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The Role of Companiesand Governments in the

Angolan Conflict

A ROUGHTRADE

ANGOLA: A BRIEF OUTLINE

The First War of 1961to 1975,The War ofIndependence

Angola has been in conflictsince 1961 with massacres inthe north of Angola, followedby years of the struggle forindependence. In 1975Portugal, the colonial powerabruptly pulls out, and morethan half a million people leaveAngola in the biggest airlift inhistory. Prior to this the threenationalist groups that hadfought colonial rule begin tofight for control. Cold Warpolitics becomes a majorfactor as the Soviet Unionbacks the Marxist MPLA, andthe USA and China backs theMaoist, but anti-Marxist,UNITA.The MPLA form asingle-party Socialistgovernment in November1975 which gains widespreaddiplomatic recognition,although not from the UnitedStates and South Africa.Fighting continues for controlof territory.

The Second War of1975 to 1991,Guerra do Mato(War of the Bush)

The civil war continues.In 1987-88 the horrificsiege of Cuito Cuanavelemarks a dramaticincrease in the scale andferocity of the war.Thetown is totally destroyedand many thousands die.In 1988 the New Yorkagreement results in apeace treaty withinterventionist foreignpowers South Africa andCuba, and foreign troopswithdraw.The end of theCold War has a significanteffect on the foreigninvolvement in Angola,and as superpowerpatronage begins to dryup both sides need newsources of revenue.

In 1989 the cease-firebreaks down and isfollowed by some of themost intense fighting ofthe war.The BicesseAccords of 1991 create atemporary halt to a warthat has already killedbetween 150,000 and300,000 in battle.NationalElections are held inOctober 1992 and theMPLA win, but a secondpresidential run-offelection is required as thevote is closely splitbetween MPLA’s Eduardodos Santos and UNITA’s

Jonas Savimbi.However, theelection result is rejected byUNITA before the secondelection, and it goes back to war.

The Third War of late1992 to late 1994,Guerra das Cidades(War of the Cities)

Some of the worst fighting ofthe entire conflict takes place,with 182,000 people dyingbetween May and October1993.The cities of the centralhigh plains, which had beenrelatively unscathed, aredestroyed, and virtually allinfrastructure, roads, railwaysand bridges are destroyed. Bylate 1993 UNITA controlsover 70 per cent of thecountry, although 1994 seesgovernment troops advancingand UNITA makingconcessions in the Lusakapeace talks.The LusakaProtocol is initialled on 31stOctober 1994 but fightingcontinues despite promises tothe contrary from the

government. On 20thNovember 1994 The LusakaProtocol is finally signedmarking the end of the ‘ThirdWar’.A Joint Commission isset up comprising the UN,Government and UNITArepresentatives with the Troikaof the USA, Portugal andRussia as observers.Thepresidential run-off election ispostponed indefinitely.

1995 to 1998

Localised fighting continuesduring 1995 and 1996 despitethe Lusaka Protocol, butnegotiations continue.However UNITA continue toviolate the cease-fire during1997, with many of the attackstargeted at civilians, whilst thegovernment also violates thecease-fire.There is a majorincrease in tension, and in June1997 the Governmentcaptures approximately 10-15per cent of diamond areasformerly under UNITAcontrol. In October 1997 the

UN Security Council imposesa range of sanctions onUNITA, although it does notinclude diamonds, and threeweeks later UNITA starts tocut its contacts with theGovernment and the UnitedNations.Tension continues oninto 1998 and increases, andby July nearly two-thirds of theprovinces are unsafe.Thousands of people aredisplaced in the process. In Julythe UN Security Councilenacts further sanctionsagainst UNITA, this timeincluding diamonds.Tensionescalates and as of earlyDecember 1998 the UNITAheadquarters of Andulo andBailundo are surrounded bygovernment forces, whilstUNITA hold UN staff hostagein both towns.A renewal ofconflict seems almostinevitable.

(with thanks to CIIR “PeacePostponed:Angola Since theLusaka Protocol”, 1998)1

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INTRODUCTIONThis document was written to stimulate debate and action on awell known and much reported issue: the key role thatdiamonds have played in the Angolan conflict in the last tenyears. There is a dangerous acceptance amongst theinternational community that the mechanics of the trade indiamonds, particularly from UNITA controlled areas, arebeyond any real controls. Global Witness investigations showthat governments flout the United Nations Security Council(UNSC) embargo on unofficial Angolan diamonds (those notsold under the control of the Angolan government diamondparastatal, Endiama). Furthermore, lack of understanding andgovernment scrutiny of the functioning of the diamond tradehas resulted in the absence of any serious examination ofcorporate culpability, allowing many diamond companies tocontinue to operate without fear that their actions may becalled into question by consumers.

For reasons of safety Global Witness has not identifiedthe numerous individuals involved in the trade, interviewedin the course of investigations.

This document must necessarily concentrate on onefactor in the Angolan equation, diamonds, a difficult taskgiven the extreme complexity of the ongoing war in Angola.This document does not seek to play down the political andsocial issues at stake, nor the way in which the internationaloil industry has underwritten a government widely seen ascorrupt and unaccountable to its own electorate.

“But instead of going to pay for reconstruction efforts after 23years of civil war, the oil revenues are being used by the MPLAgovernment to fuel its side of the conflict with the rebel Unitamovement.” BBC News, Online Network 4th November 19983

But it is important that the role of diamonds in UNITA’scontinued war and the serious lack of accountability withinthe diamond trade be exposed and understood so that vitallessons can be learned from the tragedies of the mid 1990’s,including the deaths of an estimated 500,000 Angolans whodied as a result of the return to civil war in this period. Theinternational community must examine how it has becomecomplicit with diamond barons and what this means for theeffectiveness and reputation of the United Nations.

It is time that a business which operates in an arcaneway, like a family business, re-assess its operation andaccepts that corporate accountability is now an importantfactor in international business. The South African-Britishgroup De Beers and its Central Selling Organisation (CSO),as the major player in the diamond trade, must assumesignificant responsibility for this. As they say themselves“De Beers is committed to a policy of fair dealing andintegrity in the conduct of its business.This commitment isbased on the belief that business should be conductedhonestly, fairly and legally” 4. Leading companies shouldaccept that the rationales used to justify the buying of‘outside goods’ (unofficial diamonds) in countries such asAngola and Sierra Leone must be weighed in the balancewith the possible and severe implications that such apurchase can have, including the destruction wreaked byconflict, the suffering of millions of people, the deaths ofhundreds of thousands, the billions of dollars of lostdevelopment and the high cost of conflict resolution.

“The country’s revenues are meant for resolving the country’sproblems,” said Fernando Dos Santos,Angola’s InternalSecurity Chief.“It would be ideal to spend them in the socialsector. But what use are social projects when Unita areblowing up power lines and bridges.” Quoted from BBC NewsOnline 4th November 19983

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A ROUGH TRADE THE ROLE OF COMPANIESAND GOVERNMENTS IN THEANGOLAN CONFLICT

“UNITA keeps control of diamond areas in NortheasternAngola because for the [sic] sake of its own survival.” 2

JONAS SAVIMBI, IN LE FIGARO, MAY 1996.

