The Kimberley Process Certification: “Everybody Knows The Deal Is Rotten.”
“Everybody knows the deal is rotten,
Old black Joe still picking cotton
For your ribbons and bows…”(Leonard Cohen, “Everybody Knows”)
The name, Kimberley, comes from the Earl of Kimberley,
a noble from England for whom the original diamond mining area of South Africa was named. The first diamonds were found in deep “Kimberlite” veins which sink into the ground like giant carrots.
Kimberley was also the location of the first DeBeers mine named after the DeBeers Farm. Back in those days, there were hundreds, perhaps thousands of small scale artisanal miners—all of whom were white and European in ancestry.
The 6000 acre allotments given to Boers where diamonds were found, were actually occupied by tribal societies. These early miners utilized disenfranchised tribal people as cheap labor.
Big holes were dug. Boom towns rose up. The early Kimberley veins were so dense, they created markets that were quite unstable.
Eventually, the boom and bust diamond business of the 1870s and 1880s enabled Cecil Rhodes, financed by the Rothschild’s, among others, to buy up all the white small scale artisinal miners and consolidate the diamond market. DeBeers, known as the Diamond Trading Company (DTC) controlled the diamond market for over a hundred years.
From the late eighties to 2003, regional wars were funded by the diamond trade. The Kimberley Process was created to stop these wars.
In fact, if there was one positive outcome of the blood diamond tragedy, it could be the Kimberley Process Certification (KPCS). Imagine the difficulty of creating a comprehensive treaty with over seventy countries that would encompass all diamond producers and purchasers, making conflict diamonds illegal. Given the complexity of the diamond sector from mine to market, and the number of countries involved, few believed it could be done.
The Details of The Treaty
KPCS is a legally binding treaty, signed by seventy-four countries. Its purpose was to create a trail of custody in the supply chain of diamonds that eliminated diamonds being used for illicit purposes: the funding of regional conflicts.
In a nutshell, the goal of KPCS is to regulate the diamond trade, tracing diamonds from mine to market through a clear and documented chain of custody. Part of the treaty reads:
“Participants are encouraged to ensure that all diamond mines are licensed and to allow only those mines so licensed to mine diamonds. Participants are encouraged to ensure that prospecting and mining companies maintain effective security standards to ensure that conflict diamonds do not contaminate legitimate production.”
Note the word, “encouraged” which is used several times. Though, there are missions that visit countries. No government wants to get kicked out of Kimberley. The treaty supports their ability to regulate and tax diamonds. Yet within each country, the treaty is still highly self enforced and self regulated.
Just about everyone sees KPCS as an honest and valiant attempt by the international diamond industry that works with NGOs and governments to create a better platform. The stakes for the treaty are high. The image of diamonds since the blood diamond tragedy has fully depended upon KPCS.
Yet there are no means through which to insure that jewelers sell diamonds that have been Kimberley certified.
KPCS absolutely does not address labor and environmental abuses resulting from diamond mining. Nor does it assure ethical labor in the digging of diamonds, unless you consider diamonds produced by under compensated small scale miners, or child workers in unregulated environmental conditions as “ethical.”
Indeed, even when diamonds come completely traced from legitimate sources, under the aegis of the KPCS, many diamond miners continue to exist in abhorrent living conditions. The activities in Angola by the star of the Israeli diamond industry, Lev Leviev, who was the first to break the DeBeers cartel, are well documented.
The New York Times wrote a very informative article on Sierra Leon: “Diamonds Move From Blood To Sweat And Tears.”. Though the war is gone, artisanal miners still live in abhorrent conditions and are paid often well under $100 a month.
At a Fair Trade Jewelry conference I presented at in June, 2008, Sue Saanario, the US State Departments’ Special Liaison For Conflict Diamonds, mentioned the need for a “Kimberley II.”
Huge holes exist in its interpretation, and not just in developed countries, but in the US as well. At the same time, to claim the opposite—that a Kimberley diamond provides any assurance of an ethical diamond is absolutely false.
Kimberley And The Artisan Diamond Diggers
Kimberley was created to stop the flow of revenues that funded regional conflict. It was really the small scale diggers that were finding and selling these diamonds, though large scale diamond companies were in the game. DeBeers was purchasing diamonds from these small producers until 1999. These days, large scale producers source from their own mines which are tightly controlled, which is part of their Kimberley assurance.
Nevertheless, what is certain is that if someone brings a pocket full of uncut diamonds to the back alleys of Mumbai, Antwerp or New York, they will, with the exception of those that are busted, find a way into the supply chain. Guaranteed. They will end up Kimberley-washed by diamond dealers.
Every diamond dealer in the world will claim to be Kimberley compliant. In other words, they lie. My concern is that there is way too much business taking place just as it always has: under the table.
At the Istanbul Gem Show in 2007, I spoke extensively to a big diamond dealer there who had a large booth about how massive the amount of diamonds that are traded outside of Kimberley. Upwards of ten or fifteen
percent, he told me. Diamonds are very easy to smuggle.
