Businessweek Archives

Is The King Of Diamonds Forever?


Books

IS THE KING OF DIAMONDS FOREVER?

THE LAST EMPIRE: DE BEERS, DIAMONDS AND THE WORLD

By Stefan Kanfer

Farrar, Straus & Giroux x 409pp x $25

The sparkling two-carat number on your finger or cuff link may have come out of the earth in Zaire, Yakutia, or Australia. The odds are overwhelming, though, that it arrived via the selling organization of De Beers Consolidated Mines Ltd. De Beers bankrolled that subtle "diamonds are forever" advertising pitch and pretty much determined what your diamond cost.

Until recently, it was no overstatement to call De Beers the world's most successful monopoly--a massive operation whose reach extends to every corner of the globe. It's virtually impossible to do business in South Africa without running into De Beers and its sister monolith, Johannesburg-based Anglo American Corp. As early as 1960, the two made up "an octopus," complained former Prime Minister Henrik Verwoerd, with "branches in all spheres."

Someday, perhaps, someone will reveal how these two labyrinthine giants, with their cross-shareholding webs and interlocking directorships, operate. For now, that knowledge remains the birthright of a handful of people named Oppenheimer. Unless one of them decides to tell the tale--a remote possibility at best--the rest of us will have to settle for less satisfying glimpses provided by such works as The Last Empire.

Stefan Kanfer, a longtime contributor to Time, has chosen a propitiously dramatic moment to produce his study of De Beers, Anglo American, and the Oppenheimer family, which runs both. The diamond market, of which De Beers controls an astounding 80%, has been weakened by lingering economic malaise in key consumer nations. More important, the cartel's hold is being undermined by wildcat production in Angola and the former Soviet Union, and by illicit trade in other spots; even the two-lane desert road in Namibia on which I lived much of last year was a key route for diamond smugglers. At the same time, political revolution in South Africa is undermining the structures that have allowed the Oppenheimers' empire to hold sway.

Kanfer contends that Harry Oppenheimer, De Beers' 84-year-old patriarch, will overcome these challenges as he has past hurdles, just as his father, Ernest, did, and earlier, such titans as Cecil Rhodes. Writes Kanfer: "A chill wind is blowing, and many will wither before its blast. Not De Beers; not Harry."

That's arguable. De Beers and Anglo are both at monumental, fairly ominous junctures. Not only are profits down but De Beers, to prop up prices, is stockpiling an unprecedented $3.8 billion worth of jewels. To assert that an empire will stand because it always has is to ignore the lessons of ancient Rome and modern Britain--not to mention IBM. And to suggest that the profit motive always will overcome global revolution is either cheap cynicism or capitalist arrogance--it's hard to know which to accuse Kanfer of here. Either way, it's myopic claptrap: Things change, institutions die. Even the odd diamond shatters.

Still, The Last Empire is an entertaining read and a solidly researched, if somewhat derivative, history. It tackles a singularly complex entity whose operations are at once pervasive and secretive. That ambition makes the book interesting, but it also guarantees a central flaw: As the subtitle, "De Beers, Diamonds and the World," suggests, the book is just too broad.

There is, first, the history of South African diamonds. Kanfer begins his account in 1867, with a farm boy's discovery near the banks of the Orange River of the colony's first major diamond. The ensuing 140 pages chronicle the rise of the wealthy merchant class that whipped a hundred disparate mines into powerful buying and marketing organizations; it also traces the inevitable battle between the British and the Afrikaners for custody of the region's wealth.

A colorful time, to be sure. But Kanfer's prolonged throat-clearing serves mainly to overshadow the De Beers story, which is too bad, for the saga is compelling. Few organizations transcend boundaries and politics as De Beers does. For decades, it bought Siberian diamonds through a string of heavily camouflaged intermediaries--even, Kanfer observes, as self-righteous Soviet officials "spent their days and nights maligning capitalism." Similarly, Tanzania, Ghana, and Sierra Leone, averred enemies of the apartheid state, sold jewels to anonymous go-betweens, such as the Diamond Development Corp., and somehow that ice found its way to De Beers.

Indeed, the subordination of political ideals to wealth is central to De Beers' history. Kanfer captures this nicely, especially in his documentation of the publicly liberal Oppenheimers' pious justification of their industry's racist labor abuses. From the start of mining in South Africa, employers gave black workers the most dangerous work, degrading accommodations, and wages that were only a fraction of those paid whites. Ernest Oppenheimer's late-life epiphany about such inequities in 1956 did little to improve the lot of his workers.

But Kanfer misses the final irony. Although De Beers and Anglo American have been relatively progressive employers by South African standards, it was the mining companies' discriminatory work and pay rules that forced the emergence of a vital black union movement in the early 1980s. That unionism provided the core of a grass-roots democratic surge that has moved South Africa to the brink of majority rule--and sent tremors of uncertainty through the vast networks of the Last Empire.KEITH H. HAMMONDS


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus