Professional Jeweler Archive: Conflict Diamonds: A Resolution

September 2000

Diamonds: News

Conflict Diamonds: A Resolution

Two major diamond organizations agree on a process to stop the trade of illicit gems

A nine-step plan to curb the trade of diamonds funding conflicts in Sierra Leone, Angola, the Democratic Republic of Congo and Liberia was approved at the 29th World Diamond Congress in Belgium by the World Federation of Diamond Bourses and the International Diamond Manufacturers Association. The activist groups that called the issue to the world’s attention endorse the plan also.

Positive repercussions are expected throughout the diamond pipeline, from producer to retailer. Retailers in particular will benefit now that they can answer consumers’ concerns with concrete examples of what the industry is doing about conflict diamonds.

Industry analysts say the plan will restore any flagging confidence and that supplies and prices should remain stable. “We believe [the plan] is implementable in the short-term and does not preclude further steps being taken when the means and requirements arise,” the document states.

No Can Do

The document first lists actions the industry is not able to take:

1. It’s not possible to determine the source and origin of each rough diamond. (However, with the correct system, rough diamond parcels can be monitored within a net.)

2. There is no way to tag, track and identify finished polished diamonds.

3. There is no way to make sure all rough diamonds travel within an identifiable net.

The Possible Dream

Then the document lists actions the congress wants the industry to take:

1. Each accredited rough diamond importing country – whether a producer, manufacturer or dealing center – should enact “redline” legislation. As such, no parcel of diamond rough could be imported unless it has been sealed and registered in a universally standardized manner by an accredited export authority from the exporting country.

2. Each exporting country, which can be a producer or accredited dealing/ manufacturing center, should establish accredited export offices or a diamond board that seals parcels of rough diamonds to be exported and registered in an international database. If the country is a producer, it should be accredited only if it has control mechanisms to determine the flow and legitimate ownership of the rough to be exported.

3. Polished-diamond-consuming countries should enact legislation forbidding the importation of polished diamonds from any manufacturing/ dealing country that has no redline legislation of rough.

4. As part of the diamond net, every country – be it a rough exporter, importer or polished-consuming country – should enact legislation calling for criminal penalties against any person or company proven to be knowingly involved with illegal rough diamonds.

5. Every diamond organization should adopt an ethical code of conduct on conflict diamonds, labor practices and good business practices. Failure to adhere to this code would lead to expulsion from WFDB, IDMA and other relevant organizations.

6. As a positive measure of compliance, all relevant and interested parties should promote adherence to the code in the consumer marketplace.

7. The trade should enlist the support of banks, insurance companies, shipping companies and other pertinent providers of goods and services to expose and cease business relations with anyone found knowingly violating these principles.

8. The trade should conduct continual analysis of relevant technologies – and invest in developing them – for implementation leading to greater compliance.

9. Compliance should be monitored and controlled by an International Diamond Council, composed of producers, manufacturers, traders, governments and relevant international organizations. This process would be fully verified and audited.

NGO Support

Endorsing the plan are representatives of some 60 activist groups (also known as non-governmental organizations or NGOs). These include Global Witness, Amnesty International, World Vision, Partnership Africa Canada, Physicians for Human Rights and Fatal Transactions.

The NGOs stress they will monitor how the industry implements the plan. They also praised WFDB and IDMA, saying they had never seen an industry respond as quickly. “The test will be the willingness by the industry to quickly finger out those who are dealing in conflict diamonds,” says Ian Smillie of Partnership Africa Canada.

Global Witness first drew the world’s attention to the horrific treatment of innocent civilians in war-torn African countries. The wars have been funded largely by the sale of diamonds by rebel groups, so the NGOs pressured diamond organizations to solve this problem.

Reportedly, about 4% of diamonds on the world market fund conflicts. All parties, including the NGOs, agree it’s imperative not to damage trade in the world’s legitimately traded diamonds. Several African countries – including Botswana, Namibia and South Africa – depend on the diamond trade for their economic strength.

– by Robert Weldon, G.G.

Trickling Down to the Retailer

At the bottom of the conflict diamond powder keg is the consumer, and so far no one has ignited the fuse. The unanswered question is how the issue will be resolved in jewelry stores.

Because diamonds are not a necessity like food or clothing, industry leaders say it’s imperative to maintain diamonds in a positive light. “We owe people like Peter Hain, the British foreign minister of state, a debt of gratitude for being a moral antenna,” says Sean Cohen, International Diamond Manufacturers Association president. “From our perspective, one conflict diamond is one too many.”

While dealers say most consumers – or retailers, for that matter – don’t appear to pay attention to the internal politics of African countries, they also concede this could change in a heartbeat. Coverage in general-interest publications such as Newsweek and daily newspapers, including photos of children with severed hands or guerrillas with machetes and machine guns, brings this story to the public.

Head Off Bad Publicity

Leaders of organizations with strong links to U.S. retailers say that’s exactly what they’re trying to head off.

Jewelers of America held meetings in New York City with U.S. retailers following the World Diamond Congress. The goal was to craft the resolutions agreed on at the Congress into language retailers can use.

“A lot has been done already,” says Matthew Runci, president of JA. “We had backgrounder briefings for retailers in June to offer guidance. One suggestion is retailers and dealers signing assurances the don’t handle conflict diamonds.” But Runci says the time has come to form a proactive strategy for the future. “JA wants to develop messages that are in a user-friendly format. We’re looking at things such as an industry-wide communications campaign to inform the consumer press and consumers as to what steps were taken in Antwerp.”

Industry Back-Up

The congress resolutions, once implemented worldwide, should help calm most fears of jewelers. Diamonds will be traded with an industry-based chain of warranties that can be traced to the ultimate source. “It goes without saying these warranties must be true and genuine,” says De Beers Chairman Nicholas Oppenheimer. “The customer must be reassured the diamond he or she buys is free of conflict.”

Even before the resolutions take effect, all major diamond centers have issued resolutions calling for the dishonorable discharge of any dealer knowingly trading in conflict stones. A dismissal would result in a violator’s name and picture being posted in trading organizations.

The resolution also calls for exporting countries such as Sierra Leone and importing countries such as Belgium to pass legislation regarding the exchange of conflict diamonds. Trade in “hot” diamonds will be punishable by law. While some suggest the added bureaucracy will increase the price of diamonds, industry leaders say they don’t expect a significant change for consumers.

– R.W.

Copyright © 2001 by Bond Communications