In a Wall Street Journal article, “DeBeers Polishes It’s Image”, the CEO of DeBeers, Penny stated. “It is estimated that 99.8% of all diamonds in the world flow through the Kimberley Process, which is extraordinary.” I do not know where that statistic comes from.
As Mark Twain said: “There are three kinds of lies: lies, damned lies and statistics.” A diamond field can be ten square miles. Smuggling can reach upwards of fifteen percent, according to an international diamond expert whose specialty is human rights issues.
The only way it can be true, is that so many companies “Kimberley wash” diamonds, which are massively smuggled through the small scale mining sector where many diamonds in Africa are sourced.
Today, diamonds are funding regional conflicts in Zimbabwe, which recently had mass killings in their diamond fields.
Also listed as blood diamond sources are The Democratic Republic of the Congo and the Ivory Coast. All these issues are detailed and widely published from Partnership Africa Canada, which has become the “conscience” of the diamond sector.
No one knows what percentage of diamonds are funding wars versus what percentage are simply being sold on the black market by small scale diamond diggers trying to survive.
The critical issue here is smuggling. Not all smuggled diamonds are blood diamonds. The Republic of Congo, for example, has no diamond mining, yet the country has been exporting large amounts of diamonds which cannot be traced to any origin. Venezuela has about ten thousand artisanal diggers and has not signed on to Kimberley at all.
Yet KPCS states,
“All artisanal and informal diamond miners should be licensed and only those persons so licensed should be allowed to mine diamonds.”
According to the Diamond Development Initiative (DDI), which is addressing the difficulties in the small scale diamond mining sector, there are up to 120,000 diggers in Sierra Leone, 800,000 in the Democratic Republic of Congo and many tens of thousands in Angola, Liberia, Brazil, Guyana, Venezuela and elsewhere.
Before Kimberley, diamonds were often traded without state regulation. Now, for diamonds to go through proper channels, over a million small scale artisan miners who dig for diamonds in alluvial deposits must be “licensed” and sell to “authorized” dealers.
“Authorized dealers?” “Licenses?” Consider the countries where these wars took place. They lacked social institutions and were massively corrupt. Huge amounts of business takes place around the world outside of government control and taxation. Why would a small scale digger want to be taxed on his sale?
It could be argued that at least these diamond diggers do not have a gun to their head, though how much of this is because of Kimberley is subject to intepretation.
To nation build takes many, many years and great resources. Yet, the effectiveness of the treaty rests upon the ability of governments to create fair systems. This is an impossible prerequisite and is KPCS’s achilles’ heel. It essentially made Kimberley’s effectiveness questionable from the start.
Governments limit the licenses and there is often an intricate web of relationships that work against the small scale miner. Officially sanctioned middle men are inevitably going to pay as little as they can so they can make more money.
In fact, the licensing system naturally lends itself to cartels which funnel all the diamonds through a few favored suppliers. For the miner, getting a fair price for a diamond or going black may be the difference between having food for a family or going hungry. Ironically, the Kimberley Process, which was created to eliminate “blood diamonds” did so by creating conditions perfect for a black market.
This type of legal structuring is not present in the sale of any other gemstone. If I want a Zambian emerald, I can go to a region where stones are mined, and buy directly from the source. I could develop a strong relationship with an artisan group and pay them absolutely the best price, assuring that they would keep the cream for me.
Then I could take the ruff to cutters in Namibia, Botswana or Bangkok. If I was really ambitious and had the scalability, I could invest in local cutters. Thus, I could bring the stone to market assuring mine to market custody on a small scale.
Whether this diamond would be considered fair trade or not is an issue beyond the scope of this article. It would certainly provide mine to market custody for the small scale miner. But I cannot do this with diamonds without breaking international law.
This tangled web, explains why it has been so difficult to bring anything like an ethically source diamond from a small scale miner to market. The paper trail and government regulations, for all the good it does, also essentially smothers a lot of opportunity for the entrepreneurial gem trader.
A Great Marketing Scheme
Kimberley has become an excellent marketing scheme that provides great cover for jewelers who want to continue just to do business as usual. It is even used to undermine legitimate attempts to raise the standards. An extreme example was in the Baselworld International Jewelry Trade Show in spring, 2008. This statement appeared in the daily newsletter by a leading official from the Antwerp diamond industry.
“Determining the origin is a direct result of the Kimberley Process and guarantees customers that this is a fair trade diamond which has been produced in accordance with ethical standards.”
Not only is this attempt to brand Kimberley with an ethical code of conduct inaccurate, but to link Kimberley with the concept of fair trade is deeply undermining for those who are attempting to achieve the illusive goal of a true fair trade diamond.
On the retail front, an article in the diamond sector’s Rapaport Magazine (9/07) surveyed sales people in Las Vegas, NV exposing the banality of jewelry stores that sell diamonds, often misinforming customers in regard to conflict diamond issues while selling. The article never made it online because it generated so much controversy. It is easy to get the impression that the blood diamonds tragedy is viewed by many in the jewelry trade as a public relations issue rather than a moral crisis.
What’s confusing particularly on the consumer end is how terminology is used in the marketing of diamonds. The term, “blood diamonds” and “conflict diamonds” are used synonymously. To the public, these diamonds are most readily associated with war torn areas as portrayed in the recent film. This is in accordance with the UN’s definition of conflict diamonds as: “diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally recognized governments, and are used to fund military action in opposition to those governments.”
