No Tanzanite Al Qaeda Link, Say Dealers

November 19, 2001

No Tanzanite Al Qaeda Link, Say Dealers

Tanzanite dealers around the world have united in condemning a Nov. 16 Wall Street Journal report as ludicrous and unsubstantiated. The article, which appeared on the front page of the newspaper, says some tanzanites are used to fund al Qaeda supporters.

"The report is illogical," says Abe Suleman of Tuckman International, a gem dealer based in Arusha, Tanzania. "It makes no economic sense whatsoever because there is not enough of a margin in tanzanite to be attractive to bin Laden's organizations, and besides most Tanzanians involved in the business are too poor to be donating money to anyone." Suleman says the government of Tanzania was "broadsided" by the report and says officials from the Ministry of Mines are drafting responses to it, as is TAMIDA (the Tanzanian Mineral and Dealer's Association, of which Suleman is also marketing committee chairman).

"The tanzanite mines in Tanzania, except for Afgem's mine, is in the hands of local Masai tribes," says Menachem Sevdermish of Menavi International Ltd., of Ramat Gan, Israel, who has traveled extensively to Tanzania for twenty-five years. "Masai's know the exact price they can get [for tanzanite] on the world markets. They accept only cash transfers to their banks in Tanzania or America before transferring the tanzanites. Why should someone buy tanzanites for the full price in dollars, smuggle it out to other countries, resell it in dollars, when he could have used the original dollars [to fund al Qaeda] in the first place?" Sevdermish also questions the Wall Street Journal allegations about the smuggled gems, because the Tanzanian government's duties on tanzanite are purposely low to discourage smuggling. "Can you imagine anyone in their right mind would accept to smuggle $100,000 worth of tanzanite, uninsured and with no guarantees, just to save $3000 taxes rightfully requested by the government?"

Other dealers say that to launder money through tanzanite in exchange for dollars is an almost laughable suggestion. "It is easy to buy dollars in Kenya and Tanzania and to wire them out of the country. Why go through the added delay and headache of buying tanzanite, smuggling it and selling it for cash when you could have simply 'washed' the cash by buying dollars in the first place," wonders one gem dealer.

Benjamin Hackman of Intercolor, a major dealer in tanzanite based in New York City, says he has repeatedly asked his tanzanite contacts in Africa about a business called Tanzanite King, referenced in U.S. government court documents regarding the U.S. embassy bombings in Nairobi, Kenya. "No one in the trade has heard of this business name, even after searching government business registries in search of the name." He and others suggest the name was used as a front, perhaps even by al Qaeda operatives, but not for tanzanite trading, as was implied. "Because of the limited supply of tanzanite world-wide it is easy to trace it back to the dealers who actually produced or cut the goods," adds Sevdermish.

Some dealers in the United States and abroad suggest there may be a stronger connection in this story to South African based Afgem, and not al Qaeda, as the Wall Street Journal writes. Afgem, a gem mining and marketing company recently bought into a major block at Merelani, Tanzania, and reportedly spent millions of dollars in developing a mine at the site. It is also preparing to brand its tanzanite, a move that is viewed with suspicion by independent miners who say they lack the resources to commit to their own brand. "Afgem has continually sought to marginalize independent tanzanite miners so it can brand its product," says Suleman. He and other dealers say that by the Wall Street Journal's broad-brush tainting the majority of tanzanite dealers, Afgem stands to benefit as it would be viewed as the only 'clean' source of tanzanite, thus supporting Afgem's brand. It is a charge Afgem's president, Michael Nunn, hotly disputes. "I am stunned and amazed by the very suggestion," Nunn says. "I just spent a weekend worrying about the fate of tanzanite, because this report is so devastating for tanzanite in general. It is a naive and uninformed suggestion that I could have been in favor of a report like this. Our company has invested $20 million in tanzanite much more than anyone else. We have much more to lose. Why would a company act so irresponsibly, or stoop so low?"

In addition, Nunn says he was shocked by what he termed as a "sleazy report." "I have yet to see any substantiation over what was written by the Wall Street Journal," he adds.

With further response by dealers, the Tanzanian government and others still pending, the gem's fate hangs in the balance. What is certain is that American retailers will very soon demand greater accountability and guarantees for tanzanite.

- by Robert Weldon, G.G.

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