Letter to the Editor:
While I do not generally respond to press reports about De Beers, I felt compelled to in this instance as I believe there were a number of inaccuracies with regard to De Beers and our historical class action settlement in the United States in the article "De Beers $250 million payoff - Class action lawyers to cash In" published online on January 9, 2007. [Read the original story.]
Firstly, while it is not a commercial necessity for us to settle this civil case, I do believe it is in the overall best interest of both De Beers and the United States diamond jewelry industry that the past is put to rest. As the world's leading diamond company, producing and selling some 40 percent of the world's rough diamonds, we believe it serves the reputation of our product, our industry and our stakeholders, to have the historical legal issues fully resolved, without any admission of liability. In addition, the greater our understanding of the United States' diamond jewelry industry, the world's largest market, the more likely it will be that we can develop our business strategies in such a way that can support the trade, and play a full role in the many challenges the industry will face in future, particularly on the reputational front.
However, I was more concerned about other points so let me make it absolutely clear:
1. Your facts are wrong. In March 2006 we reached settlement on all class actions against us in the United States for a total sum of $295 million, and this was granted preliminary approval by the relevant United States Federal Court.
2. Approval by European Union's competition authorities of De Beers' business activities does not, in any way, mean that the business activities do not also have to be compliant with United States laws. Quite the opposite; De Beers will be required, legally, to comply with United States and European laws (as well as the laws of the other countries we operate in.)
In other words, we will operate by the same rules as any United States-based company.
3. The Federal Judge presiding over the cases is legally obligated to conduct an inquiry into the fairness, reasonableness, and adequacy of the settlement and will not approve the agreement unless it is clear that all legal requirements have been met, and, further, it is not the lawyers, but the court, who will decide how to best distribute the settlement fund to class members.
4. Lastly, our business model was inaccurately described. We select our clients, as all companies with limited resources must (where demand exceeds supply,) based upon a set of clear and objective criteria. However, we do not, and will not, tell our clients who to sell to, how much to sell for, or when to sell. Mining and marketing rough diamonds is our business. Manufacturing and marketing polished diamonds is theirs.
At De Beers we remain committed to our policy of full legal compliance, and believe our present practices to be fully compliant with both the European Union and United States' competition law. The settlement resolves historic claims, and De Beers believes putting this remnant of the past to rest is in the best interest of De Beers, its stakeholders, and the diamond industry as a whole.
Yours sincerely,
Gareth Penny
Managing Director of De Beers
Article from the Rapaport Magazine - February 2007. To subscribe click here.