Findings of the independent Board Sub-Committee

12 May 2021

LSE: PDL

Petra Diamonds Limited

Findings of the independent Board Sub-Committee investigation into alleged breaches of human rights at the Williamson Diamond Mine in Tanzania
 

Summary

Petra Diamonds Limited (the “Group”, “PDL”, “Petra” or “the Company”) today issues the findings of its independent Board Sub-Committee in relation to alleged breaches of human rights at the Williamson Diamond Mine (“the Mine”) in Tanzania raised by the UK law firm, Leigh Day and the independent NGO, Rights and Accountability In Development (“RAID”). The Mine is operated by Williamson Diamonds Limited (“WDL”), which is 25% owned by the Government of Tanzania and 75% owned by Petra. Petra acquired its majority interest in WDL in 2009.

WDL and Petra have taken the human rights allegations mentioned above extremely seriously. They have sought to gain a full understanding of the allegations through an external investigation, with the aim of:

• understanding what happened;
• supporting the provision of a balanced and fair remedy, in the interest of all parties; and
• putting in place preventative measures to address the issues identified.

This announcement presents the findings of the independent Board Sub-Committee formed to investigate the allegations. It also provides detail on the measures put in place by WDL and Petra both immediately after being notified of the allegations and subsequently in response to the findings of the external investigation.

Based on the conclusions of the independent Board Sub-Committee, the Company acknowledges that past incidents have taken place that regrettably resulted in the loss of life, injury and the mistreatment of illegal diggers, within the WDL Special Mining Licence area (“SML”). The incidents in question involved WDL’s third-party security provider Zenith Security as well as the Tanzanian Police Force (“TPF”). During the investigation, no evidence emerged that WDL personnel were directly involved in these actions.

The Company took immediate precautionary measures to address the concerns raised, ahead of the findings of the investigation and in order to mitigate the risks of future incidents. These measures included:

• The closure of the holding facility at the mine
• The appointment of a new third party security contractor
• The suspension of personnel implicated
• Deployment of a stakeholder engagement expert and a comprehensive engagement plan with the affected communities
• The implementation of a Community Grievance Mechanism to deal with any day-to-day issues
• The design of an Operational Grievance mechanism (“OGM”) aimed at addressing any historical, or future human rights violations, and the upgrading of the Mwadui medical facility

As announced today, Petra has reached a settlement, on a no admission of liability basis, in relation to claims brought in London (“the Claims”) by Leigh Day, on behalf of the anonymous claimants, in

relation to alleged breaches of human rights, associated with third-party security operations, within the SML.

The agreed total settlement figure is £4.3 million, which includes the sum to be distributed to the claimants by Leigh Day, a contribution to the claimants’ legal expenses and significant funds, which Petra has committed to invest in programmes dedicated to providing long-term sustainable support to the communities living around the Mine.

The OGM is being funded by PDL and will be aligned with industry best practice as advocated by the United Nations Guiding Principles on Business and Human Rights. The OGM is specifically aimed at considering incidents at the Mine involving any additional historical incidents, and any future human rights claims, and providing redress where necessary.

PDL will separately fund a Gender Based Violence (“GBV”) campaign aimed at providing education and information to the groups most vulnerable to gender violence. The campaign aims to strengthen the local capacity of government, organisations, and communities in order to establish a long-lasting culture change, with greater accountability and community-wide awareness.

Commenting, Peter Hill, Non-executive Chairman of Petra Diamonds Limited, said:

“The Company, Board and Management are greatly saddened and concerned by the findings of the investigation and we all regret the loss of life, the injuries and the mistreatment of illegal diggers that the investigation has found to have taken place. The actions being put in place, combined with the agreement reached with the claimants, are aimed at providing redress and reducing the risks of future incidents occurring. This is in keeping with our approach throughout, where we have tried to provide fair remedy, in the interest of all parties, based on a detailed, balanced and independent understanding of the allegations made.

Petra’s CEO, Richard Duffy, took immediate action upon being made aware of the allegations in 2020. The wider Petra Board have been equally determined to address the shortcomings identified, and have taken remedial actions where necessary to minimise the risks of reoccurrence of similar events, recognising that WDL’s small yet high value products will always attract individuals and syndicates looking to exploit these for their own gains.”

Background

The WDL SML covers an area of 30.6km² in the Shinyanga province in north-western Tanzania and is one of the world’s largest kimberlite resources. Between 2011 and 2021, security operations at the mine were provided by a third-party security contractor, Zenith Security and on 1 March 2021 Zenith Security was replaced by a new security provider, GardaWorld. Throughout the period the Tanzanian Police Force has also been actively involved in security operations at the mine.

