There is a very old argument about a glass that contains water half way to the top. The argument is that a pessimist sees it half-empty, the optimist half-full. I see it differently. I see that the glass and the water have value, and the space within the glass has use. If you drop the glass and break it, you lose the water and the glass. It no longer has any value. However, the space is unaffected by the presence or absence of value or of a container.
Things have value, all of which are subject to loss and gain. That, which cannot be perceived by the senses and are unaffected by acquisition or renunciation always remain useful and are truly precious, though no monetary value can be applied to them. When people concentrate on that which has value and forget that which is precious, disaster will follow.
I am currently in Guinea as I write this article. Here in Guinea, things have not turned out as planed. I have been in Guinea nearly five weeks. Two separate groups contracted me. One group hired me to verify the diamonds they contracted for are here and have the value stated. The other group did a JV with me to source diamonds to bring to Geneva CIF.
My JV partners funded the trip. Before I left the U.S., my job was to source the diamonds and do all the due diligence on the mining company we wished to buy diamonds from in Guinea, as well as all gemological work. For the JV, I had outlined a very simple and minimal financial risk strategy. The person, who was the source to the main mining company, has a good reputation and came highly recommended from a friend I trust. In addition, the mining company here in Guinea is reputable and enjoys a long business history.
Without requesting my input, my JV partner group determined they did not want to follow my minimalist strategy. They elected, with the prompting of the mine agent/broker in the USA, to change course and instead issue an MT799 for approximately 10M. In this way, the mining company would agree to pay all taxes, shipping, etc., and deliver the diamonds I picked CIF Geneva.
The logic behind this seemed reasonable. The US agent and the Guinea Managing Sales Director for the mining company told the JV partner group they had a better solution to deliver CIF Geneva then my strategy. Their idea was to use a ‘financier’ who would pay for the diamonds, taxes, etc., in country. We just needed to put up the MT and block the funds. The financier, we were told repeatedly, was their very best financier and had a long time relationship with the mine.
Obviously, this sounded like a great idea to the JV group. It would free us of all the risks and the cost was the price of the MT799. They estimated that the cost of the MT was going to be less than our original estimates for the other expenses and would allow us to ship a much larger quantity of diamonds and bring about success much faster than my procedure. They wrote and signed the contract with the mining company and issued the MT799.
Based upon the JV group’s assumptions, an assistant and I (who I did not request) were shipped off to Guinea. When we first arrived, we were taken to the mining office by the mining sales manager and introduced to the Director of the mining company.
Unfortunately, my French is very limited and his English was as bad as my French was. This proved to be a fatal problem. Through our hired interpreter, the mining director asked us in front of the sales manager and others in the room, how we were planning to pay for the diamonds. After this question was translated to us, I thought this was some kind of mistake. Before I could answer, the sales manager interjected and told me, not to worry, that he would explain everything to the director. The sales manager then said this director is brand new to the job and was not aware of our contract and our MT799. He said he would explain everything to him that afternoon.
The sales manager said something in French to the director and the director then brought out goods for us to look at. They were not the goods we had contracted to buy. I figured this was the same old African bull to determine if we knew goods. After I rejected the diamonds, the director put the goods away, and the sales manager told us he was going to prepare our parcel with the director and we would return the next day to do the purchase.
The next day the sales manager came to our hotel with two other gentlemen. He said they were from the mine. Right there in our hotel room, they pulled out goods for us to look at. These goods were the kind of stones we had requested. They put the goods away and the sales manager said he would prepare the parcels for us. He said it would be the next day.
I will cut out much of the story from that day until 2 ½ weeks later. Suffice it to say, that every day was another excuse as to why the financier had not performed. Finally, I gave up and started going through my list of contacts here in Guineato see if I could pull a rabbit out of a hat.
In the mean time, the JV group continued their communication with the USagent and finally the group told the agent to get the financier on the phone. When the group asked the agent what the name of the financier is, the agent said he did not know his name! This, after telling us for weeks that this was their best financier and they had been doing business with him for years.
Now the agent tells the JV partners, that actually, the sales manager is the connection to the financier. The JV partners get the sales manager on the phone in Guinea and the sales manager says he does not actually know the financier either, he deals with his agent here in Guinea!
At this point, the jig is up. The agent and sales manager are forced to tell the whole story. And, here is what really took place. The US agent and the sales manager cooked up the idea of selling us CIF with the use of an MT799. However, for it to work, they needed a large gold deal they were working on to go through. They were so sure their gold deal was going to close, they thought they had no risk of failure. They were then going to use part of the gold deals MT799 money to finance our deal and whatever funds they could monetize from our 799. Only they did not expect to deliver the whole 10M. They figured to come up with a couple of million in diamonds to get started and then using their profits from their sale to us, they would increase our shipments. They figured they could explain the smaller parcels to us by saying they had to reject a lot of diamonds, but that the ‘right’ goods were still coming.
Our contract is with the mining company itself. It was signed by the sales manager of the mining company as a duly authorized representative of the mine on the mine letterhead and seal. We came to realize that the mine has no idea we have a contract with them. The bank and the account we issued the MT799 too, belongs to one of the mining owners who did not disclose this transaction to the other owners. The three of them, the US agent, the sales manager, and the partial owner were going to pay the mine themselves from our payments and give us receipts for the higher charges. They would pocket the difference and make a fortune. The mine would see sales and never know the difference.
The JV group is waiting for me to get out of the country before they take legal action. In the mean time, this is what I am doing still in Guinea. I have met with a mining company and have gone to the Ministry of Mining with the owner and my contact. I verified in the mining office that his export license is valid. I have worked out a cost plus agreement with him so that he will bring miners to his diamond office and I will select goods of my choosing.
We are putting up another 799 and the mine owner has agreed to bring the goods to Geneva if I pay the taxes and other costs in country. Sound familiar? In order to do this, we are purchasing a buyer’s license and being put on as one of the four possible companies who can use his export license. I verified all this in the Ministry of Mines with the ministry director himself.
We have worked out our contract with this company and I am waiting for the JV partners to send me back the final copy of the contract for the mine owner to sign. It takes a couple of weeks to receive the licenses after I apply for them and so I am going to go home as soon as possible. I hope by Tuesday. I will return after my wife has the baby. She is 8 months pregnant.
That is the sorted story of my trip here. I did all the due diligence possible. I just could not take into account the deception, stupidity, and greed of these three people. The three stooges have ruined their
reputations, face serious legal actions and are certainly going to have some explaining to do to the innocent mining company who may also have some liability. The glass is shattered, the water gone and the empty space between their ears remains unused.
Louis Pearl G.G.
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