Global Witness: U.S. Congressional Hearing

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By Global Witness


Global Witness is a British based not for profit non-governmental organisation (NGO) which focuses on the links between environmental and human rights abuses, especially the impacts of natural resource exploitation upon countries and their people. Using pioneering investigative techniques Global Witness compiles information and evidence to be used in lobbying and to raise awareness. Global Witness’ information is used to brief governments, inter-governmental organisations, NGO’s and the media. Global Witness has no political affiliation.

Global Witness started working on the issue of conflict diamonds with the publication of its report ‘A Rough Trade’ in December 1998. This work was carried out due to the role that the diamonds, diamond companies and governments were playing in the protracted and brutal civil war in Angola and the devastating effects upon its population. This was the first time that a critical examination of the diamond trade in Angola had taken place.

The funding of conflict by diamonds though, is not the whole story of Central and Southern Africa’s on-going wars, and Global Witness believes that the wider role of natural resources other than diamonds, as well as that of organised crime and corruption, requires urgent and full discussion. Clearly this is beyond the scope of this hearing, but because of its importance, brief mention will be made here.

In Angola the corrupt and un-transparent use of growing oil revenues by the Angolan Government has led to an absence of accountability of government and a situation where over-priced arms deals are arranged more on the basis of cronyism, than on value for the state. Global Witness estimates that the Angolan State generated between US$ 1.8 – 3.0 billion annually from oil, and this figure is set to double over the next decade. Despite the scale of this revenue, it is hard to see any notable contribution this revenue has made to the development of Angola, and the country continues to languish at the 160th position out of 174 countries assessed by the UN’s Human Development Index (HDI).

In effect, we are seeing a gradual move of organised crime into this region, whose aim is to acquire extensive concessions of the region’s natural resources, in return for the supply of weaponry and other resources, which are fuelling conflict in this region. These structures are benefiting from the use of off-shore tax havens, and the global banking systems. As such, it is vital that the international community looks more carefully at this problem, with a move to close down this activity.


There are two key questions that are central to the whole debate. Firstly does the problem of conflict goods need to be addressed, and consequent upon that, what kind of system is required to severely restrict the entry of conflict goods into the legitimate market . The humanitarian, economic and ethical arguments are overwhelming. It is clear that governments and the commercial trade are looking to address the problem of conflict goods. Unfortunately, due to the high value of these goods, a system based solely on declarations of intent and unenforceable declarations of self-regulation are unlikely to significantly address the core problems, and may even lead to consumer cynicism about claims made by the diamond industry. This could have unfortunate knock-on effects on other issues that are at the heart of maintaining industry integrity and consumer confidence, such as assurances that diamonds are not treated or not synthetic

In recent years it has become increasingly apparent that gem diamonds, one of the most concentrated forms of wealth known to man, were and are playing significantly destructive roles in some of Africa’s brutal conflicts. The control and exploitation of diamond rich deposits by rebel factions in order to fund their campaigns of terror and for personal enrichment has tarnished the image of diamonds away from the traditional images of love and beauty. The industry has known of the connection between diamonds and conflict for at least a decade, indeed in many cases it has structured its buying so as to be directly from combatants. But the trade had done nothing to try and address the problems. Indeed the trade, particularly De Beers, spent time and money promoting the concept that it was ‘essential’ to buy the conflict diamonds to maintain a steady world market price. However there is still time for the diamond trade to act together to end this trade in death and ensure that the image of diamonds is not tarnished even further.

The basic debate is that the majority of the diamond industry is well organized and controlled but that a minority of diamonds from rebel armies in countries affected by conflict are entering the world market with destructive impacts upon those countries. There is also considerable concern that the legitimate diamond markets will suffer from a consumer backlash as the association between diamonds and conflict is made more apparent by the worlds media. The negative impact of revenue from diamonds within some of these countries is well documented, but was little understood until recently. More importantly, the humanitarian and economic costs have been devastating to those affected countries and are completely unacceptable. In Angola, Unita used revenue from its massive sale of diamonds, up to $3.7 billion between 1992 and 1998, to undermine its part in Angola’s failed peace processes and to re-arm. In Sierra Leone, analysts have pointed to the key role that control of diamond fields played in the conflict and is playing in the return to peace. In Liberia diamonds from Sierra Leone played a significant role in the financing of their destructive civil war. Currently in the Democratic Republic of the Congo diamonds are playing a fundamental role in the funding of the conflict for all factions. The positive economic aspects of diamonds are clear understood as in the significant economic success of Botswana. Namibia and South Africa have also both benefited from their diamond resources. It is very important that the diamond revenue is not negatively effected in these countries, and others, where diamond production is not funding conflict.