However, Wikipedia, has a slightly different but important emphasis on the notion of conflict free: “A conflict-free diamond, is a diamond whose profits aren’t used to fund wars and which is produced and mined under ethical conditions. Only diamonds that are certified and can be traced from the mine to the consumer are conflict-free diamonds.” (my bold)
In this definition, since “conflict free” diamonds are linked to those, “produced and mined under ethical conditions… from mine to the consumer”, it becomes understandable why some companies have based their entire marketing on the claim that conflict free applies only to diamonds mined in highly controlled western nations, such as Australia and Canada.
The Net Effect of Kimberley
The real lack of teeth in the Kimberley treaty leads any skeptical and ethical person who knows a little about the history of the diamond trade to wonder about the real reason so many countries and diamond dealers have supported the treaty.
The treaty does not address the social and economic relationships which were the cause of the blood diamond tragedy. It is a perfect collusion between government and large scale mining to control the diamond sector. Let’s look at the real outcome, its two main results. What it essentially accomplishes is:
As a diamond seller, I get calls all the time offering massively discounted diamonds with prices that are not available through official “site holders” who distribute the diamonds from large producers like Rio Tinto and DeBeers. I wonder where those “bargains” are coming from?
The irony of naming the current legal document Kimberley, which disenfranchises once again the small scale miner, certainly could not have been lost to those who framed the treaty. For those who know history it is kind of an inside joke—like the Native Americans who opened casinos around my home in Santa Fe, New Mexico, naming them, “Cities of Gold.”
Yet these days, some important people in the diamond sector are beginning to distance themselves from Kimberley.
Everybody Knows
World Diamond Council (WDC) member Chaim Even-Zohar was recently quoted in the Johannesburg Times as saying,
“Though the very existence of the KPCS has rightfully been heralded as a magnificent achievement, it is slowly degenerating into an antidemocratic, non-accountable and non-transparent mechanism.”
“It’s key members spend great efforts fighting the dissemination of relevant feedback to their constituencies and stakeholders as a way to mask their inability to act responsibly and do what they are supposed to do. As such, the KPCS is evolving in ways that will gradually erode its trust and standing within and outside its immediate stakeholder communities.”
Kimberley was always, in its essence, “an antidemocratic, non-accountable and non-transparent mechanism.” Small scale mining, a key stakeholder, did not have full consultation.
Though Kimberley was framed in large part by NGOs, such as Global Witness, the Jewelry sector’s use of Kimberley, to create a fair and ethical diamond supply chain is analogous to believing that the plumbing, electrical, foundation, walls, ceiling, and roof of a house will change when you paint from optic white to off white.
Until we have truth and reconciliation, can we be sure of the real intentions and sincerity of the WDC along with their network?
Perhaps the World Diamond Council could look in the mirror instead of reflecting blame to those corrupt states (which provide them their products), the Kimberley Process (which they framed) and the Artisan mining sector (which they purchase from).
But the really big question I want to know is where these upstanding members of the diamond trade were ten years ago? When all these wars funded by diamonds were taking place. Why did they not do something after 10,000 were killed, or 100,000 or a million? Was two million deaths to fund regional wars enough? NO. They still sold their diamonds and lived in a consensus trance in which money was more important than humanity.
Why did they wait until 4 million? And why didn’t the diamond sector and jewelers as a whole really notice these issues until the Blood diamond movie? Isn’t there something wrong here? Or is it that I am really misguided and mistrustful of their motives to feel that their voices ring somewhat hollow, without any truth and reconciliation?
The Kimberley Process Certification (KPCS) is part of a historical continuum. First the blood diamond tragedy, which wiped out about four million Africans for which no one in the diamond sector has ever been held accountable; and then Kimberley, created to marginalize the small scale miner and better control the diamond sector to the advantage of large scale mining companies colluding with governments.
The process continues to be used to mislead the public. If you have a cynical view of the diamond sector and their motives, you could conclude that KPCS, for the disenfranchised diamond digger, it is a perfect One, Two Blow!
Conclusion
Some people will read this article and say that I totally oppose Kimberley, which is not true. Many, many people are working very hard to give this treaty more teeth. I do not fault the treaty for its shortcomings. It may be displaying it’s best possible outcome, given the ground upon which it is constructed.
That does not however, change how the jewelry sector uses Kimberley in its marketing. Obviously, I also have strong concerns about its effect on the small scale diamond miner.
There is one simple, elegant solution which would eliminate most of the black market for diamonds. Small scale diggers need real incentives to work within KPCS. For this to happen, you would need to create real free markets that would make the black markets obsolete.
Make it beneficial for the small miners to sell in KPCS markets. Let those governments implementing the Kimberley process with “authorized dealers” just pay the small scale minors what the diamonds are really worth.
As for the very small amount of diamonds coming out of conflict regions which are sold on the black market, the solution is much more complex; some kind of mixture of greater enforcement and changing human nature.
~ Marc Choyt, Publisher, fairjewelry.org