AbbreviationsDRC Democratic Republic of Congo

ENDIAMA Empresa Nacional de Diamantes de Angola

FAA Angolan Armed Forces

GURN Government of Unity and National Reconciliation

HRD The Diamond High Council, Belgium

MONUA The UN Observer Mission to Angola

MPLA Popular Movement for the Liberation of Angola

UNDP United Nations Development Programme

UNICEF United Nations Children’s Fund

UNITA National Union for the Total Independence of Angola

UNSC United Nations Security Council

Contents

Angola: A Brief Outline 1

Introduction 2

Summary 3

Recommendations 3

1. Role of Diamonds in Angola in the 1990s 4

2.The Diamond Industry, De Beers and the CSO 5

3.The UNSC embargo 9

Case Study 1: Belgium 10

Case Study 2: Zambia 11

4.A Brief Overview of the Trade in Angolan

Diamonds 12

Conclusion 14

References 14

Victims of war, Lunda Norte, Angola 1992

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SUMMARY

Diamonds and Angola’s Recent HistoryIt is well documented that the decline into renewed civil war,following the failure of the 1992 elections, was financed for themajor part by natural resources - oil and diamonds. The warcost the lives of at least 500,000 Angolans, with thousandsmore maimed due to land mines - a continuing blight for thepopulation. Economic chaos suffered by the majority of thepopulation has resulted in the country’s steep decline asdefined by all internationally accepted social indicators.

Since 1992, UNITA have consistently controlled 60-70%of Angola’s diamond production, generating US$ 3.7 billion inrevenue, enabling them to maintain their war effort.

UNITA’s diamonds reach the major international marketsthrough a worldwide diamond industry that operates withlittle transparency or scrutiny from the internationalcommunity

De Beers, the CSO and the Diamond IndustryThe De Beers company and its Central Selling Organisation(CSO) have dominated the international diamond industry forthe last 60 years; sorting, valuing and selling around 80% ofthe world’s diamond production. Company literature boaststhat the cartel structure provided by the CSO is of benefit toall involved in the international diamond trade.

De Beers annual reports during the 1990’s clearly state thecompany’s heavy involvement in buying Angolan roughdiamonds, at the height of resumed fighting and a time whenUNITA controlled the majority of Angola’s diamondproduction. Given that De Beers were, according to their ownreports, buying a substantial proportion of Angolan roughdiamonds, at a time when a large section of the country’sdiamond mines were under Unita’s control, one couldconclude that the drive to keep the lucrative outside marketbuoyant was a primary concern - despite the consequences thismight have for the people of Angola during this period.

The UN Security Council EmbargoIn response to the lack of progress over UNITA’simplementation of the Lusaka protocol, the UN SecurityCouncil passed Resolution 1173 and 1176, which prohibit thedirect, or indirect export of unofficial Angolan diamonds -those defined as not accompanied by a Certificate of Origin(CO) issued by the Government of Unity and NationalReconciliation (GURN) in Luanda.

Whilst resulting in some reduction of revenue for UNITA,the implementation of UNSC Res. 1176 appears token at best.Investigations reveal that significant diamond exports still takeplace, mainly by air and in smaller quantities, throughcountries such as Zambia. Most of the diamonds are sold onthe open market in Antwerp and in other countries. Belgium,as home to the world’s premier diamond market, bearssignificant responsibility for this situation.

This illegal trade is made possible through a combinationof inadequate control and verification of CO’s from theGURN, and the fact that diamonds imported fromneighbouring countries do not require any effectiveverification of source. The latter situation, especially given theinvolvement of corrupt officials, provides a perfect loopholefor the laundering of UNITA sourced diamonds throughAngola’s neighbouring countries, and on to the internationalmarket.

Publicly, the diamond industry declares that it is notpossible to identify the source of diamonds. In fact, notableinternational diamond experts are clear that diamonds arereadily identifiable by source - often to the level of the minethey were extracted from. It is clear that the professionalcapacity of the international diamond industry is such thatAngolan sourced rough diamonds are clearly identifiable.

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RECOMMENDATIONS

● All member states of the UN should fulfil theirreporting obligations under UNSC Res. 1173.

● The UNSC should immediately amend UNSCRes. 1173 to require that all diamonds in tradecarry a Certificate of Origin (CO) and besubject to independent scrutiny byinternationally recognised diamond experts.

● The UN Secretary General, in his report to theUNSC, which is due by 15th January 1999,should identify those countries not fullyimplementing the embargo, and specify actionsto be taken to improve implementation.

● De Beers and the CSO should publicly clarifywhat changes to their internal structures theyhave made to ensure full compliance withUNSC Res. 1173.

● De Beers and the CSO, as the most powerfuland expert monitor of the diamond industry,should notify the UN and relevantgovernments and enforcement agencies of anycompany or trader that offers them Angolandiamonds, so that all documentation can besubject to official scrutiny.

● De Beers should revoke sight holder statusfrom any trader found to be dealing in UNITAsourced diamonds.

● De Beers and the CSO, as the original shapingforce behind the current way in which theindustry operates, should lead the necessaryprocess of reform within the industry toaddress current issues of transparency andbusiness ethics.

● Traders that deal in UNITA sourced diamondsshould be penalized with confiscation ofdiamonds, heavy fines and, in Belgium forexample, loss of tax concessions. Resultingrevenue should be put towards reconstructionin Angola.

● Any diamonds originating from Angola'sneighbour states should be subject to especiallyrigorous inspection, as it is known that they arerecipients of UNITA sourced diamonds andthat forged documentation is rife.

● The governments of Angola’s neighbours andmajor diamond trading nations (includingBelgium, Israel, South Africa and the UK)should exercise the precautionary principle andprohibit the import of diamonds unless it canbe proven that they do not originate fromcombatants.

● The Belgian Government needs to takeimmediate action to improve the ability of thediamond experts who work with Customs, toidentify Angolan diamond imports.

● The government of Angola should ensure thatofficial diamond exports are accompanied byinternationally recognised COs, stamps and aresigned by named authorised officials.

● An independent review of the issuessurrounding the identification of the country oforigin of rough diamonds urgently needs to becarried out.

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1.THE ROLE OFDIAMONDS IN ANGOLAIN THE 1990’S

“In the mining areas of Lunda Norte, historically themost exploited of the country’s range of reserves,diamonds have played an important role in sustainingthe conflict since the 1992 elections. UNITA isthought to have reaped about US$1.5 bn from salesof diamonds mined in areas it has controlled duringmuch of this phase of the civil war. In 1995 Angola’stotal diamond output raised about US$700 m,according to industry sources, of which only US$147m was accounted for by legal sales by minorproducers and the parastatal company Endiama.most of the rest was mined by UNITA and smuggledout unofficially.” 5

ECONOMIST INTELLIGENCE UNIT (EIU) COUNTRY REPORT, 4TH QUARTER 1996.

“Oil and diamonds, in particular, have been used to pay for thewars that have plagued the country since the 1960’s... Much ofAngola’s wealth is unaccountably taken up by UNITA andgovernment elites, with little reaching the grassroots.” 1

CIIR PEACE POSTPONED:ANGOLA SINCE THE LUSAKA PROTOCOL, 1998.

“They [UNITA] have occupied the most [sic] productive areasthan the government and the same thing (occupation of thediamond rich areas) is being used to buy the arms which theyare using on innocent people.” 6

PAULO MAFUNDAMA,ANGOLAN CONSUL GENERAL IN MONGU, ZAMBIA

The importance of diamonds in funding UNITA’S war effortover the last decade is well known and fairly well understood.Diamond revenue became increasingly important for anumber of reasons including the political changes in the post-Cold War era. Diamonds have provided the majority ofUNITA’s funding although gold, coffee and particularly inthe late 1980’s wildlife products and timber were all sources offunds. Between 1992 and 1998 UNITA obtained an estimatedminimum revenue of US$3.72 billion from diamond sales.This does not include revenue from other sources, norinterest generated in overseas bank accounts.

The international trade in diamonds has become a majorobstacle to any possible progress towards peace; and hasplayed the major role in enabling UNITA to restock itsmunitions and maintain a flow of supplies which in turn hasenabled it to disregard the 1992 election results and to avoidmeeting its obligations under the Lusaka Protocol.

