WASHINGTON, D.C. - Major U.S. and international retailers that sell diamond jewelry are failing to follow through on promises to prevent the trade in so-called 'conflict diamonds' that have fueled civil war and violence in several African nations, according to a new report released at this week's annual meeting of the World Diamond Council (WDC) in Dubai.
The report by British-based Global Witness found that of 30 retailers in four major U.S. cities, salespeople in only four that were visited by the group's undercover investigators were well informed about their company's policy and system of warranties to ensure that they did not sell conflict diamonds.
And out of 30 companies, 25--including international luxury companies like Bulgari, Cartier, and Harry Winston--failed to respond to Global Witness in writing about their policies on conflict diamonds and how they ensure that none are sold by their stores. U.S. jewelry chains, including Littman Jewelers, Whitehall Jewelers and U.S. department stores like Bloomingdales, Macy's and Saks Fifth Avenue, also failed to respond.
The 40-page report, 'Broken Vows: Exposing the 'Loupe' Holes in the Diamond Industry's Efforts to Prevent the Trade in Conflict Diamonds,' concluded that retailers' compliance with the so-called Kimberley Process on which they agreed in 2002 was "abysmal" and added that the WDC itself, which is supposed to coordinate and monitor compliance was also falling short of its commitments.
The Kimberley Process, which was formally launched in January, 2003, was the result of negotiations between the diamond industry, governments of diamond-producing and -importing countries, and international non-governmental organizations (NGOs) to devise an international certification scheme aimed at halting the trade in conflict diamonds.
In a landmark report released four years ago, Global Witness found that rebel groups in conflict-ridden countries such as Sierra Leone, Angola, and the Democratic Republic of Congo (DRC) were mining diamonds in order to buy arms and pay soldiers to sustain their insurgencies. The group, backed by other NGOs, such as Amnesty International, called on the diamond industry to ensure that these 'blood diamonds,' did not enter the $7 billion-a-year diamond trade and end up on retailers' shelves.
To put pressure on the industry, the NGOs launched a public campaign to highlight the role played by diamonds in prolonging conflicts in Africa, particularly in Sierra Leone, where the mining was controlled by a particularly vicious rebel group, the Revolutionary United Front (RUF), whose trademark terror tactic was to amputate the limbs of its victims, including small children.
Worried that a growing association of diamonds with brutality and bloodshed in the minds of consumers could wreak havoc on the industry--in much the same way that animal-rights groups ravaged the global fur trade during the 1990s--the diamond industry and producer nations, notably in southern Africa, realized that they had to take action to ensure that conflict diamonds would not affect their ability to sell legitimate gems.
The result was the Kimberley Process, named after the South African city where the interested parties met in 2001 to discuss proposals for keeping conflict diamonds out of the marketplace.
After several meetings, the participants agreed on a voluntary and self-regulating system whereby governments and the diamond industry, through the WDC, were required to implement import/export control regimes on rough diamonds, whose packaging and certification from the point of origin all the way to the retailer would ensure that blood diamonds would be excluded.
The industry undertook to implement a system of warranties requiring that all invoices for the sale of diamonds, and jewelry containing diamonds, contain a written guarantee that the diamonds were conflict free and to inform company employees about the industry's policies and government regulations to combat the trade in conflict diamonds.
"Diamond jewelry retailers are the industry's public face and they have a special responsibility to tackle conflict diamonds by complying with the self-regulation and by actively promoting compliance by their suppliers," said Global Witness' Corinna Gilfillan. "But some of the largest U.S. and international retailers are paying only lip-service."
"This continued failure means that diamonds can continue to fuel conflict, human rights abuses and terrorism," she said. "It is even more disturbing given that the industry will soon be required to implement anti-money laundering regulations under the USA PATRIOT Act to help combat terrorist financing." Last year, the Washington Post reported that al Qaeda and its associates were buying conflict diamonds and selling them to traders to raise money.
It was not just the knowledge of the retail salespeople that was disappointing, according to the report. Out of 30 companies that were asked about their policies on conflict diamonds by letter and a follow-up telephone call, only five responded, according to Global Witness. They included Fortunoff, Pampillonia, Tiffany & Co., the Signet Group, and Zale Corporation.
Of those five, Global Witness said, Tiffany stood out because it described how it has tried to strengthen its sourcing and auditing policies precisely to ensure that it was not dealing in conflict diamonds.
The group stressed that the survey might not be representative of the entire diamond industry or retail sector, but nonetheless provided a useful insight into how self-regulation was working.
"The industry has put far more energy into making public statements than in actually delivering on what it has committed to," the report found, adding that, at this point, the self-regulation "is amounting to not much more than a public relations maneuver with little credibility behind it."