Retailers Fail Kimberley Test, Says Global Witness


March 30, 2004

Retailers Fail Kimberley Test, Says Global Witness

Human rights group Global Witness says major U.S. and international retailers selling diamond jewelry fall short of promises to demand warranties from suppliers that the diamonds they receive are conflict free, according to a report issued March 30 during the annual meeting of the World Diamond Council in Dubai. WDC was formed to address the issues surrounding conflict diamonds. Global Witness spearheaded the effort to bring conflict diamonds to the world's attention.

The report is called "Broken Vows: Exposing the 'Loupe' Holes in the Diamond Industry's Efforts to Prevent the Trade in Conflict Diamonds." It details a survey and an undercover investigation Global Witness undertook to find whether retailers were fulfilling their role in complying with a voluntary industry system meant to keep conflict diamonds out of the legitimate jewelry trade.

The Kimberley Process Certification Scheme is an international import/export program launched in 2003. It requires governments to monitor and seal diamond exports and imports and keep records to ensure conflict diamonds can't enter the legitimate rough diamond trade. Diamond cutters and traders agreed in 2002 to follow up with a voluntary system of warranties, pledging the diamond parcels they subsequently cut and traded continued to be free of conflict stones. Diamond jewelry manufacturers also agreed to comply with and pass on the warranties. Retailers, in turn, agreed through their major trade organizations that they would require their suppliers to provide the warranties and educate their employees about the voluntary system, so they could answer consumer concerns about conflict diamonds.

Last year, Jewelers of America enlisted the support of all its state jewelry associations to get a written commitment from members to secure the Kimberley warranties from all their suppliers. Rewards were given to associations that got 100% of those commitments. Still, JA represents only a portion of the U.S. jewelry retail trade and can not compel compliance in the voluntary system.

"Diamond jewelry retailers are the industry's public face and they have a special responsibility to tackle conflict diamonds by complying with the self-regulation and by actively promoting compliance by their suppliers. But some of the largest U.S. and international retailers are paying only lip service," says Corinna Gilfillan of Global Witness. "It is even more disturbing given that the industry will soon be required to implement anti-money laundering regulations under the USA Patriot Act to help combat terrorist financing."

Global Witness surveyed 30 retailers in Los Angeles, Miami, New York City and Washington, DC, finding that:

•Only five of 30 retail companies formally contacted informed Global Witness in writing that they have a policy on conflict diamonds and are implementing the system of warranties: Fortunoff, Pampillonia, Tiffany & Co., the Signet Group (parent company of Sterling Jewelers and other retail brand names) and Zale Corp. Tiffany & Co. stood out, says Global Witness, because it described how it has strengthened its sourcing and auditing policies to help ensure it's not dealing in conflict diamonds. Companies that did not respond include: international luxury jewelry companies such as Bulgari, Cartier, Harry Winston, Van Cleef & Arpels and Wempe; jewelry chains Littman Jewelers and Whitehall Jewelers; and department stores Federated (parent company of Bloomingdales and Macy's) and Saks Fifth Avenue.

•Salespeople at only four of the 33 stores visited by Global Witness investigators were well-informed about their company's policy and the system of warranties.

In the report, Global Witness says the World Diamond Council, as well as other trade organizations, have inadequately monitored compliance with the self-regulation. Global Witness is urging governments participating in the Kimberley Process to directly regulate the diamond industry's compliance with its self-regulation system. The group is also calling on WDC and other key industry bodies to develop a common standard for verifying compliance with self-regulation and to promote its adoption throughout the diamond industry.

A copy of the report can be downloaded from globalwitness.org.



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