Partly due to the launch of the Global Witness report, ‘A Rough Trade’ in December 1998, there has been a shift in world opinion on the issue of conflict diamonds, which in itself is a new term. No longer is the ‘soaking up’ of ‘open market goods’ from areas of conflict deemed to be an inevitable consequence of the need to stabilize the world price of diamonds. Governments have ceased to accept this as an argument for non-interference, as have consumers. Indeed, perhaps most importantly, in terms of long-term change, the commercial part of the diamond industry has itself begun to change its position on this issue. There have been encouraging actions and statements but these have been in response to pressure from governments, the United Nations and from a small number of non-governmental organizations.

It is vital that a long-term solution to this very complex problem be found, and that can only work if some of the underlying structures are addressed rather than the commercial sector of the industry dealing with each problem country on a case-by-case basis. This is no way to protect the legitimate diamond economies nor to deal with the atrocities and horrors inflicted upon the peoples of affected countries. It is clear that there is a need to create a ‘chain of custody’ within the diamond trade – an auditable trail from the mine to the consumer that can work with existing structures and patterns of trade. The initiative of the South Africa Government on bringing together government and industry in a Technical Forum, on the 11–12th May 2000, to work on ways to address the problem is to be welcomed and should be widely supported.

The total world production of diamonds for 1999 is estimated at $6.8 billion. Of this total $3.8 billion was from countries that are well regulated, namely South Africa, Namibia, Botswana, Canada and Australia. The remaining $3 billion came from Russia, which is difficult to assess, Angola $600 million, which appears to be attempting to reform controls, and also smaller production from a wide range of countries, which accounts for $800 million (Democratic Republic of Congo would account for a significant proportion of this). In other words, just over half of the world’s production by value came from five countries with tightly controlled diamond production, and just a small number of mines. Russia’s production is very significant and is from a small number of mines and it is difficult to obtain information on the controls. Diamonds are mined in a total of approximately 26 countries. The overwhelming majority of diamonds are mined under government control and about 80% of all diamonds mined are used for industrial purposes. The working of diamonds takes place in about 30 countries worldwide.

Polished production in 1998 amounted to approx. 860 million stones with India polishing the vast majority of these stones. In 1999, $13 billion of diamonds were sold in jewellery sales worldwide with a wholesale value of approx. $27 billion, and this in turn was worth $56 billion in retail sales. The diamond content of jewellery varies widely and an accepted average is that 23% of diamond jewellery retail value is actual diamond value. The wholesale market breaks down as follows: the USA was the largest market with $6.24 billion (48%); Japan the second largest with $1.82 billion (14%); Asia Arabia $1.43 billion (11%); Europe $1.56 billion (10%); Asia Pacific $1.3 billion (10%); the remainder was $0.65 billion (5%). In terms of retail sales the percentages are very similar, although the values are much higher: the USA accounted for 44% of sales ($24.6 billion); Japan for 19% ($10.6 billion); Europe 14% ($7.8 billion); Asia Pacific 5% ($2.8 billion); and Asia Arabia 4% ($2.2 billion). De Beers has estimated that the value of diamond jewellery at wholesale terms was $27 billion in 1999. The US has a special responsibility to take action due to the huge percentage of high quality diamond jewellery (nearly 50% of the global market) that is sold there annually.

The diamond industry is a major player in the economies of a number of countries. In Africa it is a significant contributor to the South African economy, the Guinean economy and to others, and is the dominant revenue source in Botswana and Namibia. In Russia the picture is less clear but the country produces about $1.6 billion of diamonds. In Canada the importance of diamonds is growing fast, with a projected 12% share of total world production within the next few years. Belgium is the world’s biggest market for rough diamonds, with an estimated 80% of rough and more than 50% of polished diamonds passing through Antwerp. Although tax income to government is very low, the sector employs c2,000 people directly. Switzerland is important because it is the country through which large quantities of diamonds are transferred by De Beers’ London based Central Selling Organisation (CSO) for, it seems, tax purposes. Britain plays a unique role as it is the country from which De Beers, through its sightholder system, sells its diamonds, which alone account for approx. 70% of all diamonds mined.


