South Africa's De Beers the Most Unethical Corporation in the World

Author: St. Antoninus Institute


St. Antoninus Institute

Social conservatives may be criticized for being more concerned by the actions of corporations which transgress doctrinal Christian no-nos, like supporting abortion (the Saint Antoninus Pro-Life Shopping Guide, as well as the Pro-Life Mutual fund project are casting a glaring light on those) or homosexuality (see our past feature article on Levi-Strauss, the blue-jeans company, which has positioned itself as the international champion of the homosexual cult). What about old-fashioned business immorality? Are we, social conservatives but also economic conservatives, blind to their transgressions?

Not at all. But we do have to make the difference between absolute, collectivized and/or institutionalized evil (as was the case for communism) which need be fought with priority and/or collectively and relative, individual and random evil which must be considered on a case by case basis.

However, we present here the example of one company which really defies all standards of business conduct on a grand scale. Its case was interestingly presented by the PBS TV program "Front Line" with contributions made by Edward Epstein, author of "The Rise and Fall of Diamonds" and Duncan Innes, author of "Anglo-American and the Rise of Modern South Africa."

DeBeers is a corporation which was set-up by Cecil Rhodes, the British explorer and adventurer who gave his name to the African country of Rhodesia (now Zimbabwe) and to Rhodes scholarships (the darker side of these scholarships will be made evident with the presentation of the elitist bent of Rhodes and DeBeers).

The purpose of DeBeers was the exploitation of diamond mines in South Africa. The challenge was that, according to Epstein, while diamonds were a rare resources only a couple of centuries ago, the discovery of extremely rich mines in South Africa and other countries of Africa was threatening to drive the prices down. The establishment of DeBeers consisted therefore, in a parallel effort, of setting up a cartel with other producers in order to control international prices of diamonds.

A cartel is a loosely, but effective, agreement between producers of a resource, product or service to agree on minimum levels of prices offered for these resources, products and services to the general public. A cartel is usually also structured in such a fashion that its members follow the marching orders given by the cartel leader.

The whole concept of a cartel is exactly what was the reason for the passing into US law the Sherman Act. Cartels are immoral because they overcharge the buying public by artificially propping up prices. They victimize the general buying public. They are also against the freedom of enterprise for they force possible competitors to obey the cartel directives, often under financial or even physical threats; they are victimizing their co-producers or suppliers.

Naturally the issues of the quality of products and truth in advertising are all rolled together into the issue of the victimization of the buying public. Products of a given quality are much too expensive for what they could be if the prices were allowed to be set by the market forces. Any advertising claims are relying on the concept that the products are attractive at their offered prices, and attractive for different psychological reasons for the buyers. It the prices are not morally set, the whole advertising exercise is an effort in deceit.

The DeBeers diamonds are extracted from the South African mines and marketed in London, at the address of the Diamond Trading company, a DeBeers subsidiary. There buyers, including retail and wholesale buyers from the New York city diamond district, come to look what DeBeers has to offer them to keep them in business. The DeBeers employee takes the diamond distributor in a small room and present him with a bag of diamonds. The retailer cannot buy diamonds one by one. He has to take the whole bag or leave it. Further the retailer makes an offer for the bag and the negotiation proceeds on this base. Retailers are very afraid of crossing the DeBeers operation because if they refuse the bag, or make too little an offer or behave like poor citizens in the diamond trade DeBeers will either not offer them any new bags of diamonds to purchase or will offer them bags with only poor grade diamonds which are difficult to distribute.

The DeBeers operation is therefore unethical not only towards the end buyers, the public which buys diamonds but also to all distributors and retailers of diamonds in the whole world.

US authorities are keenly interested in the whereabouts of the DeBeers operatives and have subpoenas against any DeBeers executives for transgressing at least the spirit of the Sherman Act and its anti-cartel intent. The fact that DeBeers can freely advertise and distribute in the US market, its largest market in the world is witness that something else is going on.

To begin with British authorities are very supportive of DeBeers and are not happy with the US justice system's statutory mandate to pursue such a bad corporate citizen as DeBeers. DeBeers incorporates a special mentality within establishment British circles which has not disappeared with the colonial era. The behind the door control of the world, instituted by Rhodes is very much in the liking of great interests in England. These interests are supporting the Rhodes scholarship to sanction the excellence of US students with studies at Oxford, but it also helps selection individuals who will be groomed to contribute to their elitist efforts.

The day this article is being written, an article in the paper announces that the US justice department convicted General Electric Co and DeBeers for conspiracy to raise prices in the $500 millions-a-year industrial diamond industry. "The indictment charges GE and DeBeers, which account for 80 percent of the industrial diamond market, with conspiring to fix and raise prices worldwide." The industrial diamond industry, naturally, is a very small part of DeBeers diamond operation.

