The Police last week impounded a multi-million-dollar consignment of diamonds belonging to Namib Desert Diamonds following back-to-back interventions by authorities to the extent of major diamond exports being blocked.
The repeated scrutiny appears to be challenging the manner in which the parastatal conducts its operations, igniting fears that the state is being stripped of vital diamond revenues.
Last week’s police intervention marks the second time in less than five months that Namdia has had a run-in with authorities, risking having its diamonds impounded while en route to clients abroad.
Namdia spokesperson Beverley Coussement confirmed to The Issue that authorities have scrutinised the parastatal’s consignments destined for export on two separate occasions. She added, however, that the consignments were cleared for export on both occasions.
The Issue understands that about three months ago, another of Namdia’s diamond consignments was blocked from being exported. This time it was halted by the Namibia Revenue Agency (NamRA), triggering an audit by the tax authority. The consignment in question was worth approximately N$160 million.
At the core of the two incidents is the allegation that Namdia was unable to provide the relevant documentation proving that the parastatal was in compliance with the laws governing the valuation and selling of unpolished diamonds before they are exported out of the country, as well as provisions in the law dictating that only entities or individuals approved by the Ministry of Mines and Energy may handle, mine, sort, or trade in diamonds.
Police deputy inspector general for operations, Elias Mutota, confirmed the latest operation, saying that the police action was caused by a lack of paperwork regarding the valuations of the diamonds to be exported. Meanwhile, prosecutor general Martha Imalwa told The Issue that her office was consulted for advice on the matter by the police. “This matter has nothing related to corruption, it’s not even criminal; it’s purely an administrative error,” she said.
It appears Namdia was failing to prove to authorities that before selling and exporting its diamonds, the company made use of independent and government-approved diamond valuers as per the requirements set out in the Namibia Diamond Act.
The parastatal has not had an independent diamond valuator since 2021, when the government refused to renew the services of C-Sixty Investments (later called Nuska Technologies). The Issue understands that Namdia then started making use of its internal staff for valuations, a move deemed to be in contravention of the law, as in-house valuators are not considered independent.
Suspicions over the company deepened late last year when a senior employee, responsible for valuations and sales, abruptly left pending a disciplinary case. Andries ‘Special’ Eiseb resigned in November last year. Media reports indicated that he was facing disciplinary action for allegedly holding interests in diamond trading entities in direct competition with Namdia or trading with the parastatal.
This has led to calls for government intervention into the operations of Namdia. Government sources told The Issue that allegations have been made that the current situation at the parastatal has led to the undervaluation of diamonds, incorrect assessments of export levies and taxes, potential profit shifting, and a general weakening of the company and its ability to bargain with its stakeholders. There have also been further calls for the government to appoint independent valuators to value the diamonds just before they leave the country for export.
These allegations of the government being cheated out of potential tax revenue appear to have attracted the attention of the country’s tax authority, prompting a closer look.
The case for closer scrutiny was especially emphasised because of Namdia’s mandate, which is to market Namibia’s diamonds independently as part of a price discovery exercise that formed part of an agreement between the government and its partner, the global diamond giant De Beers. This agreement compelled the government-De Beers joint venture (Namdeb Holdings) to make 15% of its yearly production, estimated to be worth around N$2.6 billion, available to Namdia, which would then independently trade them on the international market.
“Namdia categorically rejects allegations of diamond undervaluation or any conduct intended to prejudice the interests of the company or the Republic of Namibia,” said Coussement, who added that the allegations levelled against Namdia are not supported by any evidence that the parastatal is aware of.
Those in the know said that part of the NamRA investigation was to look into whether the situation at Namdia really means a loss of revenue to the government. The Issue understands that one area of focus was to establish whether Namdia was underselling its diamonds. An allegation was also made that the company buys its diamonds at a discount of about 8% from the Namibia Diamond Trading Company (NDTC) and sells them onward at the same discounted rate.
The NamRA probe then led to the tax authority putting a freeze on diamond exports the company had in progress. Sources said the revenue agency felt the exportation was illegal.
It allegedly required a high-level meeting with officials from NamRA, Police, the ministry of mines, government lawyers, and Namdia for the consignment to be released. The Issue also understands that Namdia relied on a 2021 agreement between the ministry of mines, the revenue agency, and Namdia to get the diamonds released.
The decision to release the diamonds for export led to allegations that NamRA was turning a blind eye to wrongdoing at Namdia.
Coincidentally, this week saw a diagram circulating on social media accusing NamRA commissioner Sam Shivute of being “tough on order with me, while silent on diamonds exported like watermelons”.
According to NamRA spokesperson Steven Ndorokaze, the revenue agency is bound by confidentiality and is unable to respond to detailed questions about its case with Namdia.