The importance of diamonds in funding Unita’s war effort over the last decade is well known and in the light of recent publications of studies, such as the United Nations expert panels report, increasingly well understood. Diamond revenue became increasingly important for a number reasons including the political changes in the post Cold War era. Between 1992 and 1998 Unita obtained an estimated minimum revenue of US$3.7billion solely from diamond sales. This international trade in diamonds has been a major obstacle to any possible progress towards peace and played the major role in enabling Unita to restock its munitions and maintain a flow of supplies which in turn enabled it to disregard the 1992 election results. United Nations sanctions were finally imposed on Unita’s diamond sales by the adoption of UNSC Resolution 1176 which activated Security Council resolution 1173 on the 24th of June 1998. This prohibited the direct or indirect export of unofficial Angolan diamonds, defined as those not accompanied by a Certificate of Origin issued by the Angolan government.

However there were considerable problems with the certificates of origin which were victim to institutional corruption, poor coordination and administrative negligence. It was increasingly apparent that it was possible for Unita to launder their diamonds through the legitimate government channels and thus obtain the Certificates of Origin. Governments of importing countries also failed to insist on improved Angolan GURN COs – an important point not fully addressed by the aforementioned UN Expert Panel report. Significant international pressure on the Angolan government resulted in a renewed Certificate of Origin system, tighter export controls, tighter purchasing agreements and changes in national legislation relating to diamonds. Recently agreements between the Antwerp based Diamond High Council (HRD) and the Angolan government to work together to eradicate any loopholes and actively pursue the smugglers of Unita origin diamonds. It is hoped that this will make it increasingly difficult for Unita diamonds to enter into the legitimate diamond market although given the climate of corruption within Angola and the role of diamonds in unofficial funding of Angolan army generals caution needs to be expressed. There are also considerable concerns relating to the new exclusive selling agreement that was arranged between the Angolan government and the company Ascorp and the Russia/Israel based businessman Lev Leviev. De Beers has launched a legal challenge to this new agreement and question marks have to be raised as to the claims made by majority share holder, Lev Leviev, over how he is to ensure that Unita diamonds do not enter into the legitimate Angolan production that he is purchasing.

Sierra Leone

Diamonds were discovered in Sierra Leone in 1930 and significant production began in 1935. By 1937 Sierra Leone was mining one million carats annually, reaching a peak of 2 million carats in 1960. From 1930 to 1998 approximately 55 million carats were officially mined in Sierra Leone. At an average price of $270 per carat with the total value being close to US$15 billion. From the late 1970s to the early 1990s, aspects of Lebanon’s civil war were played out in Sierra Leone. Lebanese militia sought financial assistance from their compatriots in Sierra Leone, and the country’s diamonds became an important informal tax base for various factions. In 1987, following a failed coup, opportunities arose in the country for a number of Israeli ‘investors’ with close connections to Russian and American crime families, and with ties to the Antwerp diamond trade. In 1991 the Revolutionary United Front (RUF) was created. From the outset of the war Liberia acted as banker, trainer and mentor to the RUF. With a negligible diamond production of its own, Liberia’s dealings in stolen Sierra Leone diamonds have been a major concern to successive Sierra Leone governments since the great diamond rush of the 1950s. What was different and more sinister after 1991 was the active involvement of official Liberian interests in Sierra Leone’s brutal war – for the purpose of pillaging rather than politics. By the end of the 1990s Liberia had become a major centre for massive diamond-related criminal activity, with connections to guns, drugs and money laundering throughout Africa and considerably further afield. In return for weapons, it provided the RUF with an outlet for diamonds and has done the same for other diamond producing countries.

The civil war lasted from 1991 until the signing of the Lome peace accords in July 1999. During this period an estimated 75,000 died, 2 million were displaced and tens of thousands were mutilated by amputation. During the signing of the Lome peace accords the control of diamond resources was central to the signing of the accord. As a result the Commission for the Management of Strategic Resources, National Reconstruction and Development was created. In an apparent compromise for peace this body was to be headed by RUF leader Foday Sankoh. The United States, who were key negotiators in the Lome peace accords, have through the Office of Transition Initiatives (OTI) provided US$1million for technical assistance to the Commission. The aim of the technical assistance is to ‘assist the Government of Sierra Leone in establishing national policies and practices for the efficient and legitimate exploitation of diamonds and gold, and the transparent utilization of those resources in funding national reconstruction and development.’ The UK government are also extensively involved in working towards solutions regarding Sierra Leone’s diamond industry.

