De Beers’ O’Ferrall Calls Kimberley End of Beginning

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(Rapaport…December 2, 2002) Rory More O’Ferrall, De Beers director of Public and Corporate Affairs, today reminded sightholders in London why the Kimberley Process is so important, calling its adoption “the end of the beginning.” Diamantaires must ensure that conflict diamonds do not enter the market, he said, and even if some of the civil wars in Africa that were funded with diamonds are over, new conflicts are all but inevitable. O’Ferrall’s speech follows unabridged:

The adoption of the Kimberley Process Certification Scheme by 50 nations in the Interlaken Declaration of 5th November is not, as some may think, the end of the matter. Far from it. The Declaration launched the international mechanisms agreed by governments, the diamond industry and the NGOs to eradicate the use of diamonds to fund conflict, as mandated by the United Nations General Assembly. It is, therefore, merely the end of the beginning, and the task now, for all of us in the diamond business, is to ensure – with our partners in government and civil society – that the Scheme is as effective as possible.

It is easy to say that it won’t work. It is easy to say that the international community has been unable to regulate drugs or the arms trade, that people determined on illegal activities will always find a way to circumvent the rules, that corrupt governments or officials will render the Scheme inoperable.

It is easy to say that the very conflicts that the Scheme was designed to halt appear (at least for the present) to be over, so why should we bother? Why should the diamond industry be singled out so unfairly in this way and all of us be penalised for the activities of a few rogue traders and the failures of the UN and governments in conflict resolution?

It is easy to say. There is truth in these views and we have all been frustrated that they have not been addressed, but the DTC believes that to argue about such things now misses the urgent reality of the situation. We must deal with what is in front of us, not what might have been. Let us remind ourselves why we are here in the first place. There was a real threat to the diamond industry, to our companies, to our livelihoods. That threat was that unless swift and firm action was taken to drive conflict diamonds (however small a percentage of our trade they might be) out of the mainstream of our business, the consumers in our main markets would boycott diamond jewellery – with the same effect as the negative public reaction to fur had in destroying that trade.

This was a real danger. It is still a real danger. The diamond industry had a choice – do nothing or take prompt and effective action. The leaders of the industry saw that there was a clear moral imperative that we could not allow our beautiful and unique product to be associated in any way with the horrors of war. We could not stand aside and say this was an African problem, let Africa solve it. A very large proportion of our rough diamonds – the diamonds you buy here at the Sights, and are traded and polished downstream and made into jewellery – come from Africa. Whether we like it or not, we were involved, we are involved. Equally, the commercial imperative was clear – do nothing and our entire industry was at risk. The leaders of the industry chose, wisely, to act.

The World Diamond Council was set up to represent the whole diamond industry – producers, dealers, manufacturers, wholesalers, jewellers and retailers – in negotiations with governments and NGOs in the Kimberley Process. It is important to remember that the Kimberley Process was instigated by the United Nations General Assembly with the proviso that the measures put in place were not to be “unduly burdensome to the legitimate diamond industry”. It is precisely to ensure that is the case that your representatives on the WDC have been so deeply involved in discussions with diplomats and activists over the past two years.

What we have now is certainly not a perfect construct, the system is not absolutely watertight, and there are still a number of outstanding anomalies. It is, however, the best compromise that could be agreed without placing intolerable burdens on the industry. The Kimberley participant countries recognise this, and there will be a further meeting early in 2003 to address those problems and difficulties that will undoubtedly arise on implementation in January. These talks will include the status of those countries with diamond-cutting factories, which have not, as yet, become participants in the Scheme.

What we have now is the best possible deal for the industry. Don’t forget that had not the WDC proposed – on behalf of us all – that the industry would institute self-regulation measures, far more stringent and intrusive controls, regulations and inspections would have been imposed upon us by the United Nations and by our own governments. What has been offered by the WDC, and endorsed by the World Diamond Congress held in London in October, is really very simple and straightforward. The willing co-operation of the industry in this way has been widely applauded by the UN, by governments, by the NGOs and by the media. The reputation and standing of the diamond industry in the eyes of the world has been very greatly enhanced, as this collaboration between governments, industry and civil society is unprecedented.

