The upcoming departure of Gareth Penny from De Beers marks the end of an era in the diamond industry. Let’s call it the “post-cartel era.”
Penny announced he was resigning on Friday, on what seems to be his own accord. De Beers spokespeople noted that he had said from the start that he wanted to serve five years as CEO (the title was formerly called managing director), and that runs out this year.
A lot will be said about Gareth’s record, pro and con. One thing is indisputable: He is, as an analyst said, a “pretty impressive character”; a former Rhodes Scholar, always well-spoken and incisive, he turned PowerPoint presentations into something of an art form. He was also more personable and approachable than prior De Beers executives — and far better on television. (Reporters seem to love him.)
Perhaps Penny’s greatest achievement occurred before he became CEO. He was not a De Beers outsider; in fact, he was the godson of former chairman Julian Ogilvie Thompson, and worked for the company almost continuously after business school. But he clearly brought a new perspective. As the overseer of the company’s “strategic review,” he helped introduce the 100-year-old cartel to concepts like social responsibility and legal compliance. All while still in his thirties.
When he finally became CEO, his record was, inevitably, mixed — and the jury is still out on the policy he was most associated with, “Supplier of Choice.” SoC did change the industry’s mindset to become more marketing and consumer oriented. But it’s probably best known today for the huge amount of money sightholders spent on mostly failed brands and marketing projects.
Another signature initiative, settling De Beers’ legal problems in the U.S., has just hit a major roadblock, with an Appeals Court not approving part of its anti-trust settlement. It will be interesting to see if Penny’s departure causes De Beers to reconsider their support for this agreement.
The rest is a mixed bag. The company hasn’t made any significant new discoveries lately (though neither has anyone else.) The “Forevermark” program hasn’t set the world on fire. De Beers also hired a lot of people from outside the industry — then had to let many of them go in its recent cutbacks.
Penny was an ambitious man who wanted to shape events, but his tenure was mostly shaped by them. Once African governments began taking a fresh look at where their diamonds were going, the difficult task of keeping producer countries happy seemed to dominate Penny’s time.
And then there was the recession, which caused De Beers to experience some of the most serious financial problems in its history. In 2009, it was forced to borrow hundreds of millions from its producer partners. Yet, De Beers survived and now seems financially stable. That wasn’t always certain.
Penny is leaving on a high note — De Beers’ most recent financial results were impressive, and there is once again talk (mostly denied) that the company will go public.
All in all, the company greatly benefited from having such a fresh and impressive thinker at its helm. Penny says he has no idea where he will go next, and I’m sure he has a world of opportunities open to him. But I hope he stays with diamonds. This industry could use a lot more like him.
Finally, the speculation about his replacement has begun — this article drops some names, including Jonathan Oppenheimer and current co-interim CEO Stuart Brown. But recall, when Penny was appointed, South Africa’s deputy minerals and energy minister expressed “exasperation and disappointment that [De Beers] will replace one white managing director with another white managing director.”
A lot has changed since then, but it’s possible De Beers will be pressured to appoint a non-white CEO. Appointing someone from Botswana would send a pretty powerful message about where this industry is going.
And so we are once again at a crossroads. So much of Gareth’s job at De Beers involved cleaning up the messes of the past. But the industry has just begun to look to its future. Let the post-post-cartel age begin!
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