Lebanon’s $156M Rough Imports Concern NGO

150 150 Rapaport News

(Rapaport…July 29, 2005) According to trade data from Lebanon, rough diamond imports in 2003 were $6.25 million, but increased to $15.3 million in 2004. However, for the first six-months of 2005, Lebanon reports rough diamond imports of $156 million.

Rapaport News investigated trade data from Lebanon and found that month-to-month diamond import accounts are sporadic with 16 of the past 30 months showing no rough imports. Rough diamond exports from Lebanon for 2005 thus far have totaled $260,000, and total diamond exports account for $7.9 million for the first six-months.

According to hard diamond export data for 2005, Lebanon lists the following:

  • “Unworked, sawn, cleaved, bruted” $260,000
  • “Other” $7.461 million
  • “Other” $312,000

    For all diamonds exported in the past two years, Lebanon claims:

  • $22.9 million in 2004
  • $13.5 million in 2003

    Lebanon was dropped from the list of countries approved by the Kimberly Process Certification Scheme in early 2004, but Parliament passed a law in November in order to qualify for reapplication. Global Witness, a non-governmental organization (NGO) that monitors abuse of natural resources, examined Lebanon’s import and export data and concluded that Lebanon imported $156 million in rough diamonds from the Republic of Congo during the first half of 2005.

    “A Lebanese official confirmed to Global Witness that diamonds had come from the Congo, but said that they [diamonds] were artificially overvalued and that an investigation was underway.”

    Global Witness

    The Congo was removed from participating in Kimberley Process in 2004, and on August 5, 2004, Philippe Mvouo, Republic of Congo’s minister of mines, energy, and hydraulics, said that the government would suspend diamond trading and exports until the process is better organized.

    Congo’s Kimberley Process suspension hit after investigators found most of the nation’s 5.2 million carats exported had been smuggled in from neighboring countries. Sharing an eastern border with the Democratic Republic of the Congo, the Congo borders a small section of Angola on its southwest fringe, Gabon is to the West of Congo, and Central African Republic is to the North.

    While rough diamond trading outside of the Kimberley Process Certification Scheme is legal between countries not formally participating, the imports into Lebanon “throw serious doubts on Lebanon’s commitment to counter the trade in conflict diamonds and cast a shadow on its current efforts to join the Kimberley Process,” Global Witness reports in a statement.

    The issue comes down to trade data with exact diamond values for February and March of 2005 that are listed for both Lebanon’s diamond imports, and for what the Congo exported into Lebanon, Rapaport confirms. Comparing codes Lebanon’s data reflected diamond imports from the Congo. However, it lists that trade agreements exist for the diamond category with Palestine (67 percent) and “missing” percentages for Iraq and Sudan.

    Global Witness said, “The imports in question are clearly identifiable from Lebanese customs data publicly available online, which show that in February (2005) $90 million and in March $66 million of industrial rough diamonds were imported.”

    Furthermore, Global Witness said, “A Lebanese official confirmed to Global Witness that diamonds had come from the Congo, but said that they [diamonds] were artificially overvalued and that an investigation was underway.”

    In 2004 the Kimberley Process (Canada) chair, Tim Martin, said “The Republic of Congo cannot account for the origin of large quantities of rough diamonds that it is officially exporting.”

    Following extensive review Martin said, “The removal of the Republic of Congo from the list of participants is necessary to safeguard the credibility and integrity of the KPCS.”

    Lebanon passed law number 645 (the Kimberley Law) in November 2004, to “Implement the provisions of Kimberley Process Certification Scheme,” through a committee and to “exchange information with other participants concerning the trade of rough and conflict diamonds and cooperate with them in monitoring all related activities,” according to Lebanon’s ministry of economy and trade.

    Further, Lebanon would “keep a database” of all decisions taken judicial authorities regarding this law. As part of Lebanon’s internal controls, the ministry of economy and trade agreed to record:

    • The original invoice
    • A detailed list of packing if the invoice does not include the proper details
    • A copy of the “bill of lading”
    • The value declaration sample (DEV)
    • A valid and validated Kimberley Process Certificate
    • A former import license issued by the Minister of Economy and Trade

    Corinna Gilfillan of Global Witness said, “By trading with a country removed for being in blatant violation of the scheme, Lebanon makes a mockery of the Kimberley Process.” Gilfillan said Lebanon should not be admitted into the Kimberley Process “until it has declared the value of its current stock of rough diamonds and is able to convincingly explain these significant imports from a country which is a known conduit for smuggled diamonds.”

    Specifically the Congo may participate in the Kimberley Process at a future date, according to Martin. But before consideration, the Congo must account for rough diamond exports and be able to adequately “ensure that Kimberley Process Certificates were being issued only for rough diamonds produced in the Congo or those which were imported in a manner consistent with the requirements of the Kimberley Process,” Martin said.

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