To return to the question: why, now that the conflicts in Sierra Leone and Angola appear to have been resolved, do we have to continue with the Kimberley Process at all? Firstly, let us not forget that there is still a civil war and appalling human suffering in the Democratic Republic of Congo and that, although there seems to be a real chance for peace in Angola, the situation in Sierra Leone remains uncertain. Also, the sad reality is that further conflicts in Africa, or elsewhere on our troubled planet, are probably inevitable. Our industry has to be insulated from any taint of conflict in the future. The Kimberley Process provides that insulation.

Secondly, in addition, we must accept that many governments, and certainly civil society, are now looking beyond conflict diamonds to address the possibility of illicitly traded diamonds being used to facilitate money laundering and, more significantly, the financing of terrorism. We may say, with near certainty and justifiable outrage, that no evidence of this whatsoever has been produced by the government intelligence agencies, but that is not the point. In the post September 11th world, the very fact that diamonds (amongst many other commodities) could be misused in this way is enough to ensure that governments insist on a better-regulated industry.

Thus the Kimberley Process is no longer just a conflict issue, it is an urgent international security issue. In the case of the United States, our largest consumer market, this is a national security priority. The American representative to the Kimberley Process, Ambassador Bindenagel, is armed with special Presidential authority and is charged with bringing the Kimberley provisions into effect without delay. The reality is that unless the industry is fully compliant with Kimberley from the 1st January next year – now just four weeks away – we will be unable to trade in rough or polished with the US.

The industry’s self-regulation measures are an essential part of the Kimberley provisions, recognised and approved by the UN General Assembly. So, as this is now an established international security issue, there is no way that we can, or should, ignore, or seek to avoid or evade, the binding requirements on us. We must have Kimberley Process Certificates on all imports and exports of rough diamonds and we must have warranties on the invoices of all diamond transactions, be they rough, polished or diamond jewellery.

If that all sounds heavy and burdensome, let us just look at what we are required to do. For most of us it amounts to no more than ensuring that the rough and polished we buy is accompanied by a signed warranty from the vendor that the diamonds being offered for sale are conflict free. When we sell rough or polished, we must issue a signed warranty that the diamonds being offered for sale are conflict free. When required to do so by the relevant government authority, our auditors will verify that warranties have been obtained on purchase and issued at sale, and that a record of this has been kept. What could be more simple? For importers and exporters of rough (not polished or diamond jewellery) there is the added requirement that the goods be accompanied by an import or export certificate issued by the relevant national authority. This is really not much to do to protect ourselves, the reputation of our industry and the integrity of our product.

Challenges often provide opportunities and this is no different. The challenge presented by conflict diamonds provides us with this opportunity to demonstrate that we and our entire industry are above reproach. Most significantly, we will, through the international certificate scheme and the System of Warranties, be able to reassure our ultimate customer, the all-important consumer, that our product – the natural diamond – is, and will remain, the ultimate symbol of beauty, love and eternity. The ability to do this with confidence will be of real commercial benefit to our business.

In closing, I should just like to echo the remarks made by Gary Ralfe at the London Congress when he said that we all, individually and as companies and trade organisations, must look to our own “ethical accountability”. In the wake of Enron, Worldcom, Andersons etc, business is under the most severe scrutiny by the outside world. Our business has always been based on trust and integrity. Let’s keep it that way, but add to those traditional virtues a readiness to be open and transparent in all our dealings. In the context of conflict or illicit diamonds, that means questioning the origin of all diamonds, demanding warranties from our suppliers and refusing goods of questionable provenance – however tempting they may be – in order to preserve both our good name and the future prosperity of the business.

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