The Ministry of Mines and Energy has blocked a proposal by the state-owned Namib Desert Diamonds (Namdia) chief executive officer Kennedy Hamutenya to appoint his sales manager to replace C-Sixty Investment as a diamond valuator.
C-Sixty Investments - which was previously owned by businessman John Walenga and Tironenn Kauluma, a nephew of former minister Helmut Angula - valuated Namdia's diamonds but their contract ends in September this year.
Namdia was born out of an agreement between the government and global diamond giant De Beers that was approved by former mines minister Obeth Kandjoze and then attorney general Sacky Shanghala.
This agreement compelled Namdeb to hand over 15% of its production every year - estimated to be worth around N$2,6 billion - to Namdia.
Then in 2016, Kandjoze's ministry awarded a contract to valuate Namdia diamonds to C-Sixty Investment.
This enriched Walenga and Kauluma who largely benefited from the C-Sixty Investment contract with Namdia - a deal estimated at N$3 million a month or up to N$200 million since 2016.
Walenga and Kauluma sold C-Sixty Investment to Isreali businessman Doron Cohen last year.
As the C-Sixty contract is set to end in September this year, there is a tussle over who should take over that contract.
Hamutenya has overseen the operations of Namdia over the years that it faced allegations of selling diamonds worth N$2 billion to Dubai for peanuts.
Hamutenya wrote to mines and energy executive director Simeon Negumbo on 8 March 2021.
"We are aware that the C-60 Investments agreement with the ministry is coming to an end in September 2021," Namdia's boss said.
He added: "We are also cognisant of the fact that MME [ministry of mines and energy] has no intentions to renew this contract when it expires and has notified C-60 Investments to that effect".
He then asked Negumbo for approval for Namdia to issue its own valuation certificates in respect of its assortment, as is the case at NDTC.
"We propose that the current Namdia key accounts manager Andries Eiseb be the authorised valuer. This function is currently done by C60 Investments," Hamutenya said.
Industry players questioned Hamutenya's move, saying it could increase the secret underselling of Namibian diamonds.
Negumbo told The Namibian last week that the ministry rejected Hamutenya's application.
"We have received and responded to the request from Namidia. The Ministry of Mines and Energy did not grant their request," he said.
In addition to concerns of potentially selling Namibia diamonds for a song, Hamutenya's proposal to appoint Eiseb has raised red flags among industry players and is seen as part of a power play in the diamond sector.
Some questioned this move since it would effectively appoint Eiseb who has past ties with Dubai-based diamond dealer Neil Haddock.
A former De Beers dealer, Haddock has since 2016 been a frequent flyer between Dubai and Windhoek to facilitate the sale of Namdia's diamonds. He was replaced by Eiseb last year.
This has worried some sources who believe that it will be business as usual at Namdia.
Hamutenya admitted that "we are aware that Eiseb worked with Mr Haddock before at the De Beers group of Companies".
He said this does not disqualify Esieb from being employed by Namdia.
What Hamutenya did not disclose is that Haddock and Eiseb have past business ties in the diamond industry. The Namibian reported last year that Haddock provided consultation services to Eiseb's private diamond firm.
Hamutenya said they approached the mines ministry to evaluate their diamonds to mitigate potential disruption to Namdia operations.
"The valuation certificate is required in order to obtain the Kimberly Processing Certificate from the ministry as it enables Namdia to export the diamonds to our clients," he said.
The Namdia chief said since starting in 2016, Namdia has consistently sold "over and above the buying price from the NDTC and attained good sale margins to trade. This is evident in our audited financial statements that are published annually".
Sources close to Namdia have said the company is still cheaply sealing diamonds abroad.
Questions sent to Eiseb were not answered.
Sources said Hamutenya appears to take advantage of a lack of clarity on what will happen after the C-Sixty contract with the ministry expires.
There have been calls in the past for the government to take charge of the valuation process, instead of enriching a private company that, in most cases, rubber-stamps diamond prices set by Namdeb.
There have been calls over the years for the mines ministry to have its internal team to valuate the diamonds.
This, some experts said, would avoid relying on Namdia to valuate their own prices.
Former finance minister Calle Schlettwein told The Namibian last year outsourcing the valuation of diamonds to outside entities is not sustainable.
"We need to bring the function of the evaluating process back into existing structures and link it with the required checks and balances," Schlettwein said.