakha, an
independent state which obeys Muscovite diktat). De Beers, though still the pre-eminent world producer,
faces declining reserves.
Nor are the Russians the only problem. Canada looms. One day even the Angolans may get their act together.
The situation screams out for threat, bluff and flexibility. Do you want the Russians, cheating all over the
place, outside the tent, peeing in? Or inside with unpleasant consequences when the lights go out?
Much better, I think, inside the tent with a catheter securely in place, De Beers' hand firmly on the tubes. The
Russians are proud and sometimes vigorous and probably always mendacious. Well, what's new? The time
has come to make them respectable, partners in the CSO. Not De Beers, the CSO. Give them some shares, a
seat or two in the committee chamber.
In fact, perhaps this is a good time to divorce De Beers from diamond marketing and selling altogether and
turn it into a primary mining company. So perhaps it is opportune to think about inviting the Batswana and
Namibians and Australians to the CSO party too.
I can guarantee this idea will be treated with solemn disrespect.
A welter of charges
I learn that stockbroker De Witt, Morgan has been charged by the JSE with a variety of misdemeanours, from
the sound of it some of them fairly serious. Senior partner Willem Morgan, previously a member of the JSE's
main committee, won't comment.
However, I understand that the charges, laid against a Morgan employee in his personal capacity as well as
against the firm, relate to gilts transactions involving FirstCorp and FirstCorp dealers.
FirstCorp CE David Lawrence politely refuses to discuss the matter, though he doesn't deny his bank is
involved.
When I asked JSE executive president Roy Andersen for confirmation, his initial reaction was that he knew
nothing about it. He has since confirmed my information but won't add to it.
Of course, I am intrigued. What is involved? Has FirstCorp lost money (I presume it must have)? How much?
And were FirstCorp dealers involved, too, perhaps in their private capacities?
A tribunal has been arranged, though I don't yet know who will preside or the date for the hearing. Stay tuned
to this channel for more information.
Hitting below the belt
While on this subject, Andersen has objected strongly to my column last week. I am wrong, he points out, to
say the JSE has entrenched secrecy in its tribunals.
"On the contrary, we've gone out of our way to make things transparent. If the appointed judge throws a
hearing open to the public, that's entirely within his prerogative. Of course, he can also choose to hold the
hearing in camera."
This means that I may actually get to hear the charges against the firm Ed Hern, Rudolph and that I will also be
able to listen to the pleadings.
If so, it is a welcome change. Of course, I have written, asking the judge, in this case J J Trengove, to permit
me to attend the hearing.
David Gleason
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[End of quote from FM]
Nempela |
