The Naked Truth

Stopping the world’s spin.

Combating Blood Diamonds – The Diamond Industry’s Failure

Wars need money.  Natural resources such as timber, diamonds and minerals play an increasingly prominent role in providing this money, which is often used to fund armies and militias who murder, rape and commit other human rights abuses against civilians. 

Conflict diamonds, also known as blood diamonds, have contributed to wars in Africa that have killed millions of people, destroying lives and wrecking countries. Since 2000, the diamond industry has not done enough to fulfil the pledges it has made to eradicate blood diamonds from international trade. In response to pressure from Global Witness, Partnership Africa Canada, and other civil society groups, the key trade bodies representing the global diamond industry agreed to a voluntary system of self-regulation aimed at helping to prevent the trade in blood diamonds and in supporting the government-run Kimberley Process Certification Scheme. The polished and retail sectors of the diamond industry opposed stringent government regulation when the Kimberley Process was being negotiated, and the industry was left to police itself.

Six years after the blood diamond issue came to international attention, the industry has failed to change its practices. International diamond trade bodies have issued countless press releases and statements claiming that the problem has been solved, but have provided little information on what they have actually done to fix it and fulfil their promises. Despite vast profits made by many in the diamond industry – in 2005 diamond jewellery sales were over US$60 billion – little has been invested to ensure that blood diamonds will not be able to enter the legitimate trade.

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How the diamond industry has fallen short:

The diamond industry has failed to create an auditable tracking system to ensure that diamonds are conflict free. As a key part of the self-regulation, the diamond industry agreed to track diamonds from where they are mined to where they are sold through buying diamonds only from suppliers that provide a written guarantee on invoices that diamonds are conflict-free. The industry also committed to keep records of these invoices and have them audited every year. But the industry did not clarify how this tracking system would work or how it would be audited. A written guarantee simply stating that diamonds are not from conflict sources is meaningless unless it is backed up by actions and policies to monitor that the statement is true. However, there are no clear standards detailing how records are to be kept and other elements that should be examined. It is clearly not an auditable chain of warranties as there is very little for auditors to verify. A Global Witness investigation and a joint survey with Amnesty International showed that many in the industry do not meet even the basic measures of the self-regulation and that there is confusion throughout the industry about what the measures actually mean in practice. Research carried out by the Diamond Trading Company demonstrated that these findings are very largely correct. The World Diamond Council’s misleading public relations campaign is not matched with meaningful action. A new website provides education packs for consumers and retailers, but provides no information about how adoption of the self-regulation will be monitored and reviewed. This system of warranties is unable to prevent blood diamonds from entering the legitimate trade and to give consumers adequate assurances that diamonds are conflict-free. In response to pressure from Global Witness and other NGOs, major diamond mining companies and jewellery retailers have created the Council for Responsible Jewellery Practices (CRJP) to develop a chain of custody backed by independent, third-party auditing measures. While participants include a cross section from the diamond and jewellery supply chain, many in the diamond industry have not yet signed up, especially small and medium sized companies, and implementation will not begin until 2008. We welcome the initiative of the CRJP, but it is too early to say how effective it will be and what impact it will have in improving practices within all sectors of the diamond trade.

The diamond industry has failed to implement a code of conduct adequately to stop the trade in blood diamonds. Although there are fewer blood diamonds now than there were during the 1990s, this is largely due to the fact that wars in Angola and Sierra Leone have ended. However, diamonds are playing a role in the conflict in the Ivory Coast and the Democratic Republic of the Congo. The illicit trade in smuggled diamonds is also flourishing which shows where there are weaknesses in control systems that can be used by those trading in blood diamonds. Global Witness’ field investigations in November 2005 found that diamonds mined in West Africa are regularly smuggled and given Kimberley Process certificates by countries other than their country of origin. Some of these are blood diamonds, and they are being certified as conflict-free.
Given this current situation and the destructive role diamonds have played in the past, diamond companies should be making every effort to carry out due diligence when selecting suppliers to make sure that the diamonds they purchase only come from legitimate sources. The Kimberley Process scheme and industry compliance with this must be robust so that consumers can buy diamonds originating in any country, confident that they are conflict-free. However, members of the industry continue to trade in conflict and illicit diamonds and diamonds are still being used by organised crime, for money laundering and for other illicit purposes. In Belgium, an ongoing investigation into illicit trading may involve up to half of the diamond trade there and millions of dollars in fraudulent activity.

The diamond industry has failed to clean up its membership and to operate in a more transparent manner. Major international trade bodies such as the International Diamond Manufacturers Association (IDMA) and the World Federation of Diamond Bourses (WFDB) agreed to expel members that do not meet the selfregulation requirements or comply with the Kimberley Process. They agreed to publicise names of the expelled members. However, these trade bodies have not provided any information to the public or to civil society about any members who have been expelled. Nor have they shown what measures are being taken to ensure that the self regulation is being adhered to. There has not been adequate monitoring to assess whether members are meeting these commitments. While many in the legitimate industry know who is trading in blood diamonds and using diamonds to fund criminal and other illegal activities, the trade is still secretive and unwilling to tackle this problem head on.

source: globalwitness.org, also see the consumer’s guide on conflict diamonds.

March 12, 2008 Posted by | Human Rights | , , , , , , , , | 1 Comment