-Caveat Lector-
Saba, here is another article on this problem with the 'conflict
diamonds' but what I am looking for is from whom are the weapons
purchased once the 'blood diamonds' are sold? Or is it a direct
exchange and remember Nichols, was it, who went to the Philippines
to get his diamonds? From whom and for what did he make that trip?
~Amelia~
Diamonds of Death
By Ken Silverstein *
Nation
April 23, 2001
For much of last year, the diamond industry was rocked by a wave of
bad publicity concerning "conflict diamonds"-smuggled gems whose
sale allows African governments and rebel groups to finance their
wars. In addition to several United Nations reports and hearings in
the US Congress on conflict diamonds, the media devoted
considerable space to the topic. Particularly damaging was a
PrimeTime Live segment that included dramatic footage from Sierra
Leone, where rebels known as the Revolutionary United Front-best
known for cutting off the limbs of civilians who oppose it-fund
themselves primarily through diamond sales. Meanwhile, groups such
as Global Witness, World Vision, Physicians for Human Rights and
Amnesty International threatened to launch a consumer boycott until
the industry changed its buying practices so as to insure that
conflict diamonds are eliminated from international markets.
Fearful that diamonds might become to this decade what fur was to
the last, industry leaders in the United States (such as Lazare
Kaplan International) and abroad (especially De Beers of South
Africa) vowed to take action. To address the issue of conflict
diamonds-which account for 4 percent of the world's
$7-billion-a-year trade according to industry and at least 15
percent according to human rights groups-the companies formed the
World Diamond Council last July. The WDC pledged to support the
campaign for reform, including efforts to halt imports of conflict
diamonds into the critical US market, where about two-thirds of
diamonds are sold.
Instead, diamond companies and trade groups have launched a
lavishly funded lobbying and public relations campaign aimed at
burnishing the industry's reputation while protecting its profits.
The centerpiece of the industry effort is a bill called the
Conflict Diamonds Act of 2001, which was written by one of the
Beltway's most well-connected lobby shops. Representative Tony
Hall, an Ohio Democrat who has spoken at rallies against conflict
diamonds at jewelry stores in New York City and Chevy Chase,
Maryland, calls the act "mushy, fishy and full of loopholes." "The
industry is completely untrustworthy," says Hall, who along with
Republican Representative Frank Wolf and Democratic Representative
Cynthia McKinney has introduced an opposing bill to crack down on
conflict diamonds. "The fact that they've hired so many of the top
lobbyists in town shows that they don't want any serious
legislation to get passed."
During the cold war, dictators and guerrillas in Africa could turn
to one of the superpowers for financial support. Now rebel groups
need to raise their own money to buy weapons and pay for their
wars. In Africa the source of that money is invariably diamonds,
which are small, easy to smuggle and hugely lucrative. The three
primary sources of conflict diamonds are Angola, Sierra Leone and
the Democratic Republic of Congo (formerly Zaire). In the first,
Jonas Savimbi's UNITA rebels, supported until the early 1990s by
cash and mat�riel from the CIA, have raised almost $4 billion from
diamond sales during the past decade. In Sierra Leone, the
Revolutionary United Front has smuggled out at least $630 million
in diamonds through Liberia, in exchange for support and weaponry
from Charles Taylor, the corrupt warlord who heads that nation. To
pay for its war against rebel groups and their foreign allies, the
government of the Democratic Republic of Congo formed a diamond
joint venture with the armed forces in neighboring Zimbabwe. The
combined death toll from fighting in the countries named above is
more than 2 million. About a quarter of the casualties are in
Angola, where four-fifths of the country's population lives in
poverty, average life expectancy is 42 and more than 2 million
people are internal refugees.
Countries that launder diamonds smuggled out of war zones also
profit from the conflict diamond trade. The big players here, in
addition to Liberia, are the Ivory Coast, Guinea, Gambia, Togo,
Burkina Faso, Zimbabwe and Ukraine (the last of which is accused by
the UN of bartering arms for diamonds from UNITA). Profiting, too,
are diamond finishing and polishing centers, notably Belgium and
Israel. "Why should Antwerp and Tel Aviv be built on the limbs and
backs of Freetown, Luanda and Kinshasa?" Representative McKinney
asks.
Of course, the other big beneficiaries of the conflict diamond
trade are the corporations that control the industry. De Beers,
which buys about two-thirds of the world's diamonds, reported an 83
percent increase in profits for 1999. Though it claims to no longer
buy conflict diamonds, just a few years ago De Beers publicly
acknowledged-indeed, boasted-that it was purchasing most of UNITA's
output in order to prevent a glut on the world market that would
drive prices down.
Lazare Kaplan International, America's largest diamond cutter, is
headed by Maurice Tempelsman, whose initial foray into diamonds
came in Zaire, where he was a close friend of the tyrant Mobutu
Sese Seko. In the 1960s Tempelsman hired as his business agent the
CIA station chief in Kinshasa, Larry Devlin, who helped put Mobutu
in power and afterward served as his personal adviser. Tempelsman
is best known as Jackie Onassis's longtime companion, but he's also
a prominent player in Washington. He's doled out about $500,000 to
the Democratic Party in the past decade, and during the Clinton
years he was twice invited to state dinners and was one of a dozen
executives who went on the President's 1998 trip to South Africa.
