DDC Cites Kimberley Enforcement Power

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(Rapaport…December 30, 2002) The New York Diamond Dealers Club (DDC) announced that it will issue Kimberley Process certifications for U.S. rough diamond exports for two reasons: to serve the industry and to use its authority as a bourse to enforce the new rules, DDC leaders said.

Shortly after the Diamond Manufacturers and Importers Association of America (DMIA) formed a Rough Diamond Export Mechanism (RDEM) to fulfill the American diamond industry’s Kimberley obligations, DDC officials claimed they had been left out of the process, a charge the DMIA denied. A week later, the DDC announced that it too would issue certificates — at no charge. The RDEM certificates are $50 each. Kimberley certificates will cost very little to print, said Jacob Banda, the DDC president, “so we can lose a couple of cents on each to benefit the industry.”

The DMIA said certificates would cost $50 each because that is what it would take to cover RDEM’s operating costs. Its officers based their calculations on an estimated 700 rough shipments leaving the U.S. each year. Banda believes at least 3,000 rough shipments are exported each year. Both sides said they based their estimates on shipping company records.

Banda said it was important that the DDC implement Kimberley in the U.S. because as the country’s leading bourse, it has the authority to impose sanctions on diamantaires who may try to trade in conflict diamonds. “We will suspend them and notify all the bourses worldwide,” Banda said. The DMIA, on the other hand, is a trade group but not an official bourse, and it has licensed shipping companies such as Brinks and Malca-Amit to issue the certificates required by Kimberley.

Leon Cohen, president of the DMIA and an RDEM board member, could not be reached for a response. One high-ranking DMIA official, speaking on the condition of anonymity, blamed “organization competition” for the existence of two Kimberley implementation groups in the U.S. “They are being motivated by a sense of competition rather than cooperation,” the trader said. “They’ve been kept informed of our plans and discussions from the beginning, and somebody woke up and decided at the last minute to do this.”

Dr. Martin Hochbaum, the DDC executive director, said in response: “The DDC is the organization with the authority and the structure to implement this certification process in an authoritative manner, since we bring disciplinary proceedings against those who are noncompliant. Why else would we do this for nothing, especially during a difficult period for some of our members?”

Both DDC and RDEM officers said their organization has been recognized by the federal government as an official Kimberley implementation group. Ambassador J.D. Bindenagel, the U.S. special envoy on conflict diamonds, could not be reached for confirmation of that claim.

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