The workings of the international diamond trade areopaque and difficult to penetrate. However, it is clear that 80per cent of the trade is controlled by De Beers through theCSO. It is also clear that the key role of the outside(unofficial) market in controlling the world price ofdiamonds needs to be re-examined.

To the millions of Angolans who have survived the repeatedyears of conflict and the estimated 300,000 that died violentlybetween late 1992 and 1995, the workings of the internationaldiamond trade may seem an abstraction, but the revenue thatUNITA has been able to generate from diamonds and the directand indirect impacts of this revenue are real enough.

The income generated from of UNITA’s diamond sales, as with much of thediamond business as it currently operates, is impossible to record withabsolute precision but it can be approximated as follows:

1998 US$200m7

1997 US$700 m8

1996 US$700 m8

1995 US$320 m9

1994 US$600 m10

1993 US$600 m10

1992 US$600 m10

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SOCIAL INDICATORS“With a mortality rate of almost 30% among childrenunder the age of five,Angola ranks among the world’sworst for this critical health indicator.” 11

KOFI ANNAN, UN SECRETARY GENERAL, 23 NOVEMBER 1998. S/1998/1110REPORT TO THE SECURITY COUNCIL ON THE UNITED NATIONS MISSION INANGOLA (MONUA)

“Two-thirds of the Angolan population live on less than adollar a day.” 12

PRESIDENT EDUARDO DOS SANTOS, DIÁRIO DE NOTICIAS, 20TH APRIL 1997.

“During the conflict, from 1992 - 1994, 27% of the childrenin Bie lost their parents, 89% were exposed tobombardments and 66% saw landmines blowing peopleup.” 13

CCF REPORT, OCTOBER 1998.

It is difficult to adequately convey the enormity of the humantragedy that has befallen the people of Angola. Over 20 years ofcontinuous conflict has resulted in hundreds of thousands ofdeaths and a population suffering one of the world’s highestrates of landmine victims.The physical and psychologicalsuffering continues.The following few statistics gives only a bareoutline of the daily crises faced by Angolans.1997 HUMAN DEVELOPMENT INDEX RANKED ANGOLA 157TH OUTOF 175 COUNTRIES 14

POPULATION LIVING IN ABSOLUTE & RELATIVE POVERTY 14 82.5%

INFANT MORTALITY RATE FOR CHILDREN UNDER 5* 320 per 1000

DISABLED LAND MINE VICTIMS 16 200,000

LIFE EXPECTANCY* 42 YEARS

INTERNALLY DISPLACED PERSONS* 1.2MILLION

POPULATION WITHOUT ACCESS TO FRESH WATER* 53.9%

POPULATION WITH ACCESS TO HEALTH CARE 15 35%(UNICEF estimates)

PEOPLE REQUIRING FOOD AID* 3.2MILLION

RATE OF ILLITERACY* 50.9%

(Source: UCAH) * - UNDP Human Development Report Angola 1997.

“In the men’s ward Augusto Jocinto is lying on a piece ofcardboard covered by a blanket stained with pus seepingout of the stump that was once his left leg. He is shaking sobadly that he can hardly form complete sentences.Augustowas airlifted from the eastern city of Luena four monthsago after a landmine ripped his leg off while he wassearching for some manioc in an abandoned field.

“Did he not know that there were mines around? ‘Yes,but I had no choice. I have a wife and a baby son and wehad no food.We knew there were mines, but our stomachswere empty.’Augusto does not have any money to buymedicines or proper bandages. He has no idea what hasbecome of his wife and son.” 17

KARL MAIER, ‘ANGOLA- PROMISES AND LIES’, 1996

Illegal diamond mine, Lunda Norte,Angola 1992.

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2.THE DIAMONDINDUSTRY, DE BEERSAND THE CSO

“In recent years De Beers has limited itsinvolvement to buying up government-produced and smuggled gems on theworld’s diamond exchanges and across theborder in Zaire, in an attempt to preventthe flow of Angolan gems fromdestabilising world prices.”18

EIU 3RD QUARTER 1996

“De Beers is committed to a policy of fairdealing and integrity in the conduct of itsbusiness.This commitment is based on thebelief that business should be conductedhonestly, fairly and legally.To this end, theCompany’s Code of Business Conduct andEthics requires employees to maintain the highest ethicalstandards in ensuring that business practices are conducted ina manner which in all reasonable circumstances is abovereproach.” 19

DE BEERS 1997 ANNUAL REPORT.

“What we would hope to happen in Angola is for peace to beproperly established, for there to be a proper peacefulsettlement between the MPLA and UNITA.” 20

NICKY OPPENHEIMER, CHAIRMAN, DE BEERS, INTERVIEW, 22ND DECEMBER 1997, DEBEERS WEBSITE.

“The De Beers diamond cartel and other international dealersare buying gems mined in rebel-held territory in violation ofAngolan law.” 21

HUMAN RIGHTS WATCH ANGOLA REPORT 1994.

“De Beers has admitted spending US$500 million to buylegally and illegally mined diamonds originating in Angola in1992 in ‘open market transaction’.” 21

HUMAN RIGHTS WATCH ANGOLA REPORT 1994.

“What is true is that diamonds are a family business and acomplete anomaly in the world of today.” 20

NICKY OPPENHEIMER, CHAIRMAN, DE BEERS, INTERVIEW, 22ND DECEMBER 1997, DEBEERS WEBSITE.

The diamond business, which has been dominated by DeBeers and the CSO since the 1930s, operates with anextraordinary lack of accountability, as the methods ofoperation are widely accepted by many in the internationalcommunity, and the underlying ethics are not questioned.

Similarly there is an unquestioningacceptance of the way in which theoutside market operates. The case hasbeen made, and repeatedly stated by DeBeers and the CSO that “Our outsidebuying operations are a vital ingredient ofour management of the world market forrough gem diamonds.” 22. These operationsare a system of buying offices andindividuals located in countries wherediamonds originate, such as Angola,Guinea and the DRC23, in others whichare key routes for unofficial diamondssuch as the DRC23 and in end marketssuch as Antwerp23. Of the diamondsbought on behalf of the CSO themajority are taken to London24 and eitherstockpiled or sold on to De Beerssightholders (see DIY guide to diamondtrading). Another key factor has been the

number of middlemen involved in the trading process. Thismakes it extremely difficult to accurately trace themovement of diamonds around the world.

This system has resulted in unaccountability and createdan opaque screen, enabling the diamond industry to buydiamonds regardless of ethical considerations, such as itssuppliers could be combatants and/or terrorists in warringcountries.

Another key factor relating to acceptance of the outsidemarket is that of identification. De Beers claim it is notpossible to identify many of the rough diamonds that theirbuyers are offered25 . The reasons given include the difficultyof identifying parcels of diamonds containing mixed stonesfrom several countries as there can be strong similarities.However Angola’s diamonds are some of the best in theworld and are very distinctive. This poses a problem forpeople seeking to mix them with stones from othercountries to avoid identification, particularly as significantquantities of similar stones are required. This is furthercomplicated by the volumes of stones leaving Angola. Forexample diamond production in Zaire is predominantly of alesser quality, the stones are flattish in shape and greenish incolour: thus both shape and colour are different from muchof the Angolan production. It is difficult to understand howbuying offices of international companies, that wereoperating in the DRC up to 1997, could confuse suchdiverse stones on such a continuing basis. The director ofone Diamond Trading School in South Africa noted that onecould identify a mixed parcel from the shape of the stones.26

Other traders have also privately stated that it is possible to

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“The UNITA rebelmovement in Angola ishelping to fund to guerrillawar by selling hundreds ofthousands of pounds’ worthof illegally mined diamondsto international buyers.” 27

THE GUARDIAN 4TH MARCH 1993.

