Alweendo’s diamond headache
Court bid to halt Namdia diamond valuation contract renewal
The politically-connected diamond valuation firm that was controversially hand-picked in 2016 to valuate Namdia's diamonds says it will suffer N$135 million in damages if its contract is not renewed.
A multimillion-dollar contract to render diamond valuation services to Namib Deserts Diamonds (Namdia) is under the spotlight after mines minister Tom Alweendo asked the High Court to review and set aside the mandate given to Nuska Technologies.
In 2016, Nuska, then C-Sixty Investments, and the mines ministry, penned a service-level agreement to provide Namdia with diamond valuation and advisory services for five years.
Alweendo is questioning a recent arbitration ruling in which the ministry was ordered to renew the five-year agreement with Nuska, a private firm owned by Israeli businessman Doron Cohen.
Nuska, which is entitled to 1% of the value at which Namdia sells its diamonds, said it will suffer damages in the form of profit losses and business income of N$135 million if its five-year contract is not renewed.
Failed termination
But that is the least of Alweendo’s worries, because he feels Namdia is not benefitting from services rendered by Nuska.
Despite the arbitration ruling, Alweendo argues that the extension of the service-level agreement without a competitive public bidding process is against the country’s public procurement laws.
The parties had agreed that the agreement would be renewed when it expired unless either party gave notice of termination 12 months before it expired.
On 7 September 2020, Alwendo gave notice of termination not to renew the agreement, to which C-Sixty responded and indicated that it had no qualms with the decision.
About four months after accepting the termination, C-Sixty returned under new management and a new name, Nuska.
Nuska, at this stage owned by Doron Cohen, submitted a proposal to the ministry in a bid to have the contract renewed. The proposal was rejected on 19 February 2021.
Forced renewal
Nuska wasted no time.
As soon as it received the rejection letter, it initiated arbitration proceedings in a bid to force the ministry to renew the agreement.
This year, on 12 July, arbitrators ruled in favour of Nuska and ordered the ministry to renew the five-year agreement. The arbitrators were Lucius Murorua, Slysken Makando and Shimue Mbudje.
The outcome did not sit well with Alweendo, who, in court papers filed last week, said that "the award seeks to impose a five-year contract onto Namdia when it is not a party to such a contract".
He now wants the court to set aside the outcome of the arbitration proceedings.
Contractual blunders
The ministry faces a dilemma, however.
During the arbitration proceedings, it was found that there were two contracts with different dates for the same purpose.
One contract is dated 9 September 2016, while the other is dated 20 October 2016.
This was confirmed by former Namdia board member Chris Nghaamwa in his testimony.
During cross-examination, Nghaamwa said the two contracts were related and constituted one contract.
"There is no confusion about parallel contracts relating to the same work between two parties," he said.
He added: "There can be no confusion between government and C-Sixty Investment CC about termination relating to valuation of diamonds and that both dates would fall within 12 months of termination notice contemplated by either agreement."
Nghaamwa’s version was corroborated by former C-Sixty director Tironen Kauluma, who, during his testimony, said the "September agreement was the only agreement regulating the relationship with the ministry."
He said he operated on the basis of that agreement.
According to Kauluma, when the ministry informed C-Sixty of its intention not to renew the agreement on 7 September 2020, he responded a day later to confirm the termination and indicated that he had no problems with the ministry’s decision.
Operative and draft
According to court documents, Kauluma said he was guided by the September agreement, which is the agreement he used to obtain financing from the bank, or in relation to any dispute resolution with the ministry.
Kauluma said the termination notice was given 12 months before the contract lapsed, hence, he had no right to another termination.
Mine ministry executive director Simeon Negumbo also testified on the double-contract saga, as he sought to clarify how the two contracts came about.
Negumbo testified that the first agreement concluded was the 20 October agreement.
Negumbo said the ministry and Nuska agreed on the same day to conclude the September agreement for payment purposes because work had already started in September.
He also indicated that the October agreement was never implemented.
However, Cohen maintains that the September 2016 agreement was merely a draft agreement and that the October 2016 contract was the operative one.
