Countering Corruption in the Diamond Market

African rebels use diamonds to fund their wars. Diamond dealers work to prevent the sale of these ‘conflict diamonds.’
Countering Corruption in the Diamond Market
An unidentified diamond trader examines a newly polished stone at the Diamond Market in Antwerp, Belgium. (Paul O'Driscoll/Getty Images)
Joshua Philipp
3/25/2009
Updated:
10/1/2015
<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/biblbkb1466328.jpg" alt="An unidentified diamond trader examines a newly polished stone at the Diamond Market in Antwerp, Belgium. (Paul O'Driscoll/Getty Images)" title="An unidentified diamond trader examines a newly polished stone at the Diamond Market in Antwerp, Belgium. (Paul O'Driscoll/Getty Images)" width="320" class="size-medium wp-image-1829319"/></a>
An unidentified diamond trader examines a newly polished stone at the Diamond Market in Antwerp, Belgium. (Paul O'Driscoll/Getty Images)
NEW YORK—During the 1990s, rebel groups in Africa ran amok, resulting in bloody civil wars that took the lives of millions. The rebel groups funded themselves with diamonds which were often mined by men, women, and children held at gunpoint. Such diamonds, known as Conflict Diamonds, or “Blood Diamonds,” once flooded diamond markets around the world.

In 2003 the Kimberly Process was established in an attempt to regulate diamond trade and put an end to trade in Conflict Diamonds. Despite this, corrupt governments and black market merchants still continue to pump diamonds into the international market, slipping through the cracks in the Kimberly Process. But not all such diamonds are funding wars. Some are sold in the black merely to get a higher price.

Facing this, changes are happening in the market as honest diamond dealers seek to provide mine-to-market custody for customers seeking higher ethics in diamond trade. Marc Choyt, publisher of watchdog blog, www.fairjewelry.org and president of Reflective Images, is among them.

Choyt’s company prides itself in the trade of conflict-free and fair-trade jewelry. Choyt gets his diamonds from specialty suppliers, focused on human rights. He explained that the label of “conflict-free” is often abused, as any diamond that is Kimberly Certified can be called conflict-free.

“It’s a regulatory process. It doesn’t have any sort of ‘teeth’ in regards to human rights or labor,” said Choyt in a phone interview. “Kimberly process is considered ‘soft law.’ Each country interprets it with very limited scrutiny.”

Under the Kimberly Process, unpolished diamonds (diamond rough) can only be bought from participating countries. Each shipment must also be accompanied by a tamper-proof Kimberly Process certificate to help ensure that they are conflict-free. It also requires mines, dealers, and exporters to be licensed. Yet gaps continued to remain in the process.

According to Marc, purchasing unlicensed diamonds isn’t worth the risk to large companies. Rather, the problem arises from black-market dealers and the small scale artisan miners in countries where the mining of diamonds is poorly regulated.

While many countries are working with large-scale diamond companies such as De Beers, Choyt said that with the small-scale miners, “Massive amounts are going into the black market. Generally these small-scale diamond miners are working in very corrupt situations with very little social structure, [and] very little functioning government.”

An example of this corruption can be seen clearly in Mugabe-ruled Zimbabwe where an unknown number of illegal miners have been killed by the government. Miners say the death toll is in the hundreds. In December 2008, the British newspaper The Guardian reported on the situation. “... a Zimbabwean air force helicopter swept over the hundreds of fleeing illegal diamond miners and mowed down dozens with machine-gun fire. After that the police arrived and unleashed the dogs that tore into the diggers, killing some and mutilating others. The police fired teargas to drive the miners out of their shallow tunnels and shot them down as they emerged,” says the report.

According to Choyt, such diamonds easily make it into the global market. “There are so many diamonds that are being traded on the open market and they become Kimberly certified, there’s so many leaks. It makes sense because diamonds are highly valuable products that are easy to transport. Somebody could just walk in with a pocket full of a couple hundred thousand dollars worth of diamond rough.”

A documentary by award-winning-filmmaker Sorious Samura shows just that. The video, Blood on the Stone, which aired on CNN in 2007, followed Samura through New York as he attempted to sell diamonds illegally. It didn’t take him long to find a buyer at a local shop. In a chilling statement, the shop-owner told Samura, “I deal a lot with Africa. I’m not dealing only with you. People give me gold, people give me diamonds, people give me colored stones. I help all of them.”

Choyt explained that with the human rights issues surrounding Africa, many would-be-buyers are now turning to Canada. According to him, Canadian diamonds are labeled “conflict free” even though they have massive environmental impact in the Northwest Territories, and one fact remains clear: “Africa needs diamond trade, that’s without question,” said Choyt. “I think the cutting edge of diamond sourcing in Africa is working with buying a diamond that is actually cut and sourced in those countries.”

Such business practices are now beginning.

Alex Twersky is the president of Finesse Diamonds, which works on a business model that hires locals in Namibia, Africa and ensures that they are treated fairly. “So the diamonds, instead of being exported to foreign cutting centers as has been the practice for years, are bought and processed locally in Namibia. This has created over 100 jobs, most of them well-paying jobs,” Twersky said in a phone interview.

According to Twersky, although it costs more money training and hiring locals, he believes that fairness is what comes first and the market will follow. “There are significant cost advantages to manufacturing in India for example, but we believe there is a very positive selling point to the consumer that the diamonds they are buying come from Namibia,” he said.

Buying diamonds in the African market can be beneficial to the people there if it is done responsibly. Twersky used Botswana, the largest diamond producer in the world, as an example. “Over 75 percent of their GDP is derived from diamonds. Botswana offers free education through the university level to all of its citizens,” he said.

“It offers free healthcare to all of its citizens, has the second highest per-capita GDP in all of Africa—which is over $15,000 per head—and has the second highest average per-capita income in Africa. It’s a success story. You can’t deny it. Namibia is also a very successful, stable country.”

“In countries like Botswana and Namibia, they have stable governments because their industries are stable.”

Joshua Philipp is an award-winning investigative reporter with The Epoch Times and host of EpochTV's "Crossroads" program. He is a recognized expert on unrestricted warfare, asymmetrical hybrid warfare, subversion, and historical perspectives on today’s issues. His 10-plus years of research and investigations on the Chinese Communist Party, subversion, and related topics give him unique insight into the global threat and political landscape.
twitter
Related Topics