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Oppenheimers take De Beers diamonds back into fold

The fabulously wealthy Oppenheimer dynasty took diamond king De Beers back into the family on Thursday in a multi-billion dollar deal that is expected to keep the diamond trade closed to all but the privileged few.

The Oppenheimers' decision on Thursday to tie up with mining conglomerate Anglo American in a $17.6 billion deal to take De Beers into private hands was the biggest shake-up the industry has seen since the Second World War.

"I came to the conclusion the best way forward would be to take De Beers private," said Nicky Oppenheimer, whose forebears founded De Beers and came to dominate South African mining through it and the Anglo American gold corporation.

"Once De Beers goes private, it has no intention of disappearing behind locked doors and becoming an organisation unavailable for scrutiny," he told reporters.

But the company which coined the phrase "A Diamond Is Forever" has come to embody all that was good and bad in the much-maligned diamond industry.

De Beers never lost its reputation for secretiveness despite attempts over the last two years to make the 113-year-old firm more open and accountable to the public and shareholders.

Loved by jewellers and the rich and famous for its exquisite stones, it was hated in equal measure by United States anti-trust officials who saw the firm as a predatory cartel and banned its executives from the country.

Whether the Oppenheimers or directors of the new De Beers would be allowed to travel to the United States without risk of arrest following the buyout remained unclear on Thursday.

The company has tried to appease investors by disclosing operational details of its major diamond mines and put an end to its policy of stockpiling gems to keep diamond prices high.

What was clear was that Oppenheimer would remain at the helm, continuing the tradition of his grandfather Ernest Oppenheimer who founded Anglo American and led De Beers after the Wall Street crash of 1929.

De Beers to keep secrets

De Beers will become an associate company of London-listed Anglo but run day-to-day by the Oppenheimers, whose private fortune is estimated at $3 billion by Forbes magazine.

The Oppenheimer holding company will be paid management fees and incentives of up to $15 million a year at least until 2007.

Nicky Oppenheimer, unassuming and softly-spoken, can enjoy a life that allows him to indulge his passion for cricket while he guards his family's privacy from vast and luxurious farm estates across Africa.

Both Anglo and the Oppenheimers will own 45 per cent of the new De Beers with the remaining 10 per cent held by a joint venture with the government of diamond producing giant Botswana.

Though De Beers profits will show up in Anglo's balance sheet, the workings of the newly-private firm will be largely hidden from public gaze.

"The diamond industry won't become as open as it could have," said analyst Justin Pearson-Taylor at Standard Equities in Johannesburg.

Despite the curtain being drawn on the daily operations of De Beers and also the 65 per cent of the trade in uncut diamonds it controls, analysts expect De Beers to continue to fight against so-called "conflict diamonds."

Human rights groups have blamed the illegal trade in diamonds for fuelling brutal conflicts from Democratic Republic of the Congo and Angola to Sierra Leone, raising the prospect of a much-feared consumer boycott on the lines of the fur trade boycotts of the eighties.

"De Beers will remain committed to ending conflict diamonds because it has to. It wants to move into the retail business," said one Johannesburg analyst referring to a tie-up last month with French luxury goods group Moet Hennessy Luis Vuitton.

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