By Russell Shor

The diamond industry, responding to inter-national pleas to help end civil wars and related atrocities in several African countries four years ago, devised a plan to certify the legitimate origins of diamonds at the source. It called for governments and mining companies of diamond-producing nations to issue certificates for all diamonds legitimately mined and exported.

The intent was to eliminate from the pipeline diamonds that were mined and traded illicitly, many of which were sold by rebel groups in these countries to purchase weapons and support continued fighting.

Ultimately, representatives of more than 50 nations agreed to establish offices to monitor all rough diamond imports in a program that has become known as the Kimberley Process (KP), named after the South African city in which the first planning meetings were held. The offices are the “front lines” against both conflict and illicit diamonds; some investigators believe the latter have also been sold to support terrorist activities.

These diamonds comprise a tiny percentage of the overall market, and strict enforcement helps ensure they will remain so.

I recently visited the Kimberley Process office in Dubai, UAE, which has become a significant rough diamond trading center. Noora Jamsheer, chief executive officer of the Dubai Diamond Exchange, which administers the office, expects that about two million carats of rough will pass through it this year.

The office sits in snug temporary quarters just outside the airport. Each day, an average of three shipments arrive, packed in heavy gauge plastic wrappers, sealed at the source.

“Importers advise us prior to shipment of the nature of the goods and the KP certificate, including the dates of issue and expiry along with the total caratage,” said Maryam al Hashmi, who administers the staff.

“First we check all the documents. Then we unseal the diamond packages and weigh the parcels inside to be certain they match. Once we determine the weight of the goods matches the certificates, we verify the value of the shipment against the invoice.”

On the day of my visit, a large shipment arrived from the Democratic Republic of the Congo (DRC). It contained several thousand carats of blackish industrials and “near gems” – poor-quality rough with small relatively colorless areas that can be cleaved off and made into polished. There were also several small parcels of higher color and clarity goods, including several hundred carats of top-quality macles.

“We had a two-week course on how to evaluate these goods,” she said, noting that the KP office can realistically spot wide discrepancies between declared and actual value, such as obvious gem-quality rough valued at $10 per carat.

Pricing is an important issue, Jamsheer said. The purpose of the valuation is to ensure the stones that left the producing country are the same ones coming into her office.

Quite often, she noted, “there are discrepancies between the declared value on the KP certificate and the real value of the diamonds.
 
“If the deviation between the declared value and the actual value of the shipment exceeds a reasonable percentage, we add that trader to the UAE’s Watch List,” she said. “Traders on the Watch List are closely monitored. If we have further suspicions [that goods might have been substituted], their case is then reported to the appropriate government authorities and the KP Secretariat.”

The Republic of the Congo, which borders the DRC, was expelled from the Kimberley Process in July because it was exporting far more diamonds than was realistic, given that it has no indigenous production. Thus, the KP process appeared to be compromised there.

On the very day the KP headquarters ordered the expulsion of the Republic of the Congo, the KP office in Dubai was notified that a rough diamond shipment from there would be arriving on an Air France flight. An official of the Congo’s government requested that the shipment be cleared because the KP certificate had been issued before the expulsion.

“The trader contacted us, but we could not authorize the import,’ Jamsheer explained. “Then the trader appealed to KP Chairman Timothy Martin, but he delegated the decision back to our office. Again, we did not permit the import because, at the end of the day, the KP was implemented to combat conflict diamonds and the Republic of the Congo could not ensure the rough diamonds exported were conflict-free.”

The KP administrators’ decision to suspend the Republic of the Congo without the months of reviews and grace periods customary in such diplomatic procedures, shows the KP has teeth, said Abbey Chikane, former chairman of the Kimberley Process and the chairman of South Africa’s Diamond Board. Chikane told a South African newspaper the action proves “a country can be removed if there is reasonable doubt it is not complying with the provisions of the Kimberley Process.”