DeBeers, which has been managed by Harry Oppenheimer for years out of its offices in Johannesburg is therefore guilty of unethical conduct towards its customers, co-producers/suppliers, towards foreign governments. But that is not all.

DeBeers is also guilty of about the worse type of conduct towards its employees, namely poor blacks of South Africa. Duncan Innes, the author mentioned above, explains how Rhodes, with others, had realized that the mining operations required a lot of cheap labor. They manufactured that labor. They contributed to the establishment of numerous taxes, including a poll tax, so that the larger black population would have to get some cash to pay those taxes. Most of the blacks who lived in their villages did not belong to a cash economy had to find a job to get this cash. They walked to the DeBeers mines, with the purpose of hopefully raise that money in a short period of time and return to their villages. These thousands of "migrant workers" were victimized by the living conditions and the DeBeers company stores for decades, always suspect of stealing diamonds and fed with some bread and cold tea for hours of work, according to Innes.

DeBeers officially and through the mouth of its leader Oppenheimer, always took the position that it was opposed to Apartheid. However, Innes is surprised for DeBeers clearly took advantage of all of the mechanisms of Apartheid to provide the company with cheap and docile labor for its mines. Also, the political troubles in South Africa, charges Innes, re-enforced DeBeers business position. When countless of smaller companies either went into bankruptcy because of the social unrest within their labor forces, or more simply left camp as foreign companies did under the pressure of liberal/socialist groups abroad, DeBeers bought them out. By so doing DeBeers bought cheaply good businesses but also it supported the Apartheid regime, according again to Innes, which could have been made to give up should the economic consequences of these numerous companies going into bankruptcy be felt to its full extent. DeBeers propped up Apartheid and ended up with owning a multitude of corporations to the tune of 4O% of all corporations listed on the Johannesburg stock exchange.

DeBeers is therefore also guilty of corrupting, or at least of aiding and abetting the evil operations of a whole political system, South Africa's Apartheid system. Out of this system DeBeers has drawn two advantages: one with its labor force which had to comply to its harsh managerial policies and two by unwarranted enrichment when it took over corporations which were driven out of business through no managerial errors of their own.

DeBeers is guilty of more than all that. It is an integral part of the old-boy network instituted by the British and encompassing different US operations and interests for the purpose of controlling international governments and population for the good and in the interest of a number of corporations, especially banks. The American version of this international network is called the Council of Foreign Relations (CFR). Anyone drawing attention to the dark side of the objectives of this outfit is branded and derided as giving credence to the "conspiracy theory".

CFR is essentially a very elitist club of people in different professional occupations. To be invited to become member of CFR is indeed an honor. It may be true that most of these members are not aware of the purpose of the organization which is to ensure that its members, by following a party line, protect the interests of their financial sponsors. Most of the people thus honored genuinely have excelled in their profession but they can be said to be also strongly motivated by personal ambition because they know that belonging to CFR is a very effective ladder for social and professional climbing.

DeBeers supports CFR and its other international version as they are means to protect the integrity of its cartel. The other major members of CFR, the banks, support the group because it allows them to introduce their people in all different types of governments and political parties so that these government will never consider commandeering or nationalizing the assets of the banks (bankers are paranoia about collaterals but how do you enforce a collateral against a sovereign government?).

Through CFR, DeBeers undermines the political process of several countries, including the US.

What is worse, and we are now closing the loop, through CFR and its many efforts, not only members of the political profession are recruited but also members of academia, the press and the very powerful foundations (because they all have an impact on politics). These bodies have developed different social agendas on which they agree (which explains the relatively very little difference in many countries of the world between the politics of the conservative or leftist party when in power). On their agenda are most of the social developments which are against the teachings of the Church, including the worldwide promotion of abortion, for example through the personal efforts of Chase Manhattan Bank's David Rockefeller who also was bold enough to publicize openly his anti-Catholic sympathies.

DeBeers has also undermined the government of other diamond rich African nations and helped enrich their presidents to the tune of several billions of dollars while their population had to beg money from the UN and the World Bank to survive (the relationship with Soviet Russia is also quite interesting).

The highly unethical corporate conduct of DeBeers requires restitution to the whole world. However, let us limit ourselves first to the interest of the most needy: the blacks of South Africa who for so long labored under its yoke. They should be made beneficiary of DeBeers' wealth. But what is more likely is that Mandela's Communist African National Congress (ANC) will shamefully protect DeBeers against the population in exchange for massive financing for its operations. The broader population of South Africa, black and white, will again suffer twice because of DeBeers, the most unethical corporation in the world.

Study report File 6/4a
St. Antoninus Institute