The commission began with what appeared to be a promising start – the banning of diamond mining in Sierra Leone and the review of all contracts. However when commission chairman Foday Sankoh stated that all mining was to be banned in Sierra Leone it was supposed to be a joint announcement with President Kabbah. Also it was only supposed to relate only to the cessation of illegal diamond mining, the majority of which is still being carried out by Foday Sankohs RUF troops. Recent moves regarding Sierra Leone and its diamonds have been the publication of a detailed study of the Sierra Leone diamond trade by Partnership Africa Canada and recommendations made by US congressmen Tony Hall and Frank Wolf who have called for an embargo of illicit Sierra Leone diamonds. This would mirror the current UN diamond sanctions in Angola. However in what could become a tragic repeat of the highly destructive impact of diamonds on the Angolan peace process, the UN in Sierra Leone does not appear to have learnt any lessons. The current UN mission, UNAMSIL has been given no mandate to halt mining or even gather information about diamond mining by the RUF rebel forces. A technical workshop involving diamond companies and government officials has taken place in an attempt to present solutions to Sierra Leone’s continuing diamond problems however no solutions have been presented. As the UN mission unfolds the strategic issue of diamond mine control will become ever more apparent and urgent.


The current conflict in the Democratic Republic of the Congo, dubbed by many as Africa’s first world war, involves the nations of Angola, Namibia, Zimbabwe, Uganda, Rwanda and Chad. The DRC is abundantly rich in many natural resources, including diamonds. This has led to all sides in the conflict deliberately targeting these resources in a bid for economic superiority and financial advantage. Many of the leaders of these nations have been accused of profiteering from the exploitation of these resources and deliberately targeting resource rich areas in attempts to gain control of them rather than any interest in regional stability or peace processes.

Diamonds are the economic lifeline for Laurent Kabila, earning his regime an estimated US$100 million in income in 1997 from total diamond exports of $616 million. Congo has two main diamond producing areas in Mbuji Mai and Kisangani. The government controlled diamond mines in Mbuji-Mayi are protected by Angolan and Zimbabwean troops. Diamonds showed how integral they are to the conflict in the DRC when in September 1999 the Zimbabwean defence minister, Moven Mahachi, stated that the armed forces of Zimbabwe and the DRC had set up a joint business venture to pay for the war through the mining and marketing of diamonds. In April 2000, UN Secretary General, Koffi Annan announced the need for an expert panel to look into the role that diamonds and gold is playing in the financing of the conflict in the Congo.


The diamond industry is currently facing one of the most serious crises in its history. It has to face up to the fact that its current systems of trading are having devastating impacts in Africa which are spilling over to neighboring countries and are damaging the entire image of diamonds, which will last for many years to come. Some sectors of the diamond industry are slowly realizing this and recent developments seem encouraging – however there is still a long way to go.

There is an urgent need for a system of controls that can demonstrate that diamonds are from controlled sources. A key part of such controls will be the rigor with which they are implemented by those within the industry. As UK Foreign Secretary Robin Cook noted in December 1999 at the G8 summit “If the [diamond] industry could do it itself by self-regulation and by other proposals, that would be very welcome and I think the more we are seen to be pursuing this earnestly, the more it is likely they will do so.” Governments, both producers and importers, have a central role in setting a regulatory framework within which industry self-regulation can be a meaningful part of the process of controls. A certain amount of responsibility for the success of any proposed control system lies with the countries that actually produce the diamonds. A number of these countries, such as Namibia, Botswana, South Africa, Australia, and Canada are already operating systems that are well controlled and that can easily be developed as part of a wider control system. Importing and exporting countries and the international community need to examine how their own customs procedures and national legislation can be adapted to ensure that conflict diamonds no longer enter into legitimate diamond marketing channels.

The independent auditing of company claims and the verification of the control systems, coupled with the use of technology systems will go a long way to ensuring that the dark shadow of conflict diamonds that is currently looming over the industry will end. This will ensure its long term survival and more importantly go a long way to ensuring that no longer can factions, armed with increasingly sophisticated weaponry hold countries, governments and the international community to ransom due to the fact that they have access to the source and the markets of a highly lucrative and easily transportable commodity.

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