HB, govt deal inches forward despite Antwerp boardroom brawl
Mbongeni Mguni | Monday September 18, 2023 06:00
Oded Mansori, one of five partners who founded HB Antwerp in 2019, this week blasted his co-founders for relieving him of his management duties and has taken the dispute to courts.
Mmegi has learnt that a Belgian court is due to pronounce judgement on the dispute on September 22. In the matter, Mansori is suing his former co-founders alleging that his removal from management duties at the firm was improper.
Speaking in March at the launch of HB’s local subsidiary, President Mokgweetsi Masisi announced that government had decided to take up equity in HB Antwerp and provide the firm with a portion of the Okavango Diamond Company's (ODC) rough diamonds supply for five years.
Details of the value of the equity stake and the percentage of ODC’s supply going to HB Antwerp were due to be clarified two weeks after the launch when the two signed a formal agreement.
Since then, the two sides have been reportedly hammering out details of their deal, amidst criticism from local legislators and other commentators who have called for greater transparency and questioned the prudence of the state investing in a four-year old start-up.
This week’s revelations that Mansori is squaring up against his co-founders has added further scrutiny to the deal, in particular the wisdom of government investing in an entity battling internal challenges that involve its founders.
Rafael Papismedov, one of the co-founders and managing partners, told Mmegi the company’s focus was on finalising the agreement with government and making good on its pledges to add value to the local diamond sector.
“The equity deal involves two parties, HB and the Government of Botswana and I can only speak for us,” he said from Antwerp. “The fundamentals have been agreed and both parties are working to conclude the matter. “The negotiations are confidential but I can say both parties are working intensively towards that goal and working in good faith, in full commitment to the announcement made by His Excellency in March that was based on very long discussions.”
He added: “For us, the most important thing is to show the people of Botswana our values and principles and our vision that says total alignment with the vision of the government and the people.”
Papismedov declined to comment on the termination of Mansori's management role, saying the matter was before the courts. He however dismissed speculation that the dispute between the founders stems from or involves the negotiations with Botswana.
“It would be a lie to say it was caused by the talks,” he said. “It’s purely about operational topics and decision-making and strategy, nothing to do with Botswana or the deal with Botswana.”
In a hard-hitting statement on Monday, Mansori said Papismedov and another co-founder, Shai de-Toledo, had engineered his removal from HB Antwerp’s management on September 1.
“Mansori is determined to defend his vision and to fight for the well-being and the future of HB. “He aims to continue providing HB with the benefits of all he brought to the company,” Mansori’s statement reads.
Mansori and two other co-founders each hold equal shareholding in HB Antwerp, alongside a minority shareholder. The 35-year industry veteran remains a shareholder in the firm. To accommodate Botswana in its share registry, the four shareholders, who include Mansori, Papismedov and de-Toledo, will either have to cede some of their equity, or issue new shares.
Meanwhile, Minerals and Energy Minister, Lefoko Moagi, did not respond to questions on what impact, if any, the fallout in Antwerp would have on government’s desire to take up a stake in HB.
While the dispute has been characterised as typical of the challenges that face start-ups such as HB, President Mokgweetsi Masisi has previously strongly defended government’s decision to pursue equity in the firm.
HB focuses on applying high technology to extract the best value from the diamond ecosystem. Last November, the firm leveraged its technology, which includes robotics, to secure a ten-year deal with Lucara Diamonds under which stones from Karowe bigger than 10.8 carats are sold to HB Antwerp at prices based on the estimated polished values, rather than the industry standard where traders purchase based on rough values.
According to HB Antwerp, the projected polished price is determined using “state-of-the-art scanning and planning technology and is then adjusted through top-up payments based on actual polished sales, less a fee, and the cost of manufacturing”.
In March, HB Antwerp launched a state-of-the-art facility at the Diamond Technology Park in Gaborone and unveiled plans to expand its activities in the country “by more than 10 times in the next few years”.
“We are all saying it’s a young company, it’s only two years old, so what,” Masisi said in April at a ruling party press conference. “When you look behind what makes that company, there are generations, loads of years of experience. “The totality of the years of experience exceeds 100. “These are made up of founders of HB who come from diamond families themselves, their parents and in some instances, their grandparents were involved and these are companies that were there and they decided to form this. “It doesn’t lack intellectual capital, or technocratic capital or technological capital. “This company is solid and if you judge by the performance over the life of its existence, exceptional.”