Lazare Kaplan has a long-term agreement to buy $100 million worth
of gems per year from ALROSA, the Russian diamond monopoly that is
rife with corruption and a fierce opponent of efforts to restrict
the trade in conflict diamonds. In the mid-1990s the US
Export-Import Bank issued a $62 million loan guarantee to
underwrite ALROSA's acquisition of mining equipment from
Caterpillar. In March, the Ex-Im confirmed that it has approved a
new, $200 million loan guarantee that will benefit Lazare Kaplan's
diamond-cutting factories in Russia. In January Lazare Kaplan
announced that last year's second-quarter sales of polished
diamonds increased by 108 percent.
Retailers such as Cartier and Tiffany are also keenly following the
political maneuvering on conflict diamonds. Mustered in the
Jewelers of America, they form a potent lobbying force, especially
with House Republicans.
When the conflict diamond issue first hit the public's radar
screen, the industry argued that there wasn't much it could do
because it's almost impossible to determine where a diamond was
originally mined. Hence, said the gem companies, any effort to
eliminate conflict diamonds would wreck the entire trade, thereby
devastating legitimate producers like South Africa, Namibia and
Botswana, not to mention thousands of small businesses in the
United States and Europe.
Last May, when bad press was starting to take a political toll, a
South African initiative brought together governments, industry and
critics. What emerged from that meeting, held in the South African
city of Kimberley, was a call for a broad system of reform called
Rough Controls. Under Rough Controls, diamond-mining countries are
to ship stones in tamper-proof containers that will include
country-of-origin documentation. All importing countries, including
cutting and polishing centers-major ones include Belgium, Israel,
Russia and India-will reject stones that can't be certified as
coming from countries that have Rough Controls. When the World
Diamond Council was founded two months after the Kimberley meeting,
it embraced Rough Controls and said that anyone found dealing in
conflict diamonds would be permanently banned from the industry.
Buoyed by these shows of good faith, human rights activists and
members of Congress sought to put words into action. After months
of negotiations with industry representatives, a deal was struck
that all the players, including the Clinton Administration, agreed
to. Last fall, Hall and his allies attached a rider to an
appropriations bill for the Commerce, Justice and State departments
that would have prohibited the importation of diamonds from
conflict-diamond countries. In the Senate, Judd Gregg, a
conservative Republican from New Hampshire-who has compared buying
conflict diamonds to purchasing goods made by Nazi
Germany-threatened to cut off funding to US Customs if the rider
didn't go through with the bill.
Then on December 8, when it appeared that there were no serious
obstacles to passage, the World Diamond Council invited activists
to a breakfast meeting in Washington and announced that it was
withdrawing support for Hall's bill. According to the WDC's
executive director, Matthew Runci, the law was badly drafted (this
was a surprise, since it was put together by the legislative
counsel of the House and was based on a memo from the Jewelers of
America) and that industry had therefore decided to write its own
legislation. Soon afterward, Hall's rider was stripped from the
appropriations bill, which then sailed through Congress. No one
knows for sure exactly who did the dirty work, but the move clearly
had the blessing of the House Republican leadership.
The WDC recently unveiled its bill-it will likely have been
introduced by the time this story goes to press-which was drafted
by two lawyers at Akin, Gump, Strauss, Hauer & Feld. Akin, Gump's
most notable door openers during the Clinton years were Vernon
Jordan and Robert Strauss, but the firm is equally well connected
to the GOP. Nine officials from the lobby shop served as members of
the Bush Administration's Transition Advisory Teams, including Bill
Paxon, the former Congressman from New York, who remains close to
the House Republican leadership.
The WDC's bill, the Conflict Diamonds Act of 2001, states that no
diamonds are to be imported into the United States from countries
that are not on an approved list that the Treasury Department will
issue later this year. The problem is that the standards for making
the list are incredibly weak. A "cooperating country" is defined by
the bill as one that is "negotiating in good faith to develop an
acceptable international agreement" or "acting in good faith" to
develop a unilateral certification system. "With these flimsy
guidelines, virtually any nation can make the [Treasury
Department's] good-guy list," says Holly Burkhalter of Physicians
for Human Rights, coordinator of the eighty-member coalition
working to support the reform movement in Congress.
The WDC's draft bill exempted diamond jewelry from the import ban.
Hence, a $20 setting could turn an illegal diamond into a perfectly
allowable necklace. In response to criticism from NGOs, Akin, Gump
inserted a clause that allows the President to ban jewelry imports
if he so chooses. Another section of the WDC bill permits violators
of the law to escape prosecution if they import contraband "through
inadvertence, or by reason of clerical error or other mistake of
fact." "It's a trade lawyer's dream," Deborah DeYoung, an aide to
Hall, says scornfully of the WDC's legislation. "It won't cut the
flow of conflict diamonds, and there's no incentive for countries
to take serious action."