The article goes onto describea US$400,000 paymentreceived by UNITA officials fora diamond deal in late January1993, and to quote a dealer inTshikapa in the DemocraticRepublic of Congo (DRC) “Iwould say about one-third ofall the diamonds we handlecomes from across the

border and they all end up inthe hands of De Beers. Itknows where they comefrom, that’s De Beers’ job.”

The article quotes astatement by Tom Tweedy, aspokesman for De Beers, “Thebuying offices are open toall comers and unless anofferer of diamonds openlyshowed his affiliation wewouldn’t be aware of it.Wehave no arrangement withUnita to buy diamondsillegally exported fromAngola.”

The article also notes that“Dealers in Tshikapa saythat although De Beers

maintains that the first itknows of any transaction iswhen it views the diamondsit is about to purchase, thecartel usually has knowledgeof important deals from anearly stage, because it wantsto ensure high quality gemsdo not stray intocompetitors’ hands. Othersin the industry say De Beerscannot be in any doubtabout the source ofdiamonds, which experts candetermine.”

The article also quotes theTshikapa diamond dealer asnoting that “The cross-border trade has been on for

a long time, but we used todeal with individuals. Manywere Zaireans we knew whoacted as traffickers from thediggers. Now they come withAngolans who don’t speakFrench.The Angolans comein uniforms and there arealways Zairean soldiers -officers - with them.TheZaireans do the negotiatingbut the Angolans take themoney. we know who we aredealing with: it’s Unita.”

Tshikapa is 110 kms fromthe border opposite theAngolan province of LundaNorte, under UNITA controlin 1993.

CSO Head Office, London UK.

identify parcels of unmixed diamonds to the mine theyoriginate from, and that it is possible to identify gems fromspecific countries. De Beers however have stated to GlobalWitness that “...if you are sitting in Tel Aviv or Moscow or NewYork whatever the potential for positive identification youhave not a clue where they came from. Just to be clear if he[diamond seller] says they are Scottish diamonds [there are nodiamond mines in Scotland], you take his word for it...”.25

“...they could be diamonds from the moon.” 25. It would seemthat an independent review of diamond identification issuesis required (it is generally accepted that polished stonescannot be identified).

De Beers through the CSO buys up approximately 80%of the rough diamonds that reach the ‘outside’ market24. It iswell established that De Beers through the CSO hasconsistently bought up Angolan gem quality diamonds ofthe type which dominate Angolan supply4,22,23

(approximately 80-90% of Angola’s production is gemquality)28 and this has been the case all through the 1990’s.Indeed in 1992 De Beers boasted “That we should have beenable to buy some two thirds of the increased supply fromAngola is testimony not only to our financial strength but tothe infrastructure and experienced personnel we have inplace.”29. The problem has been that for much of this timethe majority of the diamond areas have been under thecontrol of UNITA.

“Although revenue has plummeted, the leader of UNITA, JonasSavimbi, still has access to significant stock of diamonds,which he continues to sell on international markets, and evento use in barter trade with arms dealers.” 30

EIU COUNTRY REPORT, 1ST QUARTER 1998.

The Role of De Beers and the CSO in theDiamond Business

“De Beers has been involved in all aspects of the diamondbusiness for more than 100 years.Today, it is the largestdiamond mining company in the world, producing about halfof the world’s gem diamonds by value from its mines in SouthAfrica and, in partnership with government, in Botswana andNamibia.

“Through agreements with the major diamond producingnations, the De Beers Central Selling Organisation (CSO)sorts, values and sells about 80 per cent of the world’s annualproduction of rough diamonds.

“De Beers undertakes the advertising and promotion ofdiamond jewellery on behalf of the entire diamond industry -spending many millions of dollars annually in 28 countries, inclose co-operation with the jewellery trade [close to US$200million annually according to the 1997 Annual Report].19 DeBeers’ support for the diamond industry brings very significantbenefits to every diamond producing nation.”24

DE BEERS AND THE DIAMOND INDUSTRY

The corporate structure of De Beers is complex with avariety of subsidiary companies involved in different aspectsof the business, for example Codiam in Antwerp carry outmuch of the buying31. De Beers is essentially divided intotwo main companies: De Beers Consolidated Mines Ltd,registered in Kimberly, South Africa which manages thearrangements De Beers has with major diamond producingcountries particularly South Africa, Botswana and Namibia;and De Beers Centenary AG, registered in Lucerne,Switzerland, which controls around 80% of the world’sdiamond sales through the CSO19.

De Beers mines, including those in Botswana, Namibiaand South Africa produce half the world’s rough gem stonescalculated by value; Russia produces about a quarter, valuedat US$1.2 billion; Angola produces an estimated US$700million of rough diamonds. The Angolan production is asignificant force affecting the world market.

The CSO

“The Central Selling Organisation, or CSO, was established byDe Beers and its associates in the 1930’s to create a reliableand enduring system to balance supply and demand, andprevent wild fluctuations in the market for diamonds.Thissingle channel marketing system remains fundamental to thestability and prosperity of the entire diamond industrytoday...” 24

DE BEERS AND THE DIAMOND INDUSTRY.

Outside buying

“Outside Buying.The CSO buys diamonds in substantialvolumes on the open market, both in Africa and in thediamond centres, through its extensive network of buyingoffices, staffed by young diamond buyers often working indifficult conditions. Purchases in 1996 reached record levelslargely owing to the increased Angolan production.Angolandiamonds tend to be in the categories that are in demand,although in the main these buying activities are a mechanismto support the market.” 4

JULIAN OLGIVIE THOMPSON IN THE CHAIRMAN’S STATEMENT, DE BEERS 1996 ANNUALREPORT.

The Year by Year tables (see over page) show the operationof the international diamond business and the impact thatdiamond revenue can have in one country in a relativelyshort period of time.

The issue of natural resources and their use to fundconflicts is of major importance on the African continent, andits importance is set to grow. The process of pushingcompanies towards corporate accountability over theiroperations is already well developed in other extractiveindustries, for example Shell and RTZ. Diamond companiesneed to develop new ways of operating that will ensure thatcombatants in conflict zones, such as Angola, Sierra Leoneand Guinea are not able to derive revenue from diamondsales.

It is very easy for companies to respond that it is notpossible to alter the way in which they do business, but thisresponse, especially when set against the scale of recurringtragedies across the African continent, is no longeracceptable. This is not to underestimate the scale of thechallenge nor the great difficulties that will need to beovercome. There is a clear role for De Beers and the CSO totake the lead on this process of transformation because giventhe scale of their involvement in, and control of the industry,no progress can be made without their willing participation.Indeed as the organisation which set up the CSO to dealwith a crisis in production and supply in the late 1920’s and1930’s, it is now time for it to face up to a new crisis in thediamond business; that of how to reform the industry tokeep in step with the vital changes in the late 20th Centuryin how corporates carry out their business. De Beers shouldendeavour to live up to its own rhetoric on corporate ethics.

The CSO’s sales of rough diamonds for the last ten year’s are shownbelow:34

1987 US$3,075 million











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BUSINESS IS BUSINESS

As Global Witness investigations into the trade in rough diamonds fromAngola show, the lack of transparency and corporate responsibility in thediamond industry has been central to the continued financing of UNITA, andhence the fuelling of civil war in Angola. If transparent and responsiblebusiness practices had been in place, as claimed in corporate statements, thissituation would not have arisen. Bilateral and Multilateral institutions such asthe International Monetary Fund (IMF),World Bank, Organisation forEconomic Community and Development (OECD) and the World TradeOrganisation (WTO) now consider transparency and corporateresponsibility to be essential to all areas of business.

