Seven years ago, this month Louis Goodwill Nchindo one of the most powerful figures in Botswana’s history died in circumstances that remain mysterious to this day. His apparent death and the circumstances surrounding it, as reported in the media in Botswana in 2010 constituted the worst political scandal in the history of the country.
Yet despite its importance in the history of Botswana and the diamond industry it has been noted but not researched by any academic. All of the commentary and analysis contained here, like others stems from the newspaper accounts of the time. Despite the undisputed elements of what would normally be perceived of as corruption at the highest level and the role of De Beers in the removal of an unhelpful leader, there was no subsequent investigation in parliament nor did the institutions responsible for combating corruption appear to have taken any measures to investigate the circumstances surrounding Nchindo’s death. The continuing relevance of the affair stems from several factors that are essential to the diamond industry and Botswana- secrecy and an intimate relationship between De Beers, government and Botswana’s political establishment. The Nchindo affair is the only case in Botswana’s history where De Beers is alleged to have been financially involved in the departure of a head of state.
The death of Louis Nchindo is also the defining political and economic event that shaped the popular perception that to involve oneself in diamonds or the study of the diamond industry would result in one being ‘eaten by lions’. Diamonds remain the single largest export of Botswana and yet despite their obvious importance to the national economy they are incredibly under-researched by Batswana academics. This stems in part from the secrecy and absence of reliable public data in the global diamond trade but also the sense of fear amongst scholars. Diamonds were always discussed in hushed tones, in closed offices.
As a result of the popular fear of diamonds and the industry and the cultural unwillingness of Batswana to either investigate let alone punish those who might have attained high office- means that the only source of information regarding this affair is the very extensive newspaper coverage of the events as they unfolded. It is often said that journalism is the first cut of history but in this case there will almost certainly be no subsequent cut. For those who were in Botswana in 2009/10 the affair was simply a breath-taking event for many reasons but certainly mostly because it served as such a dramatic counter-point to the image of Botswana as being the least corrupt country in Africa.
Even though the only research sources are newspapers the known facts of the case require discussion because they have come, rightly or otherwise, to be seen in the popular imagination in Botswana as defining the relationship between the state and De Beers.
Louis Goodwill Nchindo was of Zambian origin but was born in Tlokweng in 1941 and studied both politics and economics at Oxford. He then returned to Botswana following stints in Caracas Venezuela and other parts of Africa with Proctor and Gamble. At Oxford Nchindo was already in close association with many of Botswana’s independence leaders. His career went through banking and finance and he rose to head Barclays in Botswana as well as to be Director of the Botswana Stock Exchange. He went on to become the Resident Director of Anglo-American and was instrumental in the establishment of Debswana in 1991 as a 50/50 joint venture between De Beers and the Botswana government. Nchindo joined the ruling Botswana Democratic Party and rose to a position commensurate to his commercial position, becoming a presidential adviser. He was widely considered to be the ‘Kingmaker’ in Botswana politics. This was in large measure a result of the role he was to play in the departure of President Masire and coming to power of President Mogae and the then Vice President Seretse Khama Ian Khama.
In September 2004 President Mogae removed Nchindo from the position of CEO of Debswana. Following his retirement, Nchindo was awarded Botswana’s highest honour, the Presidential Order of Honour Award, by President Festus Mogae during the country’s Independence Day celebrations, although he reportedly did not attend to ceremony. At this point Nchindo assumed a private function as a property developer. The corruption scandal which ensued in the post-2008 period stems from Nchindo’s private land dealings as well as his time at De Beers.
The Case Against Nchindo
Nchindo, both in his private position as property developer as well as earlier Managing Director of Debswana, was reported to have attempted to acquire relatively large tracts of land throughout Botswana for the purposes of tourism development. Some of these tracts of land were in the capital Gaborone. It was on the basis of his alleged corruption of public officials in the acquiring of that land in Gaborone that Chief Magistrate Lot Moroka heard some 32 charges, including corrupting public officials, against Nchindo, his son and two others for their corrupt and improper acquisition of that land. These charges stemmed not only from Nchindo’s time in private business but also from his activities with De Beers and Debswana. At the time of his death he was slated to return to court by April 2010.
Masire and the Corruption and Impropriety Allegations
The essence of the corruption and impropriety allegations made by Nchindo regarding President Masire was that his company, GM5, which was principally involved in farming, had lost considerable amounts of money and these losses, if made public would be an embarrassment to the ruling Botswana Democratic Party (BDP).
The financial assistance provided to Masire by De Beers was not a one-off event. He and his company had been continually bailed out by De Beers in his time in office. Prior to the 1984 election De Beers facilitated a loan for Masire of P186,000 and it had also arranged a professional farm manager to assist Masire and GM5. Had this been public at the time it had the potential to undermine the BDP in the 1984 elections. Nevertheless, the BDP won and Masire remained President. Masire’s financial woes continued until 1987 when De Beers had secretly loaned GM Five P805,910 via a shelf company, Clairemont Corporation, located in Panama. The loans provided by De Beers did not halt the financial problems faced by Masire and by the 1990’s after many years in office, De Beers began to see President Masire as an electoral liability. The company reportedly commissioned a report from University of Natal academic Professor Lawrence Schlemmer, who suggested a way to assist the BDP win the 1999 election when it was facing unprecedented opposition. Facilitating the departure of Masire from the presidency, after he had been in power for 18 years was at the heart of the strategy. According to the public reports of Schlemmer’s strategy, Masire was to be replaced first by President Festus Mogae and then Lt General Ian Khama, the current president and son of the founder of Botswana, Sir Seretse Khama, who would also leave the army and assume the role of Vice President.
