On Wednesday, officials from the Department of Public Enterprises (DPE) and the former administrator at the diamond mining company, Lloyd McPatie, informed Parliament’s Portfolio Committee on Public Enterprises in a virtual meeting that the CEO of the Pooling and Sharing Joint Venture (PSJV) between state-owned entity, Alexkor SOC and the Richtersveld Mining Company, Mervyn Carstens, had been suspended in February following an investigation into allegations of corruption and mismanagement at the Alexander Bay mine by auditing firm, Gobodo Forensic and Investigative Accounting. 

McPatie was appointed as the administrator of the mining entity for six months after DPE Minister, Pravin Gordhan, axed Alexkor’s board members in September 2019 due to doubts in their ability to manage the mining company’s affairs.  

McPatie did not go into details regarding the exact charges laid against Carstens during the meeting, only informing the committee that Carstens had dragged him and Alexkor to the Council for Conciliation Mediation and Arbitration (CCMA) on the back of his suspension. McPatie says the CCMA hearing took place after his tenure as administrator had come to an end in March and he was therefore not able to inform the committee what the outcome of the CCMA matter was.

The Gobodo report also found the sales and marketing contract awarded to Scarlett Sky investments (SSI) in 2015 to be irregular. The contract came to national attention in the #Guptaleaks series by the Mail and Guardian’s Amabhungane and the Daily Maverick’s Scorpio teams in 2017.

The investigative teams linked SSI to the Gupta family as a part of their series into state capture. Despite the contract being declared as irregular, McPatie informed the portfolio committee that cancelling it outright would devastate the already poverty-stricken Richtersveld community. The dire financial situation at the PSJV is such that they cannot afford to go a month without selling any diamonds. At this stage SSI is selling the diamonds on a monthly basis, cancelling the contract would mean that for a certain period, the PSJV would be unable to sell diamonds resulting in salaries not being paid. In addition to this, Alexkor bears the full cost of water and electricity to Alexander Bay. McPatie says it wouldn’t be ethical to cancel the contract outright in light of those dire circumstances.

There is, however, a plan B: Alexkor must apply for its own diamond trading license. According to Alexkor SOC CEO, Lemogang Pitsoe, this has already been done and is expected to be finalised soon.

The financial constraints at PSJV and Alexkor at large have, however, already had an impact on the local community. OFM News recently reported on delays in paying out retrenchment packages nearly a year after the PSJV retrenched under 200 of its employees from the area. 

DPE informed OFM News in March that R5,9 million had been paid out towards the cost of the retrenchments. A further R 3,8 million was still outstanding at that stage but was expected to be settled “over the next three months” said DPE’s communication office at the time.

OFM News