However the International Chamber of Commerce - ICC,WTO andOECD all refuse to accept a need for legally binding codes of conduct formultinationals.As this document details, it is the inability of the diamondindustry to adhere to its own corporate codes of conduct that hascontributed to the continuation of the conflict in Angola. It is internationallyaccepted that the sale of rough diamonds by Unita has been an integralfactor in the continuation of the conflict.Yet the diamond industry has donenothing to ensure that they are transparent or accountable.The diamondindustry does not have to deal with public scrutiny in the way that manymultinationals now have to.

“Accountability imposes discipline on management; firms that have tojustify their actions publicly are less likely to take actions of whichtheir shareholders and creditors might disapprove.” 35

SOURCE: IMF MANUAL OF TRANSPARENCY, 1998.

“There is no one concerned with diamonds, whether as producer,dealer, cutter, jeweller or customer who does not benefit from it. Itbenefits not only the shareholders of diamond companies, but also theminers they employ and the communities that are dependent on theiroperations.We are very conscious of our responsibilities not only toour shareholders, to the industry as a whole and to the consumingpublic, but also to the governments of the countries in which weoperate.” 22

HARRY OPPENHEIMER, DE BEERS 1995 ANNUAL REPORT.

“The Corporation (Anglo American) and the companies with which itis associated strive to create wealth and to contribute to sustainabledevelopment by operating their businesses with due regard foreconomic, social, cultural and environmental concerns.” 36

ENVIRONMENTAL POLICY DOCUMENT OF ANGLO AMERICAN CORPORATION FEBRUARY 1998.

The diamond industry must include themselves in the debate on transparencyand accountability if they are to be taken seriously.There are numerousexamples of companies that have done too little too late and are now spendingmillions of dollars in order to preserve their corporate reputation. JohnBrowne, CEO of BP , (member of the Corporate Advisory council of the US -Angola Chamber of Commerce), is clear that responsibility in business is key:

“So business has a keyrole to play.But itmust do it responsibly.With economicdevelopment mustcome environmentalstewardship andsocial responsibilityand there must be anew acceptance ofthis responsibility.”37

JOHN BROWNE CEO BP ATAMNESTY INTERNATIONALDUBLIN 26TH SEPTEMBER1997.

Nicky Oppenheimerrecently stated, “I dohope people willthink that we areopen and preparedto answer realquestions and tellthem what we areup to as far as weare able.”38 It remainsto be seen howserious about‘openness’ NickyOppenheimer will be.

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YEAR BY YEAR

THE ANGOLAN CONFLICT

APRIL 1990 TO MAY 1991“Some of the fiercest fighting of the entire war.”1

APRIL 1991The Bicesse Accords bring a temporary halt to theconflict which killed between 100,000 and 350,000 inthe previous twelve months. 1

SEPTEMBER 1992 National Elections are held, the MPLA win, but do notattain the 50% majority required, and UNITA return towar in October 1992.

OCTOBER 1992 TONOVEMBER 1994

An estimated 300,000 people died as a result of thefighting.

“This extremely destructive conflict was notable forsystemic violation of the laws of war by both thegovernment and the UNITA rebels. Indiscriminateshelling of starving besieged cities by UNITA resultedin massive destruction, and the loss of untoldnumbers of civilian lives. Indiscriminate bombing bythe government also took a high civilian toll, as didlandmines, starvation and disease. It is estimatedthat 300,000 Angolans - 3 per cent of thepopulation - died as a result of the fighting betweenOctober 1992 and late 1994; probably more than inthe preceding 16 years of war.” 1

1993 “The United Nations reported that between Mayand October 1993 as many as 1,000 people weredying every day in Angola - more than in any otherconflict in the world at the time.” 1

This totals 184,000 people.

199431st October the Lusaka Protocol is initialled, markingthe end of the ‘Third War’.

1995Localised fighting continues.

1996Fighting continues in diamond areas.

“UNITA appeared determined to maintain its gripon its remaining diamond assets in 1996. Neitherside was prepared to concede this lucrative asset.” 1

1997There is an increase in serious violations of theceasefire, many of which are attacks on civilians, this iscarried out by both UNITA and the Government.Thediamond producing areas, including Lunda Norte, suffer.In June FAA capture an estimated 10 to 15 percent ofUNITA’s diamond producing areas. On 29th October,the UNSC unanimously adopts Resolution 1135, whichimposes a range of sanction measures on UNITA, whichincludes freezing of UNITA bank accounts and closingtheir offices abroad.1

1998There is an escalation in tension as attacks by bothsides increase. Both FAA and UNITA lay landminesaround their positions39.As of early December FAAforces have surrounded Bailundo and Andulo and manywithin the country and outside observers are predictingimminent full scale conflict.

Illegal diamond mine, Lunda Norte, Angola 1992

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YEAR BY YEAR

1991“Diamonds have continued to bedelivered to the CSO in terms of thecontract covering production from theCuango area on behalf of the Angolanstate diamond mining company,Endiama.An unfortunate side-effect ofthe cease fire in Angola is that theactivities of unlicensed diggers in boththe Cuango and Lucapa/Andrada areashave increased, and that theft appearsto be taking place on a large scale,depriving the government of revenueand foreign exchange and, in so far asthe CSO is concerned, weakening themarket.” 40

CHAIRMAN’S STATEMENT, DE BEERS 1991 ANNUALREPORT.

1992“Secondly, the surge in illicit productionand theft of diamonds from Angola, asdiggers rushed in to the alluvial areaswhen the rains ended and riverssubsided, proved far greater thananyone had expected, substantiallyincreasing the quantity of diamondsbeing offered on the open market.Thecombined effect of these developmentswas to curtail demand for roughdiamonds from the CSO below the levelforecast for 1992.” 29

CHAIRMAN’S STATEMENT, 1992 DE BEERS ANNUALREPORT.

[It is interesting to note that althoughthere was a large inrush of garimpeiros(illegal miners), with thousands comingfrom the DRC (former-Zaire), the areasremained under the control of UNITA,which continued to benefit from the sales]

The Report goes on to state:“That we should have been able to

buy some two thirds of the increasedsupply from Angola is testimony notonly to our financial strength but to theinfrastructure and experiencedpersonnel we have in place.”CHAIRMAN’S STATEMENT.

“CSO sales at the first three sights ofthe year have been very good, thoughinfluenced by exceptional factors,principally the scarcity of diamondscoming out of Angola as a result of therainy season and the resumption of civilwar...”CHAIRMAN’S STATEMENT.

It goes on to detail other factors which hadan impact.

The report later, when describing retailmarkets, notes:

“The difference between that [sic]stable retail performance and thedecline in CSO sales of rough diamondswas attributable principally to de-stocking in major markets, especiallyJapan, and to increased sales outsidethe CSO of illicit production fromAngola.”

1993“Our discussions with the Angolan

government will, it is hoped, lead toimportant decisions on buying,prospecting, mining, and marketing thatcould make a major contribution toeconomic recovery when peace is fullyrestored.” 23


Further on it notes:“Demand for rough diamonds from

the CSO was extremely strong in thefirst quarter thanks to improvedconfidence in rough markets.Thisfollowed the measures taken by theCSO in the second half of 1992 torestrict sales while at the same timemaking substantial purchases ofdiamonds (mainly Angolan) on the openmarket.” 23

CSO COMBINED REVIEW WITHIN THE ANNUALREPORT.

It goes on to note:“In early 1993 fewer diamonds were

coming out of Angola because of theresumption of the civil war and theonset of the rainy season.”

The Combined Review goes on to noteother events:

“All of these factors contributed tothe good sales achieved by the CSO.”

“De Beers provides substantial support,both financially and in kind, toeducational, health, social and culturalprojects aimed mainly at improving theliving conditions and opportunities ofunderprivileged people in South Africa.”DE BEERS 1993 ANNUAL REPORT.

