Samantha Hutchinson Reporter

Samantha writes on exports, Islamic finance and the business of doing business across borders. Before moving into journalism she worked in executive recruitment and public policy.

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Diamonds are a warlord’s best friend

Published 03 May 2012 05:08, Updated 17 May 2012 04:19

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Jeweller Nic Cerrone wouldn’t be surprised if customers experienced heart palpitations upon discovering the price attached to the rocks of their beloved’s dreams.

“It can be a real shock to the boy,” Cerrone says. “The young girls today all know the size, cut and colour that they like, because they’re always the ones who do the research.”

For the wearer, a decision about a diamond ring is most likely to be based on the four Cs – cut, colour, carats and clarity. The one left paying the bill is more likely to focus on the price tag.

But there’s another cost associated with diamonds that prospective buyers should consider. Growing awareness of the murky ethical standards and military links of the global rough diamond trade means that now more than ever, it should be provenance that matters the most for the discerning diamond buyer.

“If you don’t know where [a diamond] comes from, it could be that you are buying a blood diamond,” warns gems expert and Gemology Association of Australia convenor Katrina Marchioni.

Blood diamonds are sold to fund armed conflict and civil war. They get the blood moniker because their production and sale often lead to the loss of human life.

Profits from the trade in conflict diamonds, worth billions of dollars, were used by warlords and rebels to buy arms during wars in Angola, the Democratic Republic of Congo and Sierra Leone. Those wars are estimated to have claimed 3.7 million lives.

Now, reports from human rights organisation Amnesty International show that diamonds extracted in Zimbabwe, the Congo, Ivory Coast and Liberia often deliver profits into the hands of some of the world’s most dangerous criminal groups and regimes.

It may seem a stretch to link the dealings of obscure paramilitary groups in dusty mines in Angola to the diamond choice of a bride-to-be in Australia but the reality is that more than 65 per cent of the global trade in rough diamonds comes from Africa. Conflict diamonds are estimated to make up more than 4 per cent of the international diamond market, so it is likely that some diamonds winding up on Australian shores have a murky story to tell.

“There are always ways for [conflict diamonds] to get in the back door,” Marchioni says. “But a respected jeweller will always know their supply chain and the country of origin of their diamonds. Australia is a signatory of the Kimberley Process – we have to.”

The diamond industry came together in 2003 to stop the flow of conflict diamonds with the Kimberley Process. This is a United Nations mandated certification scheme that issues certificates to shipments of rough diamonds that are conflict-free.

Cerrone says that even with the Kimberley Process, blood diamonds will always make up 10 per cent to 20 per cent of the market.

“It’s always been there and it always will,” he says. “You can’t avoid it.”

To be certain, there are holes in The Kimberley Process. The most obvious downfall of the process is that it only covers rough diamonds, so non-Kimberley process compliant outfits can cut and polish stones in-house, then sell dirty diamonds on the legal market.

The assurances on rough diamonds are far from watertight. Global Witness, an international non-governmental organisation that helped set up the Kimberley Process and acted as an official observer, walked away from the scheme in December 2011. Among its concerns was that stones from the controversial Marange diamond fields in Zimbabwe were admitted to the process. The area was seized by the Zimbabwean army in 2008. About 200 miners were killed. Then mining concessions were granted to several companies, some associated with figures in President Robert Mugabe’s ruling Zanu PF party.

Alongside the Kimberley Process, diamond industry body the World Diamond Council has introduced another certification process, a system of warranties to help consumers check whether they’re being offered blood diamonds. The system forces companies to declare diamonds to be conflict-free. Customers can ask for a statement of the gem’s provenance at the time of sale. No certificate? Then don’t buy.

How does Cerrone recommend customers avoid inadvertently propping up an corrupt political regime?

“Buy pink diamonds,” he says, referring to Argyle diamonds mined in Western Australia. “They are the ultimate throughout the world.”

Cerrone believes that when it comes to the genuine article, the only real way to tell a stone’s ethical provenance is price. He doesn’t believe in bargains.

“They are a commodity. Like gold, there is a price you can expect to pay,” he says. “It’s like a Louis Vuitton bag. If its cheap, you know its not the real thing. You know that there’s something wrong with it.”

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