Diamond War: Castle steps in to avoid sales crisis?

IN OCTOBER LAST YEAR, a 'diamond war' emerged in the sale of the nation's precious diamonds by the Ghana Consolidated Diamond (GCD) Ltd, the only diamond mine in Ghana.

The 'war' which had the potential to tear GCD Ltd into tartars prompted Castle to suspend the sale of the diamonds to enable crack investigators to go into what appeared to be insider trading involving a tender deal which was conducted by GCD Ltd in which two out of potential five licensed buying companies participated.

No casualties have been recorded yet, but it appears one company from Israel called DWS Diamonds Ltd is enjoying un-paralleled advantage over its competitors with the help of their "friends" (cronies).

Investigations have revealed that the circumstances under which DWS, a company with long standing relationship with Precious Mineral Marketing Company (PMMC), which did not even participate in the tender held in October 2002, but was subsequently picked up as a winner for the purchase of diamonds for the next four months, was causing a lot of disquiet and disbelief in the diamond market.

It was found out that for this tender in October 2002; DWS Diamonds Ltd, refused to take part by putting in writing, even though it was invited to do so.

Beatrice Diamond Company emerged the winner in a transparent tender, which had been successful practice in the past that involved two companies namely Beatrice Diamonds and Imperial Diamonds.

For reasons difficult to understand, the Board of GCD, after conducting such a transparent tender bent backwards and awarded the contract for the sale of diamonds to DWS Ltd., even though the company did not take part in the tender, by claiming that 'market is not good'.

Our investigations have discovered that they even demanded the return of US$500,000 and threatened to take GCD Ltd to court for their money, which was given to GCD in May 2002 when they won the bid, before any new contract is awarded.

This therefore set the stage for what is now known as the diamond 'war' at both GCD Ltd at Akwatia in the Eastern Region, and the Diamond House in the heart of the nation's diamond market.

As tempers flared up over the choice of DWS, a complaint eventually landed at the Castle, the seat of government.

This led to the subsequent suspension of the sale of the nations' diamonds for investigations into how DWS, which did not take part in the tender, should emerge as the winner of the October sale.

To many analysts in the diamond trade, issues like this raise a lot of suspicions over the credibility of the tender process by GCD board. Sources indicated that this kind of practice by the management and other activities of the board of the GCD are creating discontent at the mines and morale is so low that it is actually affecting production.

Mr. G.J. Amamoo, the chairman of GCD board however debunked such suspicion, saying the board acted in the best interest of the GCD and the nation as a whole.

"After days of intensive investigation by the Castle, we were found blameless for striking a sale deal with DWS Ltd", Amamoo told Chronicle, supporting it with letters from the Castle which gave the board the go-ahead to sell the minerals to DWS.

"I have done nothing wrong but those who did not understand what was happening thought that we had entered into a secret deal with DWS", he emphasized.

According to the chairman when they opened the tender in October, 2002, only two companies, namely Beatrice Diamond and Imperial Diamond from Belgium, participated.

At the end of the bidding process, Beatrice Diamond emerged as the winner. The managing director of the company refused to sign his part of the contract, claiming there were some unfavorable clauses in it.

He therefore asked for time to seek clarification from other directors of the company in Belgium over an amount of $500,000 requested as an advance payment for the running of the GCD.

The GCD board chairman said they needed the said amount to repay DWS, the winner of the May contract, because they had taken the money for the running of GCD and therefore were expecting the winner of the October bid to pay the amount in order for it to be used to defray the outstanding debt.

Amamoo, a former editor of the Ghanaian Times, said the MD for Beatrice, Mr. Slap, at one stage agreed to give them the $500,000 on condition that GCD pays $50,000 monthly - starting from November but they pleaded with him to wave it and accept the whole money after the next tender in February 2003, but this did not go down well with the Belgium company.

"After Beatrice had refused to sign the contract and continued to drag its feet, DWS who gave us $500,000 when it won the May tender came in with a better offer above what emerged at the tender and since we need funds to pay salaries and run the place we decided to take the higher offer since there was no bond that could lead to a breach of contract between us", he said.

Insiders, say DWS Ltd took the contract by the same questionable way in May 2002, at a price of $28.60 per carat of diamond. For the Board to suddenly turn around and offer the diamonds to them at $27.35 per carat within a one month of expiration of the contract for the next four months meant that GCD was losing well over $100,000 about ( over ?850million)

The GCD is alleged to be spending ?10million as monthly sitting allowances on the board.

Equally disturbing and with the potential to spark off internecine wars in the diamond trade is the alleged "official" approval that DWS Ltd. enjoys amongst the regulatory bodies.

For example, this same company has been cited as the one that together with the PMMC and a private company, Color Chart Co, executed the 40th Anniversary Gold Coin Project for the Bank of Ghana for which some huge sums of money were lost and diverted into individual pockets.