“Buying offices have been operatingsuccessfully in Antwerp,Angola, Zaire,Guinea.” 23


1994“The CSO’s purchases of outside goodsthrough its offices in Antwerp and Africacontinued in 1994 at about the samelevel as in 1993, that is to sayconsiderably lower than in 1992.Occupation of the main diamond areasin Angola by UNITA led to diminishedactivity by illicit diggers and lowerquantities of rough reaching themarket.A new law was brought intoforce in January 1995 prohibitingindividuals from holding roughdiamonds, to help reassert governmentcontrol of the industry through the statecorporation Endiama.” 28

CSO COMBINED REVIEW WITHIN THE ANNUALREPORT

1995“The CSO’s purchases of diamonds onthe open market in Antwerp,Tel Avivand in Africa, helped by theestablishment of buying offices in

Angola, were at higher levels than theprevious year, owing mainly to thelarger quantity of Angolan goodscoming on to the market in the secondhalf of 1995.”

“..the substantially increasedproduction of Angolan diamonds -mainly in the higher value gem qualities- coming on the outside market, ofwhich the CSO successfully bought upabout two-thirds.” 22


1996“In Angola we were able to commenceonly limited aerial exploration of ourthree prospecting areas.We hope thatpeace will soon be restored and soallow the full exploration programme toproceed.” 4


However the same Chairman’s Statementdeclares:

“...the increasing outflow ofAngolan diamonds to the major cuttingcentres, much of which De Beers wasable to purchase through its outsidebuying offices.”

This, at a time when UNITA controlledthe majority of Angola’s diamond areas.

1997“The much quoted remark of mygrandfather Sir Ernest Oppenheimerremains as true a reflection of theCompany’s intentions today as it was 40years ago when he said:The aims of thisgroup have been - and they still remain- to earn profits but to earn them insuch a way as to make a real andpermanent contribution to the well-being of the people and to thedevelopment of southern Africa.” 19

NICKY OPPENHEIMER, CHAIRMAN’S STATEMENT, DEBEERS 1997 ANNUAL REPORT.

“..supplies from Angola continued todecline as a result of both the securitysituation and the higher than normalseasonal rainfall..” 19

DE BEERS 1997 ANNUAL REPORT.

1998“In 1996, the country [Angola]produced between 1 and 1.2 billiondollars’ worth of diamonds. In 1997,production fell to between 800 millionand 1 billion, and this year we areexpecting a further drop....Two thirds ofproduction in 1996 and 1997 came froma region where resources have beenexhausted. In order for work to beginagain, dams must be built across theriver. Some companies are still miningalluvial deposits and we are continuingto buy any available diamonds, butthere are fewer of them.” 41

MR GARY RALFE, MANAGING DIRECTOR OF DEBEERS, 11TH MAY 1998 IN INVESTIR MAGAZINE.

STATEMENTS FROM DE BEERS’ ANNUAL REPORTS

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3.THE UN SECURITYCOUNCIL EMBARGOON UNOFFICIALANGOLAN DIAMONDS

This section includes two Case Studies relating to thefunding of the conflict in Angola and the implementation ofthe UN embargo.

“Over a month after European Union ministers backed upU.N. Security Council sanctions against UNITA with a ruling oftheir own on July 18 the move has had no discernable impact.At least that’s what followers of Jonas Savimbi’s organizationare saying, and diamond circles and European diplomats tendto agree....The ban on imports of Angolan diamonds withoutcertificates of origin raises a laugh among UNITA stalwarts.” 42

AFRICA ENERGY & MINING, NO:235, 9TH SEPTEMBER 1998.

“Dealers in Antwerp told Diamantaire that the UN move,designed to cut UNITA’s economic lifeline, would not makethe slightest difference to supplies of Angolan rough cominginto Belgium, which is the main market....One dealer, whowished to remain anonymous, said:‘...when buyers smuggle therough out of Angola and land them in Belgium, they declarethe origin of the goods as Congolese or South African and theCustoms cannot tell where they are from’.” 43

ANTWERP CONFIDENTIAL,AUGUST 1998.

The UN Security Council EmbargoesOn June 24th 1998, the UN Security Council (UNSC)adopted UNSC Resolution 1176 which activated UNSCResolution 1173. Amongst a number of measures, itprohibited the direct or indirect export of unofficialAngolan diamonds, defined as those not accompanied by aCertificate of Origin issued by Government of Unity andNational Reconciliation (GURN).44

On the 8th July 1998 the European Union announcedthat it had formally adopted the UNSC sanctions, thus theybecame binding on all 15 member states. The regulationswhich implemented the decision of the EU Council ofMinisters were adopted on the 28th July 199845.

Observers have noted (including Human Rights Watch)that there has been a subsequent decrease of supplies toUNITA, including munitions, although a major factor inthis has been the highly aggressive military policy of theGURN in surrounding countries.

The extension of State Administration in Angola,although nominal in some cases, did result in a decrease inUNITA diamond exports during 1998, but overall theimpact of the embargo has been minimal and resulted in

changes of export logistics rather than major alterations involume. Diamond traders and analysts confirm that theembargo has not had a major impact on trade. The tradershave simply altered the routes and obtained deceptivepaperwork from obliging countries31. It appears that landroutes, some of which are small-scale, have been moreaffected by the embargo than the major exports which ofteninvolve the use of small planes from surrounding countriesand further afield, which continue to fly into UNITAareas43. The trade continues to South Africa46,47.

The UNSC does appear to have realised that it mustaddress the issue, for on 3rd December 1998 UNSCResolution 1213 states, amongst a series of points,“Paragraph 9: Urges all Member States to support the peaceprocess in Angola through full and immediate implementationof the measures against UNITA contained in resolutions 864(1993), 1127 (1997) and 1173 (1998), and expresses itsreadiness to consider appropriate reinforcing steps inaccordance with the recommendations contained in the reportreferred to in paragraph 13 below;” 48. The report in questionis due to be submitted by the Secretary-General by the 15thJanuary 1999 and is to address the status of the peace processand the future role of the UN and its MONUA force. It alsorepeats a request, made in UNSC resolution 1202 of 15thOctober 1998 which asks “..for recommendations regardingtechnical and other ways for Member States to improve theimplementation of the measures referred to in Paragraph 9.” 49.

Whilst the continuing and heightened focusing of theUNSC on the implementation of the embargoes is to bewelcomed, there are areas of concern. The recent track recordon implementation of UNSC embargo by member states hasnot been as impressive as it should be. Countries, includingBelgium and Israel (as of 4th December 1998) have failed tonotify the relevant UN committee of their implementation ofUNSC Resolution 1173; a serious failing which has resulted inlittle public censure. It is worth noting that Israel has a strongdemand for Angolan type rough stones and that much of thestones processed in Israel are bought on the open market.50

The possible working of the embargo is further rendereddifficult by the very open system of diamond import andexport. At present only Angolan diamonds require an officialCertificate of Origin51 (also problematic, see Case Study One:Belgium), whilst diamonds from other countries require onlya customs declaration and some supporting paperwork. Thisis an obvious loophole and could be addressed.