Even prior to Petra’s acquisition of its stake in WDL in 2009, the mine has been the subject of repeated incursions by illegal diggers. While for many, illegal mining is a means of supplementing income, there is evidence of organised incursions, anecdotally sponsored by illicit diamond dealing syndicates. Parties of illegal diggers range from small, to much larger groups of up to 200 people, with some armed with slingshots, machetes and clubs. Some members of Zenith Security were armed with shotguns and since October 2013 were instructed to only use non-lethal rubber baton rounds. The Tanzanian Police Force were equipped with firearms, stun grenades and tear gas. A Memorandum of Understanding (“MoU”) was signed between the TPF and WDL in May 2019, which stated that “The parties recognise the importance of actions consistent with the terms of the Voluntary Principles on Security and Human Rights, promoting and protecting human rights and fundamental freedoms”. Although the majority of incursions on to the SML by illegal diggers were dealt with peacefully, there have been a number of incidents involving violence.

Allegations

In May 2020, Leigh Day notified the Boards of Petra and WDL that it had issued claim forms in the High Court of England and Wales on behalf of 32 anonymous individuals in relation to alleged breaches of human rights, personal injuries and deaths suffered at and surrounding the Mine, arising

from the security operations. Additionally, in November 2020 RAID published a report outlining similar allegations, during the same period. Leigh Day subsequently expanded the number of anonymous claimants to 72 while RAID expanded the scope of their own allegations.

Petra formed an independent Board Sub-Committee comprised entirely of independent Non- executive Directors to oversee the matters and undertake an investigation into the allegations. The Sub-Committee was supported in its investigation by the specialist external investigator Control Risks, in conjunction with lawyers Freshfields Bruckhaus Deringer LLP.

The Sub-Committee has considered the conclusions of the independent external investigator, which has carried out a thorough investigation, including at the Mine in Tanzania and at PDL, interviewing past and present WDL and PDL managers and Board members, Zenith Security staff and representatives of the local community. Processes and communication within and between WDL and PDL were also investigated.

Investigation Findings

The Sub-Committee found evidence of many incursions onto the SML by illegal diggers. In the years between 2012 and 2020 alone, there were over 7,100 recorded incursions onto the SML, which resulted in more than 1,700 arrests taking place.

While most of these incursions were resolved peacefully, there is evidence of many incidents of aggression, both on the side of the illegal diggers as well as that of the security providers. These incidents of aggression sometimes resulted in injury to individuals on both sides, as well as damage to property and equipment, including vehicles used by the TPF and Zenith Security.

The exact details and number of incidents, which resulted in the loss of life, injury or mistreatment of illegal diggers, is difficult to determine with accuracy. The investigative team often needed to rely on a small number of accounts, which sometimes conflicted. This inconsistency is understandable, given the length of time since many of the alleged incidents took place, combined with many of the incidents having taken place during the hours of darkness. A further challenge to the investigation has been the inability to corroborate the accounts of the claimants due to their anonymity.

The investigation has established that during the period there were 12 confirmed deaths of illegal diggers, with the likely deaths of four others. The available evidence is that of the 12, some were killed by Zenith Security personnel and at least one by the Tanzanian Police Force, all during violent confrontations. In one case, in 2014 a Zenith Security guard was arrested after shooting an illegal digger and subsequently jailed for manslaughter following a trial in Tanzania. With the exception of the one individual referred to above, it has not been possible to establish if in any of the other deaths Zenith Security personnel were criminally liable. The deaths were reportedly notified to the TPF and WDL remains committed to cooperating with the relevant prosecuting authorities as appropriate. The investigation also found no evidence that any deaths or shootings were carried out by WDL’s own personnel.

The investigation established that Zenith Security and the TPF also caused a number of injuries to illegal diggers and that excessive force may have been used on occasion. Records also show that many Zenith Security guards and members of the Police were also injured.

Allegations have been made that Zenith Security personnel adapted their ammunition to fire stone pellets or metal projectiles instead of the authorised rubber baton rounds. While this has been established in relation to one incident in 2016, where the Zenith Security guard was jailed for six months, evidence suggests this may have happened on more than one occasion.

Prior to and during the investigation, allegations of GBV suffered by women on the SML were raised. Given the sensitivity around these potential incidents and the reluctance of any potential victims to provide further information on these allegations, stakeholder engagement around the establishment of the independent OGM will specifically address this point, while the GBV campaign will further assist in this regard.

