Diamond Industry malpractices hurt livelihood in Koidu – Panama Papers

Diamond Industry
[Image Courtesy: Issouf Sanago, AFP, Getty Images, Kcur]

Dangerous working conditions, low wages, forced displacement, disturbed community living, rebel wars – these factors have tainted diamond mining sector. Tax evasion, money laundering and other illegal activities by corporate and billionaires involved in diamond industry have made the systems opaque.

According to a report by ICIJ (The International Consortium of Investigative Journalists) the ‘Panama Papers’ leaking has unveiled a network of companies connected to Koidu mining that are accused of serious environmental harms and unpaid taxes. These companies are also responsible for worse living conditions of the communities near Koidu mine.

Koidu Limited operates a diamond mine in Koidu, a city in eastern Sierra Leone. The company was set up in 2003 for USD 750 by a Panama law firm Mossack Fonseca. Recently leaked millions of documents, known as ‘Panama Papers’ blew whistle over this firm’s illegal activities. These documents say that Koidu Limited is owned by Octea Mining Limited, which in turn is owned by a series of companies from British Virgin Islands, Guernsay and Leichtenstein. These islands are controlled by Israeli mining mogul Benjamin Steinmetz along with his family, says the report. Koidu Limited is apparently Africa’s most controversial mining company.

Earlier, Stienmetz, owner of Ascot Diamonds, was also accused of colluding along with De Beers and regulator’s chief executive Levy Rapoo and stealing from South African diamond industry.

Diamond Industry
Koidu residents escorted by armed guards before mining blast [Image Courtesy: Cooper Inveen, VICE News]
Koidu city of over 100,000 people has seen two protests by residents and workers. One in 2007 and other in 2012, against the company’s working conditions and environmental impact. Two people were killed in each protest due to police firing, including a 12-year-old boy.




In 2015, Sierra Leone authorities threatened Koidu Limited to discontinue their mining license due to the company’s failure in repaying loan owed to government and banks. Some lawyers of the city brought the company to court for not paying hundreds of thousands of property tax. Contradictorily, the company claims to have spent millions on community development.

Koidu’s mayor, Saa Emmerson Lamina complaints of not having medical facilities close by, bad roads and unemployment. “If we got that money, we would have been able to make some serious changes in the lives of our people, in agriculture, education and even social welfare.” he said.

After years of struggle in 2015, Koidu city council sued Octea Limited and ordered it to pay USD 684,000 for not paying property tax. But in April 2016, four days after leaking of Panama Papers, High Court of Seirra Leone declared no connection between Octea Limited and Koidu Limited and that Octea is not liable to pay the property tax.

Tatu Ilunga, a former tax lawyer and senior policy advisor on tax for Oxfam America says, “The secrecy of tax havens and the complexity with which companies can arrange their businesses makes it difficult for developing countries to get a fair deal in the share of revenue from their natural resources”

Tiffany & Co. the luxury jeweler in the U.S. had loaned Koidu Limited tens of millions of dollars for rights on the stones mined in Koidu.

Diamond Industry
Sierra Leone communities are resettled to make way for diamond mines [Image Courtesy: Cooper Inveen, Ground Truth]
Amid all this business malpractices, the communities in Koidu are living in misery. Explosions happening in mines, once or twice a week in the evening compel residents to move with their belongings temporarily. Over time, these explosions leave their houses damaged. Haunting memories of mortar bombs falling during 1990’s west African nation’s civil war hover over their minds due to these explosions. Blasting in dry season leads to dust and pieces of rock flying in the air, which further leads to coughing and headache.

Tricia Feeney, executive director of the British NGO Rights and Accountability in Development said, “Whether it’s dust, water contamination, loss of land or violence, nearly all of the costs of mining activities in Africa are borne by the communities.” She further said, “And all the benefits are going to this tiny cadre of wheeler-dealers – individuals or companies.”

Memorial sign built for one of the protesters who died in 2007 says, he died “during a peaceful demonstration … against Koidu Holdings S.A. Limited for corporate abuse of community rights.” A commission devised to investigate these killings cleared blames on the company saying the security persons who killed these people were not under the company’s authority.

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