Switzerland, which is not a member of the UN and sonot bound by UN embargoes, on 25th November 199877,rather belatedly enacted embargoes against UNITA. There isa legal traffic in diamonds between Switzerland, the UK andelsewhere, not least because De Beers Centenary AG arebased there. There is also some import of unofficial Angolan

“Decides that, notwithstandingparagraph14 of resolution1173 (1998), the measuresspecified in paragraphs 11 and12 shall come into forcewithout further notice at 01.00Eastern Daylight Time on 1July 1998, unless the SecurityCouncil decides, on the basisof a report by the Secretary-General, that UNITA has fullycomplied with all itsobligations under paragraph 2of resolution of 1173 (1998).” 44

This relates to UNSC Resolution1173 of 12th June 199852,

S/RES/1173 (1998) which, undersection B, details four issues:

“12. Decides also that allStates shall take the necessarymeasures:

(a) to prevent all officialcontacts with the UNITAleadership in areas of Angolato which State Administrationhas not been extended, exceptfor those by representatives ofthe GURN, of the UnitedNations and of the ObserverStates to the Lusaka Protocol;

(b) to prohibit the direct orindirect import from Angola totheir territory of all diamonds

that are not controlledthrough the Certificate ofOrigin regime of the GURN;

(c) to prohibit, uponnotification by the Chairmanof the Committee createdpursuant to resolution 864(1993) to all Member Statesof guidelines approved by thatCommittee, the sale or supplyto persons or entities ofAngola to which Stateadministration has not beenextended, by their nationals orfrom their territory, or usingtheir flag vessels or aircraft, ofequipment used in mining ormining services;

(d) to prohibit, uponnotification by the Chairmanof the Committee createdpursuant to resolution 864(1993) to all Member Statesof guidelines approved by thatCommittee, the sale or supplyto persons or entities ofAngola to which Stateadministration has not beenextended, by their nationals orfrom their territory, or usingtheir flag vessels or aircraft, ofmotorized vehicles orwatercraft or spare parts forsuch vehicles, or ground orwaterborne transportationservices;”

CASE STUDY ONE: BELGIUM

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diamonds into Switzerland, although the scale of this tradeis not clear31.

There is another obvious loophole that the currentembargo fails to address which is that of launderingunofficial Angolan rough into trade by polishing it first.31

The UN should immediately censure those countriesthat have so far failed to comply with UNSC 1173 and 1176,and to further censure those countries actively evading theterms and spirit of the resolutions. These countries includeBelgium and Zambia which should be subject to immediate

visits by suitable UN teams with a mandate to investigateand to report back to the UNSC Committee. The visitsshould then be repeated in April or May of 1999 after theend of the rains in Angola, which have a major impact ondiamond extraction and supply.

National government must also take action to ensurethat companies operating in their territory comply fullywith the embargo. Countries with significant flows of‘outside’ goods, including the UK, South Africa, Belgiumand Israel should be placed under UN scrutiny.

ANTWERP, the Belgian centre of thediamond trade, is a key player in theinternational diamond business with morethan half the world consumption of rough,polished and industrial diamonds passingthrough the city. It has the largestcommunity of dealers, and more than 50%of all CSO sightholders live in Antwerp.There are four diamond bourses wheremuch of the diamond trading is carriedout.

At time of going to press, the Belgianauthorities have yet to notify the UNSC oftheir compliance with UNSC Resolutions1173 and 1176, but have taken some actionover imports from Angola. However, theyhave failed to close a number of loopholesin the import control system which hasresulted in Antwerp continuing to be amajor importer of Angolan roughdiamonds.Although De Beers is a majorbuyer of rough diamonds in Antwerp, atpresent it is too early to assess theircompliance with the UNSC embargo ofJuly 1998.As one of the world’s keydiamond trading centres,Antwerp must beaware that its full compliance with theUNSC embargo would be crucial to itssuccess.

The Belgian government is failing in itsobligations to the UN by tolerating theAngolan government’s ambiguous importdocumentation and procedures.

“The Belgian government encouragesthe trade through a generous system oftax breaks.All diamond exports areexempt from taxes, and most diamondimports are exempt from import duties.A Value Added tax of 21% is payable butthere is a unique system of VATexemption for imported diamonds.” 53

There is a Diamond High Council (HRD)in Antwerp which was set up to:

“..serve and defend the interests ofthe whole diamond sector...[its]activities are conducted for the generalbenefit of the Belgian diamond tradeand industry. Its administration andmanagement are solely entitled to actin the name of the whole Belgiandiamond trade.” 54

KOMPASS DIAMONDS 1998 BELGIUM.

The HRD contains a department called:“The Diamond Office [which] is

unique in the world and acts as acustoms broker for the import andexport of diamonds and handles all thepaperwork for this process - aconsiderable service to the diamondcompanies.” 54

When diamonds are imported into, orexported from, Belgium the goods aredeclared at the Diamond Office, whichworks in co-operation with BelgianCustoms on the import, export andverification of diamonds.There is anexpertise department where all parcels ofdiamonds entering or leaving the countryare checked on behalf of the Ministry ofEconomic Affairs under supervision froman officer from the Licensing Department.53

There are normally ten diamondexperts on duty at any one time who checkall diamond parcels for weights and value.In 1995 an average of 312 parcels a daywere processed, meaning that each expertwould have had to check approximatelythirty parcels of varying sizes per day55.Thustechnically every diamond enteringAntwerp is checked by an expert.

Angolan diamonds,which are beingimported into Belgium, are being mis-described as originating from othercountries.The experts who work on behalfof the Ministry of Economic Affairs to checkthe parcels are failing to spot the mis-described parcels. It would seem this isbecause they are generalists and cannotnecessarily identify the Angolan gems.TheBelgian government needs to take immediateaction to train the experts, or find otherswho can assist in implementing the UNembargo.

There are further problems caused bythe Angolan government’s failure tooperate a rigorous system of controlsbecause:● the Angolan Certificates of Origin

(COs) do not include a printed namenor title under the signature;

● the COs are signed by a number ofdifferent people who cannot be readilyidentified;

● the Angolan government has notresponded to requests from theBelgian Government for a list ofapproved signatories to the COs;

● the Angolan government has notdefined what constitutes an officialstamp, and COs have different types ofstamps;

● the name of the exporting company ison the CO but not on the ImportLicense which allows for confusionover who is actually receiving thegoods

The importance of the diamond industryto the Belgian economy is a counter-incentive to a rigorous application of theembargo.

In 1992 Channel 4’s Dispatches broadcast‘Not Quite Forever’, a documentary aboutDe Beers which included an interview witha buyer working for the company inAntwerp:

“My role here is to buy as manyrough diamonds as I can that come onthe market at an agreed price by thehead office in London...We are alwaysbusy - our level of activity will obviouslyfluctuate, depending on the actualcurrent state of the diamond market.When the market tends to be weaker,we tend to be busier, and when themarket is strong...we’re not quite sobusy...”56

The buyer goes on to confirm that themajority of the diamonds brought to hisoffice are Angolan, and admits in an averageweek to buying US$3-5 million of Angolandiamonds during 1992.

When asked what is the most spent ina week the buyer replies “It would besomewhere in the region of aboutUS$40 million dollars.” 56

This was at a time of renewed andvery intense fighting following the electionsof late 1992.

Diamond Bourse,Antwerp,Belgium.

Angolan Certificate of Origin for diamonds.

CASE STUDY TWO: ZAMBIA

ZAMBIA’S importance as a diamondroute for UNITA increased with thefall of Mobutu and the incursion ofAngolan army troops into the DRCwhich initially closed off thetraditional and major route fromUNITA territories through DRC toKinshasa. Historically Zambia hassupported UNITA, with the presenceof Angolan refugee camps in whichthere was an element of UNITAinfiltration57.This changed due topressure and threats from theAngolan government followingdetailed reports of major armsshipments transiting through Zambia.58

Global Witness investigations haveshown that obtaining, laundering andexporting Angolan diamonds remains arelatively simple process in Zambia, withthe facilitation of government officials.TheZambian government note in their exportinformation on gemstones, “Changingcustomer requirements offeropportunity for marketing expansion.Certain products are prepared in acertain way in order just to meet thecustomer specifications.This results indifferent marketing areas...” 59

Global Witness investigations reveal thatthe Zambian Ministry of Mines and itsGeological Survey are not only happy toprovide false Certificates of Origin but areclear that “Basically all diamonds hereare Angolan.” 60

How Zambia is undermining theUNSC embargo

It is difficult to ascertain the scale and valueof the Zambian trade in Angolan diamonds,although it does seem to have decreasedduring 1998.31 It is likely that most of thecurrent trade is small-scale with a largenumber of people handling relatively smallamounts of stones.