Some of the allegations relate to alleged mistreatment of illegal diggers inside the Mwadui hospital, that is owned and operated by WDL, including the handcuffing of patients to beds. While it is considered standard practice in Tanzania for officers to guard individuals who are under arrest while they are in hospital and/or to handcuff patients if the police deem it necessary, WDL has stopped this practice at the Mwadui hospital and implemented other changes and improvements which include the installation of a separate, secure private ward to accommodate those in detention or in police custody.

There were other allegations relating to the mistreatment of illegal diggers detained at the holding rooms at the entrance to WDM. The holding rooms were initially operated by Zenith Security, but since 2016 were operated by the TPF, and not by WDL as has been alleged. The investigation has shown, however, that Zenith Security was in de facto control of the holding rooms at times after 2016. The rooms were closed by WDL on 29 September 2020.

It has been established that WDL management were aware of the situation on the ground and that details of many of the incidents, including relating to some of the fatalities as well as the allegations made in the early to mid 2010s, were known at reasonably senior levels within PDL and WDL but were not escalated to the PDL Board. It has similarly been established that since the formation of PDL’s Executive Committee in 2019, incidents and allegations, including those in 2019 by the Kimberley Process Civil Society Coalition, were not reported to it nor to the PDL Board. The Sub- Committee investigation, which included tracking PDL internal email communications, found no information to suggest information was escalated, substantiating the lack of PDL Board knowledge. As detailed below, the WDL and PDL reporting structures have been revised and revamped, to enable timely and accurate reporting of all incursions and incidents, with information now flowing through two independent reporting lines, greatly enhancing the level of information available at Board and senior management level.

Actions Taken

PDL has sought to gain a full and fair understanding of the events, so that appropriate remedy can be provided, and the necessary steps are taken to address issues. The main actions taken by both WDL and PDL, including enhancement measures already implemented to address identified shortcomings, can be summarised as follows:

Governance and accountability

 1.  The Company has acted decisively to hold relevant individuals to account: based on the investigation findings the Board concluded that while there was no evidence that WDL or PDL employees directly caused the incidents, certain senior managers fell short in carrying out their duties and responsibilities, including ensuring that pertinent information was conveyed to the WDL and PDL boards. Given the severity of the issues, these omissions are highly regrettable. Appropriate disciplinary processes have been instigated. In addition, certain individuals have left or will be leaving the Company.

 2.  Reporting structures at WDL and PDL have been revised to address historical gaps and ensure accountability, enabling the more timely, accurate and transparent reporting of all incursions and incidents. The revisions entail a new incident escalation procedure to PDL, including fully transparent reporting to the PDL Board, as well as to the Audit and Risk, and the Social, Ethics and Diversity Committees through two independent reporting lines.

 3.PDL will be appointing a Group General Counsel to, inter alia, oversee governance, compliance and ethics in the business, providing further oversight of PDL’s activities and operations.

Security and Voluntary Principles on Security and Human Rights (“VPSHR”)

 1.  The Company appointed a new security contractor: GardaWorld West Security Limited, a member of the international GardaWorld Group, on 1 March 2021. VPSHR training has been reconfigured and new rules of engagement together with clearer reporting lines have

been established, including monitoring the actions of the security contractor and the TPF, to ensure full compliance with the VPSHR.

 2.  Closure of the on-site facility used as temporary holding rooms on 29 September 2020.

 3.  Welfare of patients awaiting court appearance at the Mwadui medical facility has been secured through upgrades to the facility, including the installation of a separate self- contained private ward, with its own facilities. Security and medical personnel at WDL have been reminded of the required procedures in providing care to patients who are detained or in police custody. Individuals who allege that they were harmed at the Mine and treated at Mwadui hospital will be allowed to access their medical records.

 4.  Rolling out of a VPSHR awareness campaign: this campaign targets Petra and WDL executives and senior managers, as well as the entire security teams at both Group and mine level in Tanzania and South Africa.

 5.  Update of the Company Human Rights Policy Statement: an updated policy statement was approved by the Board on 10 September 2020 and is available on the Company’s website at https://www.petradiamonds.com/about-us/corporate-governance/business-ethics/. A revised version is planned to be released later this year by the Company’s SED Committee and new monitoring procedures have been put in place to ensure compliance with the Policy.

 6.  The Company is also implementing a Human Rights Defenders Policy, which will set out clear requirements in relation to non-harassment and victimisation to safeguard against future harm or intimidation.