Eli Izhakoff, chairman of the WDC, says that jewelry was exempted
because the problem lies with rough stones and that the Akin, Gump
bill will insure that only clean diamonds find their way to
polishing and finishing centers. "We're looking to make the law
efficient and practical," he said by telephone from New York. "If
you start making it too costly, it's not going to happen." And why,
I asked, did the council draw up its own bill instead of asking for
changes to legislation introduced last year that it had pledged to
support? "I would rather not have [gone to Akin, Gump]," he says.
"It cost a lot of money, and I'm very cheap that way. But this will
affect the worldwide industry, and it had to be prepared properly."
Over at Akin, Gump, Warren Connelly, head of the firm's
international trade practice group and co-author of the WDC's
legislation, says industry is "amenable to discussing" a flat ban
on jewelry, but that inserting such a provision is complicated. "We
have a concern about how you trace a diamond into a piece of
jewelry and putting too heavy a burden on jewelers in enforcing
that," he says.
Neither Connelly nor Izhakoff will yet say who the WDC is working
with on Capitol Hill, but to make sure that its legislation gets
through Congress-and to insure that a new bill introduced by Hall
and his allies doesn't-the industry has hired a number of prominent
Beltway influence-peddlers. In addition to Akin, Gump, the World
Diamond Council is using two big PR firms, Powell Tate-headed by
Jody Powell, the former spokesman for President Jimmy Carter, and
Sheila Tate, who performed the same job for Nancy Reagan-and
Shandwick Associates, a firm that specializes in corporate
"grassroots" campaigns. The latter has represented US clients like
Monsanto, Ciba-Geigy, Procter & Gamble and Georgia-Pacific. Its
clients abroad, according to the newsletter PR Watch, include
Timberlands, a New Zealand government-owned logging firm that
required help in spinning its pillage of rainforest lands; and
Royal Dutch/ Shell, which hired Shandwick to counter protests
against its operations in Nigeria, where it has closely
collaborated with the military.
And that's just the start of the industry's hiring spree. On the
payroll of Lazare Kaplan is Ted Sorensen, a former top adviser to
President John F. Kennedy, and Kate McAuliffe, a former aide to
House minority leader Richard Gephardt, both from the New York law
firm of Paul, Weiss, Rifkind, Wharton & Garrison. ("As an active
figure in the Democratic Party, he has participated in nine of the
last 11 Democratic Party National Conventions andSis experienced in
the ways of Washington," says the bio of Sorensen on his firm's
website.) Tiffany has signed up the blue-chip firm of Cassidy &
Associates, which has deployed Christy Evans, previously with the
House Republican Conference, and Dan Tate Jr., a former lobbyist
for the Clinton White House. The Jewelers of America has turned for
help to Haake and Associates, where another revolving-door alumnus,
Timothy Haake, is handling the account.
Foreign nations that would be hurt by efforts to ban conflict
diamond imports have also shelled out big bucks to fight off tough
legislation. Herman Cohen, a Republican foreign policy guru who
previously served as Assistant Secretary of State for African
Affairs in the first Bush Administration, is lobbying on behalf of
the Democratic Republic of Congo and Burkina Faso. Botswana has a
good record on conflict diamonds but is nervous about Hall's
approach. It has hired Hill and Knowlton to work the Hill,
especially the thirty-seven-member Congressional Black Caucus. Even
Liberia has bought its own hired gun in the form of Ken Yates of
Jefferson Waterman International, a firm whose past clients include
Burma's military rulers. (In a bold display of principle, Jefferson
Waterman quit when the Burmese fell behind on their payments.)
The industry's phalanx of lobbyists have slowly fanned out across
Washington. Before George W. Bush's inauguration, they met with
officials at the White House, the State Department and the Treasury
Department. To garner further support for the WDC bill, jewelers
and jewelry-store owners visited dozens of Congressional offices on
February 27, which industry set as the D-day for its lobbying
drive.
On the other side, Hall has just reintroduced a version of his
bill, which has 107 co-sponsors, including all but seven members of
the Black Caucus. It's similar to last year's measure but includes
a number of new clauses, including one that bars the Ex-Im from
making loans to countries that are not seeking to end the trade in
conflict diamonds-what one Congressional staffer dubs the Maurice
Tempelsman Memorial Provision. Given the firepower deployed by
industry, however, it's not at all clear that the bill can make it
through Congress-which from the industry's point of view is almost
as good as winning passage of its own bill. "We're going to face a
huge uphill battle," Burkhalter concedes. "There's no way to pass
tough legislation without industry support, and you don't get that
support by holding hands. We need grassroots action."
And as Washington debates the matter and the industry seeks
half-measures, warlords and guerrillas ring up millions of dollars
a day in the sale of conflict diamonds.
* Ken Silverstein is an investigative reporter based in Washington,
DC. Research support was provided by the Investigative Fund of the
Nation Institute.
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