While this certainly would have assisted the BDP and possibly De Beers by the mid-1990’s, Masire was in such debt that his departure from the presidency would have almost certainly have meant personal bankruptcy. It is alleged that President Masire received a transfer of P3.7 million in 1998 (approximately USD 1.3 million at the exchange rate in 1998) in the form of a preference share injection by Clairemont into GM5. Unsurprisingly, Clairemont which was allegedly listed as a Panamanian company was not part of the 94 De Beers ‘legacy companies’ that were announced in 2016. The name Clairemont does not appear on the current registry of De Beers firms and in all likelihood, it was either renamed or delisted after the affair.
While President Masire had subsequently not denied receiving the financial assistance from De Beers he denied that it was a quid pro quo for him leaving office and he also stated that the funds were received after he had left office. His press release at the time suggested that accepting the money from De Beers, had been ‘an error of judgement’.
Enter President Festus Mogae
The scandal pertaining to Masire and his debts and the role played by De Beers took a sharply different turn when former President Festus Mogae was publicly interviewed on 17th January 2010 when it was revealed by the Sunday Standard that De Beers had sought to get rid of him from office in 1998 because he had become an electoral liability and it was felt that he would lose the up-coming 1999 election if he were not replaced. However, in light of his considerable debts it was felt that without some financial assistance Masire was unlikely to leave office out of his own volition.
The public policy issue surrounding this case became clear when former President Festus Mogae was interviewed in January 2010 and publicly admitted that Nchindo had approached him and requested that:
“I should stop the prosecution (for corruption) and if I fail, he would reveal that President Ketumile Masire was bailed out, that BDP had been sponsored or funded by Debswana during elections…Nchindo even threatened to reveal my personal private life that I have a girlfriend whom I used to meet at his lodge and so on and so forth… So, I said it’s OK you can go ahead. I cannot commit a criminal offence just to have those things hidden including issues of personal private life…”
“ The second time around Kwelagobe (an MP and senior BDP official) came accompanied by BDP party treasurer, Satar Dada.” Mogae says the mission was to persuade him to stop the prosecution against Nchindo as he threatened to spill the beans on the activities of De Beers and BDP.
“Even if I were to do that, he would then keep on coming with more demands and ultimately he would reveal whatever secrets he knows. I told them (Kwelagobe and Dada) to tell him (Nchindo) he should go ahead, that I cannot destruct (sic) a government structure, commit criminal offences and violate the constitution in order to protect my embarrassment, so he is doing as he so pleases.”
To his credit, President Mogae resisted the demands of Nchindo to end until the prosecution against him and his family members. In a subsequent press release Nchindo denied the accuracy of President Mogae’s recounting of events. De Beers in a response to a questionnaire put to it by Sunday Standard was quoted as saying:
“… the purpose of the loan was to help the then head of state by relieving him of the burden of debt and providing him with resources for the farm to be independently managed and so enable him to attend to duties of his office and matters of national interest. Louis Nchindo put the idea to Sir Ketumile and also recommended the assistance to the company. This was done in his capacity as an employee of the company at the time. In the present day and age, the De Beers family of companies operates in a completely different environment with clear policy guidelines governing donations and for disclosure.”
In response to queries on how and why De Beers used Clairemont Corporation based in Panama as a conduit for bail out money for GM5 a De Beers spokesman stated that:
“… it is true that De Beers was once again approached by Louis Nchindo to grant financial assistance to the former head of state shortly after his retirement. (emphasis added). Not only did this specific transaction take place after Sir Ketumile left office it was not at all linked to any negotiations between the company and the Government of Botswana for current or past commercial arrangements. As such, De Beers did not benefit from the transaction in any way.”
The Death of Louis Nchindo
Barely a week after President Mogae made the startling allegations of official corruption and blackmail by Nchindo and two days after the public retraction, Nchindo disappeared on or around 10th February. On or around February 11th parts of what were reported to be Nchindo’s remains were found next to his car in Pandamatenga in Northern Botswana. It was reported that most of Nchindo’s body had been devoured by wild animals. A cartridge from a gun was reportedly found near the body. The press in Botswana reported that the official police verdict of his death was suicide. There was no official enquiry as the family accepted the verdict of the police enquiry that the death was suicide and the remains were quickly cremated and buried.
The death of Nchindo, a man of very substantial wealth and enormous political power and influence has entered into the domain of legend and myth in Botswana. Whether Nchindo’s death was actually suicide or his behaviour had finally caused elements of the political elite to have him removed, as was held at the time, or more fancifully, that Nchindo is alive and well and living elsewhere as is so commonly believed in Botswana, it will likely never be known. From a public policy standpoint, all that mattered were the unchallenged facts of the case. De Beers had significant amounts of secret funding to allow it to maintain a considerable slush fund and it was ready to use those funds through companies based in secret tax havens like Panama. De Beers had subsidiaries operating in many secret tax havens. Whether the existence of these tax haven companies and the transfers was to avoid tax or rather to manipulate the political system to assure the continuation of governments that De Beers considered favourable to its interests cannot be known. Further, whether in fact it used transfers through these jurisdictions as De Beers has argued, as merely an act of generosity to assist a financially troubled head of state, is left for others to decide.
The most disturbing element of the Nchindo case was the haste with which the matter was laid to rest. In the tradition of Botswana there would be no parliamentary enquiry into the relationship between De Beers and the political elite. The institutions of governance in Botswana rallied behind the political elite and the hard questions that should have been asked in any democracy after such an affair were never asked. If one accepts the explanation of Nchindo’s death and payments made to President Masire then the view so commonly held by the international community that there is no serious corruption in Botswana and that the relationship between De Beers and Botswana is entirely and undisputedly beneficial to Botswana- is false.