What was true of Blood Diamonds in Sierra Leone, as portrayed in the Leonardo DiCaprio starrer, is still true for many of the diamond producing African nations. Not just that, it seems that the diamond trade got even bloodier since then. A new comprehensive and explosive 85-page report by Amnesty International – “Chains of Abuse”, details abundance of blood diamond mining in Central African Republic (CAR), atrocities and human rights abuses caused by diamond mining, smuggling of these blood diamonds across borders and companies and institutions acting like “blind man”, despite the 2013 Kimberley Process (KP) ban on exports of diamonds out of CAR.
Apart from the local armed militia, unscrupulous traders and companies, local authorities etc., involvement of new “actors” including Antwerp and surprisingly Dubai – 2 of the biggest global diamond trading centers, in enabling percolation of these blood diamonds in the global diamond supply chain have been exposed in the extensive research by Amnesty International.
Why CAR diamonds are Blood Diamonds
- In 2012, a rebel armed group – ‘Seleka’ began its monstrosity in CAR, overthrowing the government in March 2013. As a result, rival armed militia – ‘Anti-balaka’ emerged and since then fighting between the two groups has created civilian horror and bloodshed.
- Conflict between these groups has resulted in deaths of more than 5,000 people till now.
- These groups have “engaged in serious human rights violations, including summary executions, rape, enforced disappearances and widespread looting”.
- Thousands of small-scale artisanal diamond miners and innumerous local civilians have suffered largely by way of torture, attacks, exploitation, displacement and human rights abuses.
- KP imposed a ban on export of diamonds out of CAR and suspended its membership in May 2013.
- Due to lack of any prohibition, both the groups have profiteered largely out of the internal diamond trade by direct control of several alluvial diamond mining sites and ‘taxes’, ‘mining fees’ or ‘protection’ money (extortion) from local miners and traders, in turn furthering their onslaught and crimes.
- The UN Panel of Experts also named anti-balaka commanders who were operating as diamond traders.
Human rights abuses
- At the unregulated diamond mining sites, health and safety risks are serious and artisanal diamond miners have to work in dangerous conditions, without any protection.
- NGO International Crisis Group, in 2010, estimated that only 5% of the 80,000-100,000 CAR artisanal miners are formally registered, do difficult and dangerous work while getting poorly paid.
- International Crisis Group highlighted health issues of hernia, physical exhaustion, vulnerability to malaria and parasites, and safety issues like serious injuries, miners dying under collapsed pit walls, divers sometimes not resurfacing common.
- Miners have to carry out very hard work for very little money and are commercially exploited and harassed by middlemen including diamond collectors.
- Serious concerns of child labor persist in CAR’s diamond mining sites. Amnesty International even found an 11 year-old boy working in ‘hazardous conditions at a diamond site’.
- A 2009 study by CIFOR claims that “government agents are perceived as a significant source of harassments by the miners”.
- A July 2015 report by World Bank mentions that elites have profiteered from the natural resources in CAR, while “lives and working conditions of the population in areas producing diamonds has increasingly worsened”, implying “significant grievances for the local population”.
The grim scenario still exists
- Even though on 23rd Jan 2014, the transitional president Catharine Samba-Panza was sworn in, CAR government lacks an adequate military force and has little power to curb the rampant violence.
- UN, in Feb 2015, reported “surging violence in CAR had forced tens of thousands to flee their homes since the beginning of the year to escape killings, rape and pillaging by militias”.
Diamond mining is still taking place
- Despite the conflict and ban on exports, Amnesty International witnessed that diamond mining-sites are still functional at most diamond centers in CAR.
- The UN Panel of Experts in its October 2014 report presented satellite images of Sam-Ouandja, an area associated with Seleka forces control, highlighting the rapid increase of rough diamond production in the area, in the preceding months.
No effective control to ensure diamonds produced are not blood diamonds
- Amnesty International’s interactions with traders revealed that none had any means to screen their diamond purchases to ensure that anti-balaka were not directly or indirectly benefiting from mining or trading of these diamonds.
- Major diamond collectors told the UN Panel that they could not give any assurances that their diamond purchases did not benefit armed groups.
- A diamond collector told the UN Panel that he had “never visited any mining site to verify the security conditions”. While a diamond trader described to Amnesty International in May 2015 that he “has to work like a blind man”.
- Moreover, Amnesty International’s sources revealed that “some diamond traders bought directly from the anti-balaka..”.
- A diamond collector told UN Panel that he purchases from an anti-balaka leader in west of CAR.
- Ineffectiveness of KP has been discussed below, while several loopholes including those of KP are detailed in the Amnesty International report.
These blood diamonds are getting smuggled out of the country
- Belgium authorities in May-June 2014 seized 3 diamond shipments, which are believed by UN to be originated in CAR. Kimberley Process Working Group of Diamond Experts (WGDE), post examining digital images of these diamonds stated that it was highly probable that the diamonds originated in CAR. As a result, Badica – one of CAR’s major diamond buying houses and its Belgium sister concern ‘Kardiam’ were imposed sanctions on.
