Donner und Tiffany

By Charles Wyndham.

Most would have heard about the phone hacking scandal in England, and in particular the shenanigans at the News of the World (owned by the Murdoch empire).

Part of the long saga is a judicial review being conducted by Lord Leveson and various of the good and famous who have or claimed to have been maltreated by the press have had their chance to air their displeasure in public. Some, it must be added, with more than good cause.

All was pretty dreary till this week when Paul McMullan was interviewed and there has been an outcry about his testimony.

McMullan was a journalist for the News of the World and freely admitted to hacking phones, paying police offices, stealing confidential documents, rifling celebrities rubbish etc etc.

McMullan saw nothing wrong in what he did and is actually reported as saying that ‘‘Yes, sometimes you have to stray into black or gray illegal areas.” 

Phone hacking was he thought a perfectly acceptable tool.

I wonder how many major scandals would have gone undetected if journalists had not slipped into the grey areas of the law and if not sometimes even dipped into the black.

I find it difficult to believe that the unearthing of the Watergate scandal did not at least touch upon one or two grey areas, or what about the uncovering of the scandal in England over Members of Parliament expenses. There must be much better examples but they do not come immediately to mind.

As in so many things, so much revolves around judgment.

In England the tabloid press has gone out of its way to show none and in some instances the ‘miscarriage of justice’ have been appalling.

But what could be worse?

The idea of a regulated press, however appalling it has behaved, fills me with gloom.

It won’t be long before we are all asphyxiated in an ever growing pile of political correctness, and our Lords and Masters, be they politicians or bankers, run even more amok than they are able to do already.

Regulation we have seen in the financial world does not work or certainly has not worked and has yet to be tested in a new environment.

It is a short step from a regulated press to the model being adopted in South Africa, which only provides sustenance to a burgeoning kleptocracy.

But what is even more worrying to me, in a round about way, is the news that Tiffany is setting up its own rough tendering or auctioning subsidiary in Antwerp, which will act as agents for its principal clients, the rough producers.

Of all the jewellery brands, I think it fair to say that Tiffany and its blue box is certainly one of the strongest, if not the strongest.

It is also a fairly conservative brand guarding its heritage carefully.

Tiffany seems to have grasped two key elements of the current and more importantly the future dynamics of our industry of an inevitable supply shortage of rough diamonds and the imperative for certainty of provenance.

Tiffany has already shown that it is prepared to dip its toe into the waters of investing in mining, it has gone into cutting, setting up factories in producer countries, now it is offering auctioning as a service to producer.

There is an inexorable logic in what the company is doing as a jewellery company moving downstream (or is it upstream?), potentially aligning its interests with the producer to maximise the value of the rough.

Every step the company has taken has been met with sniggers within the industry saying that they simply do not know what they are doing and all will come to grief.

Well it hasn’t. Indeed, this seemingly ‘politically incorrect’ approach has provided highly satisfactory financial results. 

Contrasting Tiffany to De Beers is interesting. 

De Beers has been valued at $12.7 billion in 2011 compared to $19 billion in 2001.  How much profit De Beers makes appears to be a pretty clear cut correlation to the number of carats it has mined, there is a painful and very visible lack of added value, which hopefully will change under its new management.

However here is the rub of the green, we have a blue chip company and primarily a jewellery company, Tiffany, effectively giving the seal of approval to auctioning or tendering diamonds.

Tiffany have stolen my thunder and I might soon have to be arguing for the continuation in perpetuity of the sightholder system to prove my non establishment credentials and non political correctness.