Failed State-backed diamond company African Romance’s staff protest at IDC, CEO promises help

25th January 2013 By: Martin Creamer - Creamer Media Editor

Disgruntled out-of-work employees of closed diamond beneficiation company African Romance, who staged a protest at the State-owned Industrial Development Corporation (IDC), demanding outstanding remuneration and unemployment insurance (UIF) help, have been promised assistance by the CEO of the failed company, Mohseen Valli Moosa.

The former South African Member of Parliament and brother of the former Cabinet Minister Mohammed Valli Moosa, who founded the five-year-old, 69-employee African Romance, was in telephone contact with the former employees to address their grievances as they protested in the grounds of the IDC.

The staff complained that they had received only 60% of their entitlement and were demand- ing the remaining 40%.

They were also awaiting UIF cards, retrenchment letters and reference letters.

“We’re speaking to the CEO on the phone right now to meet us in a week somewhere in Sandton,” a spokesperson for the protesting group told Mining Weekly.

African Romance received R97-million from the IDC and more than R50-million from the provincially run Gauteng Enterprise Propeller.

Earlier, a disgruntled protesting employee told Mining Weekly by cellphone that IDC services sector divisional executive Katinka Schumann, who served as chairperson of African Romance, was seen leaving the grounds of the IDC.

“We saw her leaving and she hasn’t come back yet,” he added.

Mining Weekly left a message with Schumann’s personal assistant requesting comment, but had not received a response at the time of going to press.

IDC spokesperson Neo Mokhesi told Mining Weekly that the company’s failure would be the subject of an independent forensic audit, following the IDC’s own audit last year, which led to the company’s restructuring and cessation of operations on December 14.

Moosa said that he was hopeful that such an investigation would serve as a learning experience of the kind of support that mineral benefi- ciation projects would require in order to succeed in South Africa.

In a written statement to Mining Weekly, Moosa said that a decision had been taken to place the company WakeGem, which traded as African Romance, into voluntary liquidation.

Mining Weekly attended the company’s launch function five years ago, when it set out to add value to locally mined rough diamonds.

Moosa said that the company had, however, experienced a significantly negative trading and operating environment since the global financial crises of 2008/09, which had affected the diamond industry as a whole, including the giant De Beers.

He said that the company was only a year old when the downturn took place and did not have the resources to recover from it.

Other critical factors that contributed to the poor financial performance of the business included the lack of adequate funding for marketing, trading and retail development, the high cost structure of funding and operating diamond cutting businesses in South Africa, compared with India and China, and the severe lack of a dependable supply of rough diamonds from the major diamond producers in South Africa.

Lack of a dependable supply of rough diamonds was particularly pertinent in causing the company’s closure after it was unsuccessful in becoming a De Beers sightholder.

In addition, the State Diamond Trader had not been able to supply polishable rough diamonds at competitive prices to South African producers.