- Both, UN Panel of Experts and NGO International Peace Information Service (IPIS) have noted that Seleka have been involved in smuggling of diamonds out of CAR.
- UN Panel has also noted that individual Seleka commanders “have captured part of the trade, taking diamonds to the Sudan instead”.
- Detailed testimonies from industry and government sources to UN Panel clearly indicated that Badica has been dealing in CAR diamonds trafficked abroad.
- CAR’s Kimberley Process office itself admitted that ~30% of diamonds left the country illegally before the 2013 conflict outbreak.
- A 2010 World Bank Study has found that 50% of diamonds, mostly high value, may have been smuggled out of CAR illegally.
- Even the KP acknowledges that CAR diamonds have subsequently reached international markets.
- UN Panel of Experts has mentioned that around 140,000 carats of diamonds worth USD 24 million have been smuggled out of CAR even after the KP suspension. Moreover, from 2011 till the time of KP suspension in May 2013 (a time when conflict was going on) around 800,000 carats of diamonds have been exported, which are essentially blood diamonds.
Trading routes and role of international diamond centers
Amnesty International report details several trading routes through which these blood diamonds are smuggled out of CAR. Prominent among them are:
- Cameroon – Firms like Gems Africa in Cameroon are reported to buy diamonds from CAR conflict affected areas and eventually export them to centers like Dubai with a Cameroon KP certificate. A customs official at Douala airport acknowledged to Amnesty International that diamonds could be fraudulently exported and customs staff in general had limited knowledge of KP and hence unable to effectively implement it.
- Democratic Republic of Congo (DRC) – NGO Partnership Africa Canada (PAC), which closely worked with KP since its inception, says “DRC’s poor internal controls make it highly vulnerable to smuggled goods from conflict-affected areas, most recently the Central African Republic”.
- Chad and Sudan – Neither of the countries are KP members. In Dec 2014, IPIS reported that there was an increase in diamond trafficking into Sudan since CAR’s suspension from KP. 85-90% of these diamonds are high-medium gem quality, representing “sizeable gains for armed groups”.
- Bangui Airport – Amnesty International learned that “a significant number of diamonds are being smuggled out through Bangui airport, including through flight crews”.
- 2010 report by International Crisis Group notes that most diamonds smuggled out of CAR cross the western border into Cameroon, where there is a ‘strong illegal market’, while in smaller quantities diamonds are smuggled to Congo and DRC where export tax is significantly lower and risk of detection is less since stones look similar. Similarly, smugglers sell diamonds in Sudan too.
- Amnesty International finds that lack of effective controls in neighboring CAR countries and smaller size of stones makes it relatively easy to smuggle diamonds into other countries where they can be traded, processed and exported.
- Dubai – The CAR diamonds seized at Belgium were routed through Dubai and Dubai’s failure to intercept them questions the center’s efficacy of controls. Amnesty International found that only infrequent random paper checks of KP numbers and random audits of annual stock declaration forms (in both cases, only one check in a sample of hundred) are carried out in Dubai. The underlying principle of diamond trading in Dubai is “trade proceeds smoothly” than ensuring that no blood diamonds are routed through it. Besides, Amnesty International also found several examples of “mistakes” by traders, which were subsequently forgiven and no action taken. Despite several Dubai-based companies were involved in the shipment of diamonds that were seized in Antwerp, Dubai Multi Commodities Centre (DMCC) was told by the companies involved that it was an “honest mistake”, resulting in no further actions. In another example, the report details the account of how a 100-carat diamond was smuggled into Dubai and then exported using a UAE KP certificate. Also, issues of transfer pricing and tax manipulation have been detailed in the report.
- Antwerp – Since KP is a not a stringent and statutory system, a parallel system of “industry self-regulation” is operated by the Antwerp diamond industry. Members of the diamond bourses and trade exchanges in Antwerp are not required to provide any documentary evidence while exporting diamonds but instead are allowed to sign a general declaration about KP compliance.
And local diamond buying houses have stockpiled these blood diamonds, ready to proliferate the markets
- The two major diamond buying houses in CAR – Badica and Sodiam, have continued to buy and stockpile the diamonds mined during the conflict, despite a ban on their exports.
- By 2nd July 2014, Badica purchased 2,896 carats of diamond roughs mostly from the conflict areas of Bria and Sam-Ouandja. As of April 2015, Badica held a total of 3,966 carats with value of USD 0.55 million.
- Whereas Sodiam holds 60,766.38 carats of diamonds worth USD 0.7 million as on April 2015. 90% of its March 2014 stock was bought after CAR was suspended from KP and more was bought later on. Sodiam representative confirmed to Amnesty International that the company was operating continuously since the outbreak of violence and is awaiting the lifting of KP suspension.
- UN Panel has noted that “Sodiam’s purchases have incidentally financed anti-balaka members..” and Amnesty International is of the belief that risk of Sodiam’s past and on-going purchases having financed the anti-balaka is high.