Stakeholder engagement

 1.  Deployment of a stakeholder engagement expert at WDL, to improve collaboration and create value for both WDL and its stakeholders. The role entails supporting the mine leadership in their engagement with local communities and other stakeholders, including the provision of high quality and responsive information for stakeholders and developing innovative approaches to engagement.

 2.  Development and implementation of a comprehensive Stakeholder Engagement Plan (“SEP”) for WDL. The SEP will ensure a commitment to open and transparent interaction with the surrounding communities; it is focused on community members in the surrounding areas, civil society, NGOs, Communities Development Committees, local Government, the TPF and Community Leaders. The SEP is focused on all issues of relevance to WDL stakeholders, including security, human rights and social development.

 3.  Opening a new community office inside the main gates of the Mine, with a dedicated grievance desk to enable all stakeholders to raise issues in a free and unimpeded environment. The desk is manned by persons trained in community outreach and with prior experience of working closely with mining communities. Once it is in full operation, WDL also has plans to provide hotline numbers for calls, messaging and WhatsApp engagement.

 4.  Development and launch of a new radio programme “Kwa Pamoja Tunajali” (“Together we care”): to provide a key platform for WDL and its communities to engage directly, address concerns collaboratively and to facilitate local information sharing.

OGM, and Restorative projects

 1.  Following the establishment of the Community Grievance Mechanism, an independent (Tier 2) OGM is being established. It will consider any incidents of potential human rights violations and provide remedy as necessary. It will be managed by an independent panel and operate according to the highest international standards, as set out in the United Nations Guiding Principles on Business and Human Rights. It aims to investigate and resolve complaints following the application of local legal requirements, including the provision of free and independent advice from local lawyers. PDL and WDL encourage any community members

subject to any human rights violations to utilise the OGM, which is expected to be operational by the end of this year. PDL and WDL will also collaborate and engage with any criminal investigation should an individual wish to lodge a complaint with the relevant authorities in Tanzania.

 2.  Community initiatives to support the local economy, intended to provide long term sustainable benefits through income generating projects, with in excess of £1 million of agreed funding committed by PDL as described above. Projects include:

 a)  Feasibility studies into a formalised artisanal tailings project at WDM and an agri- business project,

 b)  The implementation of these projects based on the outcomes of the feasibility studies,

 c)  The establishment of enhanced community clinical and medical support,

 d)  Managed access to parts of the SML, to collect firewood and graze animals,

 e)  Launch of a GBV campaign to provide specific support and counselling for victims of gender-based violence.

For all restorative projects listed above, Petra will work as necessary with the surrounding communities and specialist external consultants and local NGOs to support the design and implementation of these projects. Further information will be provided on PDL’s website in due course.

The approach throughout this process has been to provide full and fair remedy and to limit, in so far as possible, the reoccurrence of incidents, recognising that it will never be possible to completely eradicate illegal incursions, given the nature of the product being mined and the fact that diamonds are a small, easily transportable and valuable commodity that can meaningfully alter the lives of some members of the local community. The PDL Board is committed to the initiatives set out above and will continue to monitor the effects of the actions taken.

For further information, please contact:	~ Ends ~
Petra Diamonds, London Marianna Bowes		Telephone: [phone] [e-mail]
Celicourt (PR Advisor) Philip Dennis Jimmy Lea		Telephone: [phone] [e-mail]
About Petra Diamonds Limited

Petra Diamonds is a leading independent diamond mining group and a consistent supplier of gem quality rough diamonds to the international market. The Company has a diversified portfolio incorporating interests in three underground producing mines in South Africa (Finsch, Cullinan and Koffiefontein) and one open pit mine in Tanzania (Williamson).

Petra's strategy is to focus on value rather than volume production by optimising recoveries from its high-quality asset base in order to maximise their efficiency and profitability. The Group has a significant resource base of ca. 243 million carats, which supports the potential for long-life operations.

Petra strives to operate according to the highest ethical standards and will only operate in countries which are members of the Kimberley Process. The Company aims to generate tangible value for each of its stakeholders, thereby contributing to the socio-economic development of its host countries and supporting long-term sustainable operations to the benefit of its employees, partners and communities.

Petra is quoted with a premium listing on the Main Market of the London Stock Exchange under the ticker 'PDL'. The Company’s US$337 million loan notes due in 2026 will be listed on the Global Exchange market of the Irish Stock Exchange. For more information, visit www.petradiamonds.com.