Last week we commented on the decision-making process that led to the appointment of Varda Shine as Managing Director-designate of the DTC. We didn’t say much about the “other big story”, the move of the DTC Executive Director for Marketing, Stephen Lussier, to the Board of De Beers. It’s amazing how there are different views on this: some consider it “a rise”, others “a fall” and again others as “moving sideways on the way out”.

Some of these reactions were made in context to the expectations: Stephen had been widely seen as the frontrunner for the job of Managing Director of the DTC. [In May 2005, when the announcement was made that Gareth Penny would take the helm of De Beers, we also mused in these columns about Gareth’s replacement that “the early betting is on Steven Lussier, with Varda Shine in a close second place”].

When the declaration was made that “Stephen has become De Beers Director of External and Corporate Affairs with immediate effect” some viewed this as him having been removed “sideways and upstairs”, the latter mostly because of family connections. We want to say categorically: nothing could be farther from the truth.

The External and Corporate Affairs position has been open for well over a year. Meanwhile, the relations with some of the producer countries have become exceedingly problematic. Some might even apply the term catastrophic when looking at South Africa, where De Beers is now facing a draft bill which requires it to offer all its rough for sale to a governmental rough diamond dealership, a 15% export tax, while being denied a chance to supply domestic sightholders with the London mix.

Stephen will have relations with governments as part of his portfolio. That’s going to a major job – through persuasion, cajoling and by making convincing arguments to not always friendly audiences, Stephen may have to help Gareth remove many hot potatoes out of burning fires.

But it’s far more than that. The De Beers’ shift from public to private company, followed by a management focus on seemingly independent and diverging profits centers (Namdeb, Debswana, DBCM and DTC) have made corporate communication policies (both towards the outside world and internally) and relations with other diamond producing countries rather incongruous. De Beers’ external relations occasionally seem like a drifting ship without captain.

Indeed, at the recent strategic management seminar in South Africa, attended by all the De Beers group major executives, the external affairs hiatus clearly was identified as one of the most urgent issues facing the company. Great efforts were made to recruit a suitable high-level person from the outside – with no success.

By appointing Stephen, Gareth Penny has filled that position by having someone on his side whom he completely trusts. Someone he feels comfortable with. A soul fellow who talks “the same” (marketing) language. At this critical juncture in ‘ De Beers’ history – facing what some see as rather De Beers-hostile policies in Africa – external relations have become an area in which mistakes can actually have fatal consequences. When the history of the contemporary diamond scene is written, the absence of good external relations (including also producer relations) may well be diagnosed as the cause - or contributory factor - of some of these present problems. Indeed, another strategic review of the De Beers group’s external affairs structure is taking place in Johannesburg. Stephen will have to make hard decisions and fast – there will be no 100-day honeymoon.

Gareth made an excellent choice – and Stephen will soon find out (if he doesn’t know it already) that his new position will pose greater challenges than anything he has faced in marketing since joining the De Beers diamond promotion team 22 years ago (in 1985).

In spite of all the positives, appointing Stephen is not without risks. The position had clearly been seen as being reserved for a black person. Undoubtedly, African commentators and the government will express dissatisfaction or even anger. Even within the De Beers group some people were caught by surprise. The expectation had been that (experienced barrister) Rosalind Kainyah from Ghana, one of the hardest working people at the DTC (rumor has it she literally sleeps in the office, sending memos and e-mails well after midnight), was being groomed for that position. Rosalind’s current brief, on behalf of the DTC, has been described as “responsible for building mutually beneficial relationships between the DTC and its stakeholders, including governments”.

Rosalind, who joined the DTC in 2002 as legal counsel for corporate and commercial affairs, will probably get Stephen’s new job some 3-5 years down the road – for now she lacks the diamond experience and finesse, even though this is partly offset by a disarming dose of enormous charm and warmth. Rosalind will go places – she has already had an impressive career as an international environmental lawyer engaged by international and national organizations to advise governments. She also worked for the Linklater law firm – the perennial lawyers of De Beers in Europe. Moreover, by choosing Stephen rather than Rosalind, Gareth has left Varda with another strong woman on her side – something for which she probably will be grateful.

What about Rory More O’Ferrall who currently handles the Corporate Affairs portfolio? Rory once (only partly in jest) remarked that he views his task almost with a biblical fervor: “Preparing the United States for the Second Coming of the Oppenheimers.” The U.S. Department of State, the U.S. Congress, the Treasury Department, the Justice Department – these are all places where Rory has spent more time in recent years than in any country except for England. He paved the way for the settlement of the Ohio ant-trust case. Rory has been remarkably successful – but his mission is not yet accomplished. Though entitled to take retirement (he is in his late fifties and qualifies for the soon to be abandoned rather attractive 90-year service early retirement package), Stephen will undoubtedly want Rory to continue the shuttle diplomacy with the United States. [The 90-years rule says that if age plus years of service exceed 90, you are entitled to retire. Rory has served De Beers for 33 years – and, without giving away his age, he fits the formula.] We still expect Rory to complete his U.S. mission. Who knows? It would be most appropriate for Nicky Oppenheimer and Stephen to schedule Rory’s eventual retirement party at the Embassy Row Hotel in Washington, D.C.

Stephen is Family 

Has “family” anything to do with Stephen’s appointment? Of course, it has – as it also has had in the past. Especially now, when De Beers is a private company in which the Oppenheimer family owns 40% and controls executive appointments. Stephen was born in December 1957 in Boston, Massachusetts. [He earned his BA from Boston College and MBA from Columbia University in New York.] He stepped into diamonds when, straight out of university, he joined the advertising agency, NW Ayer in New York in 1981, in the Account Management Group.

Steve moved to the Consumer Marketing Division in London in 1985 as the Market Controller for the US and Canada. He served as Market Controller for Japan from 1989-1991 and Regional Director for the Asia-Pacific Region from 1991, until assuming his current role in June 1993. 

On October 14, 1995, Stephen married Sophie Clare Oppenheimer, the eldest daughter of Anthony Oppenheimer (and of his first wife Penelope Walker). Anthony had become the President of the CSO in 1994. Stephen was made a DTC Director in the same year he married. [Might have been a coincidence; we don’t think so. Family meant a lot in those days.] Steve didn’t just “join the family” – he actually became the heir-apparent on the rough diamond marketing side of De Beers.

Historically, the rough marketing business of De Beers has always been headed by Ernest Oppenheimer’s brother Otto and the latter’s descendants. When Anthony’s grandfather Otto passed away in 1948, his father Philip Oppenheimer assumed responsibility for the Central Selling Organisation (CSO) as Managing Director. Stephen’s father-in-law Anthony Oppenheimer joined the diamond conglomerate in 1959. He became a Director of De Beers in 1980 and thereafter held the title of President of the CSO, a position he occupied until his retirement in mid-2002.

Within the DTC, Stephen was always seen as some kind of unofficial “number two” and an appointment as DTC managing director would have seen a most logical step – as a widely anticipated and expected continuation of history. It didn’t happen. At the age of 47, Stephen has now been asked to solve some of the companies’ hottest potatoes. His appointment is with “immediate effect” – underscoring the recognition by the board that he is needed right away (although, from a practical viewpoint, he’ll stay at the marketing position until the end of this month.)

From the business of marketing diamonds, Stephen has now moved to marketing “the diamond business” on behalf of the entire group – getting the De Beers message to the company’s most important stakeholders. From the way we view it: Stephen isn’t only getting a great promotion – he is also inheriting a lot of corporate headache. We wish him well.

Have a nice weekend.