Kimberley Process is nothing but hogwash
- KP uses a very narrow definition for ‘conflict diamonds’ – “diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments” and does not cover diamonds mined or traded that have caused human rights abuses, financing of abusive governmental powers etc.
- KP does not require companies in the global trade of rough diamonds to carry out supply chain due diligence at any point and on the contrary absolves companies of any responsibilities even to investigate their own supply chains for checking any possibility of financing of armed groups or human rights abuses.
- This primarily means that the actual blood diamonds can go undetected, leaving consumers in the dark about their origins. In case of CAR, even before the May 2013 ban, diamonds were highly associated with human rights abuses but since they are not covered in the KP definition, they were (and are in other African countries) freely circulated as legitimate KP certified diamonds.
- KP’s ban on export of CAR diamonds has actually led to increase in smuggling of blood diamonds, leaving a big question mark on the efficacy of the process itself.
- In July 2015, KP has formally approved partial lifting of CAR’s suspension, from the so-called ‘compliant zones’ if certain criteria are met, without any strong mechanism and assurance that diamonds from non-compliant zones will not be mixed with those from ‘compliant zones’. Besides, it suggests “an area will be compliant if an armed group profited from but did not control the trade in the area”!!!
- Representative of the diamond industry in KP – President of the World Diamond Council, has said “any diamonds bought during the ban should not be exported as they are ‘contaminated goods’”.
- KP is a voluntary initiative, in which participating states implement the scheme through their own internal controls and laws, which vary widely, instead of “definitive obligations”.
- As Lucy Graham of Amnesty International puts it “This is a wake-up call for the diamond sector. States and companies can no longer use the Kimberley Process as a fig leaf to reassure customers that their diamonds are ethically sourced.”
- Before any diamond reaches its processing center, it is imported and exported multiple times from a place, getting traded 5 to 6 times normally. During this process, a diamond gets mixed with diamonds from other destinations thus losing its identity of origin. KP allows such trading of mixed diamonds under Mixed-Origin Diamonds Kimberley certificate. At each shipment, a new KP certificate is issued and the old one becomes obsolete. Obscurity of the country of origin of diamonds under the Mixed-Origin rule not only makes a complete mockery of the system but also enables blood diamonds to get mixed with other diamonds.
- Financial Action Task Force (FATF) have also raised concern regarding the Mixed-Origin certificates highlighting the increase in risk of non-Kimberley diamonds (mostly blood diamonds) entering the diamond pipeline using KP certificates as diamonds are mixed, bought, sold and mixed again.
- Besides, 2013 report of FATF on diamonds, money laundering and terrorist financing raises concerns about the process of Mixed-Origin certificates as ‘new’ documents are used to hide the true origin of diamonds and facilitate diversion of payments.
- In September 2014 alone, out of 690 diamond shipments exported from Dubai, 510 or roughly 75% carried mixed origin certificates.
- Amnesty International observed in a case of a diamond shipment coming from India with a Mixed-origin certificate, the UAE Kimberley Process Director mentioned that those diamonds could be from DRC, but no enhanced checks were observed.
Failure of crackdown on the illicit activities in the conflict areas of diamond producing African countries and on the companies involved in spite of known high occurrences and quantities of blood diamonds in circulation, lack of appropriate due diligence process and systems to ensure the origin of diamonds (like Chain of Custody), absence of onus and responsibility on companies trading in diamonds to ensure that blood diamonds do not enter the pipeline, utter failure of KP as a system, lack of transparency in the diamond trade and presence of an unethical economic-regulatory environment in the global diamond industry have resulted in facilitation of easy mixing and circulation of conflict diamonds.
As the Amnesty International report summarizes – “These failures – both by States and companies – mean that, ultimately, diamonds are circulating in international and consumer markets that are associated with conflict and abuses. Despite more than a decade of the Kimberley Process, diamond supply chains are characterised by opaqueness, abuse and unjust enrichment.”
However, CAR is just one small piece of the overall picture. Similar conditions and issues prevail in other conflict areas including Zimbabwe, Angola – KP’s 2015 Chair!!! A 2000 trade statistics from UN clearly shows that diamond rough exports from CAR to Belgium was USD 52 million, while according to Belgium authorities official rough diamond imports into Belgium from CAR was USD 168 million. The gap clearly indicating smuggling of DRC diamonds by armed groups via CAR, during the DRC conflict.
Apart from the pain and sufferings of the locals, unsuspecting consumers have been deceived and defrauded when some global retail chains ‘guarantee’ that their diamonds are 100% conflict-free. When diamond collectors upstream do not know from which mines those diamonds have come, it is then baffling how some jewelry companies ‘guarantee’ that their diamonds are non-conflict ones.
Considering their profusion and proliferation globally, in most likelihood, that so-called ‘natural’ diamond on your finger or around your neck, may very well be a blood diamond!!