He said the ministry terminated the wrong agreement because, instead of terminating the October 2016 agreement, it terminated the September 2016 agreement.
"Nuska had not received a notification of non-renewal one year in advance of the expiry date and as a consequence, the agreement had automatically renewed for five years," Cohen testified during the arbitration proceedings.
In 2016, Nuska, then C-Sixty Investments, and the mines ministry, penned a service-level agreement to provide Namdia with diamond valuation and advisory services for five years.
Alweendo is questioning a recent arbitration ruling in which the ministry was ordered to renew the five-year agreement with Nuska, a private firm owned by Israeli businessman Doron Cohen.
Nuska, which is entitled to 1% of the value at which Namdia sells its diamonds, said it will suffer damages in the form of profit losses and business income of N$135 million if its five-year contract is not renewed.
Failed termination
But that is the least of Alweendo’s worries, because he feels Namdia is not benefitting from services rendered by Nuska.
Despite the arbitration ruling, Alweendo argues that the extension of the service-level agreement without a competitive public bidding process is against the country’s public procurement laws.
The parties had agreed that the agreement would be renewed when it expired unless either party gave notice of termination 12 months before it expired.
On 7 September 2020, Alwendo gave notice of termination not to renew the agreement, to which C-Sixty responded and indicated that it had no qualms with the decision.
About four months after accepting the termination, C-Sixty returned under new management and a new name, Nuska.
Nuska, at this stage owned by Doron Cohen, submitted a proposal to the ministry in a bid to have the contract renewed. The proposal was rejected on 19 February 2021.
Forced renewal
Nuska wasted no time.
As soon as it received the rejection letter, it initiated arbitration proceedings in a bid to force the ministry to renew the agreement.
This year, on 12 July, arbitrators ruled in favour of Nuska and ordered the ministry to renew the five-year agreement. The arbitrators were Lucius Murorua, Slysken Makando and Shimue Mbudje.
The outcome did not sit well with Alweendo, who, in court papers filed last week, said that "the award seeks to impose a five-year contract onto Namdia when it is not a party to such a contract".
He now wants the court to set aside the outcome of the arbitration proceedings.
Contractual blunders
The ministry faces a dilemma, however.
During the arbitration proceedings, it was found that there were two contracts with different dates for the same purpose.
One contract is dated 9 September 2016, while the other is dated 20 October 2016.
This was confirmed by former Namdia board member Chris Nghaamwa in his testimony.
During cross-examination, Nghaamwa said the two contracts were related and constituted one contract.
"There is no confusion about parallel contracts relating to the same work between two parties," he said.
He added: "There can be no confusion between government and C-Sixty Investment CC about termination relating to valuation of diamonds and that both dates would fall within 12 months of termination notice contemplated by either agreement."
Nghaamwa’s version was corroborated by former C-Sixty director Tironen Kauluma, who, during his testimony, said the "September agreement was the only agreement regulating the relationship with the ministry."
He said he operated on the basis of that agreement.
According to Kauluma, when the ministry informed C-Sixty of its intention not to renew the agreement on 7 September 2020, he responded a day later to confirm the termination and indicated that he had no problems with the ministry’s decision.
Operative and draft
According to court documents, Kauluma said he was guided by the September agreement, which is the agreement he used to obtain financing from the bank, or in relation to any dispute resolution with the ministry.
Kauluma said the termination notice was given 12 months before the contract lapsed, hence, he had no right to another termination.
Mine ministry executive director Simeon Negumbo also testified on the double-contract saga, as he sought to clarify how the two contracts came about.
Negumbo testified that the first agreement concluded was the 20 October agreement.
Negumbo said the ministry and Nuska agreed on the same day to conclude the September agreement for payment purposes because work had already started in September.
He also indicated that the October agreement was never implemented.
However, Cohen maintains that the September 2016 agreement was merely a draft agreement and that the October 2016 contract was the operative one.
He said the ministry terminated the wrong agreement because, instead of terminating the October 2016 agreement, it terminated the September 2016 agreement.
"Nuska had not received a notification of non-renewal one year in advance of the expiry date and as a consequence, the agreement had automatically renewed for five years," Cohen testified during the arbitration proceedings.
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