The UN embargo does appear to havereduced supplies of medicines and otherimportant items to UNITA but in Zambiathis has become a mechanism used to drivedown the price of UNITA diamonds, as thevalue of barter goods increases.31 However,of great concern is that there is a wellestablished structure in place for handlingquantities of diamonds, and that officialcollusion continues despite internationalpressure, and threats from Angola61.A visitof Angolan and Zambian officials to Monguand other areas in March 1998 has notstopped the flow of diamonds.62

The process of laundering unofficialAngolan diamonds falls into three stages:

The first is to acquire Zambiangovernment authorisation to purchaseprecious and semi-precious stones.Thedocument required is a Gemstones SalesCertificate which is valid for one year andpermits the possession and export ofgemstones. It is obtainable from theMinistry of Mines and costs 200,000Zambian Kwacha (about US$100 dependingon the exchange rate), and is easy to obtain.

The second stage, the acquisition ofdiamonds is somewhat more expensive andrisky. Diamonds can be purchased at firsthand by entering Angola, usually with the

compliance of Zambian border officials, or byhiring guides acting as purchasers.Thepurchasing process can take up to two weeksas buyers may have to walk to the right areain Angola, obtain the diamonds and walkback. Mavinga, in Cuando Cubango province,is a popular destination31 and UNITA arecurrently encouraging significant buyingactivity in the area, as well as permitting 30-40 small concessions to operate47.

Mavinga was handed over to the StateAdministration on 21st October 1997 andDe Beers, which has a concession in thearea, set up a small base camp forprospecting8 but most of it was reclaimedby UNITA in the following months. It ispossible to obtain diamonds from theLundas in the Northeast of Angola butthese are difficult to access from theSoutheast of Zambia.

The guides would normally haveexisting UNITA contacts in the diamondproducing areas.Alternatively parcels canbe bought in Zambia: the three towns ofSenanga, Mongu and Zambezi, south east ofthe Zambian-Angolan border are allrecognised sources for the acquisition ofdiamonds.Angolans and Zambians basedhere are prepared to act as guides orarrange for diamonds to be brought out ofAngola. In November 1998 one company,Milkwood Ltd Zambia, were distributingleaflets in Mongu, advertising for bothdiamonds and gold (see picture above)63.Thecompany is Lusaka based and buys on aregular basis in Mongu.The diamonds comethrough the border crossings ofShangombo, Kalabo and Mwinilunga.

Diamond prices vary greatly dependingon where the sale is taking place and whois buying. In cash terms diamonds arecheaper in Angola at approximately US$100upwards per carat although UNITA seemto keen to encourage barter for medicine,clothes, electrical equipment and othersupplies.Again rates given for barter varywidely from a couple of pairs of trousersfor a small diamond or a ‘Sharp’ cassetteplayer for a larger stone from an individualseller, to the agreement of orders inadvance with UNITA officials for quantitiesof medicines and other supplies to bebrought in by a four-wheel drive vehicle,whilst placing a counter order fordiamonds at the same time. In Mwinilungaand Zambezi there is an established barter

of diamonds for cattle64.There is also a verysmall-scale pattern of fish trading, withAngolans carrying 20 to 30 kgs at a time toZambia, a journey of several days, andselling the fish for soap, clothes and goatswhich will then be taken back to areas suchas the Lundas or Luau, where a goat can beworth up to US$300, and exchanged fordollars or diamonds

The third stage is somewhat easierthan the second, and less fraught with risk,namely that of acquiring the necessarypaperwork to turn the unofficial diamondsinto a legal commodity and thus exportableunder the terms of the UNSC embargo. Itcan then be accepted by the importauthorities of any country that do not raisequestions about the high gem valuediamonds that appear to originate from acountry which has virtually no production.

Such countries include the USA,Britain, the Netherlands, Belgium, SouthAfrica and Israel.31 Other countries with aninterest in so-called ‘Zambian’ diamonds areSaudi Arabia, Hong Kong and Japan,although there has been a decline in FarEastern demand due to the economicproblems in the region.According to oneinternational trader the export documentswill sometimes include the phrase “Likely ofAngolan origin” but that does not hinderexports.31

The diamonds are evaluated by theoffice of the Geological Survey, and theresultant ‘Valuation Certificate’ details adescription of the stones, grade, quantity,colour and valuation in US dollars.Thedocument is examined, certified and signedby two officials.The official noted that itwas their usual custom to undervaluestones due to the high rate of tax, “Weunderstand...[so we] normally don’t putstones at the highest value.” 60 He notedthat a small amount of South African,Botswanan and Namibian diamonds werebeing brought into Zambia to obtainZambian export documents.

The Valuation Certificate is required byThe Mines Development Departmentwhich then issues a clearance document,the ‘Authorisation to export roughgemstones’.This goes to Customs, and isstamped for approval by both them and theDevelopment Department. Once thedocumentation is complete the stones canbe legally exported.

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Leaflet offered atCaltex petrol

station (right),Mongu, Zambia.

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4. A BRIEFOVERVIEW OF THETRADE INANGOLANDIAMONDS

Background: DiamondIndustry in AngolaAngola is one of the few countrieswhere gem quality stones, those of thehighest value, consistentlypredominate; comprising 70% - 80%of total production in 1998. In termsof world production only 5-10% ofthe worlds gems are of gem quality65.There are nine colours to the diamondquality scale and Angolan diamondsare generally in the top three.Diamonds from different areas anddifferent mines generally havedistinctive characteristics such asfissures, cracks and colours.66

Diamonds are extremely plentifulin Angola with significant currentalluvial production, requiring surfacemining or diving in rivers, carried outby unskilled workers withoutmachines. There is also potential forkimberlite mines, which are deepsubterranean volcanic pipes requiringa large investment to get any return.

Much of the mining in Angola iscarried out by garimpeiros (illegalminers) in very poor and dangerousconditions. They are often in semi-permanent debt to the comptoirs(buyers) and to those who providebasic mining equipment. In manycases the garimpeiros are little betterthan bonded labour, and have fewrights. They often work on a 50:50finders agreement with UNITA, orwhoever is in control of the miningarea.

EndiamaEndiama (Empresa Nacional deDiamantes de Angola) is the parastatal

which agrees diamond concessions,and is actively involved in diamondmining. It is also responsible forissuing licenses to buyers, permittingthem to buy unofficial production inLuanda and in the provinces. Itreceives a tax of 2.5% on all officialdiamond exports67. Export licensinghowever, is handled by the Ministry ofTrade, which is responsible forkeeping the Ministry of Mines andGeology informed67.

In recent months Endiama hasincreased the number of companieslicensed to buy unofficial Angolanproduction31. There are at least fourwell known companies with suchpermission: De Beers, Steinmetz,Oderbrecht and Almazy Rossii-Sakha.

This increased capacity to buy upunofficial diamond production willhelp solve the problem of substantialnon-UNITA unofficial production,much of which is said to be linked tokey FAA generals68. This need toensure that some of the unofficialproduction is sold could also accountfor the failure of the Angolangovernment to impose more rigorouscontrols over its system of Certificatesof Origin.

UNITAUNITA have been key players inAngolan diamond production andhence in the international diamondbusiness, since the late 1980’s. Theyhave retained a predominant butshifting control over many of themajor diamond areas, such as theCuango river valley and the Lundas,both important areas of production.Between 1992 and 1994 UNITAcontrolled 90% of Angolan diamondexports50.

In 1995 UNITA lost control ofmany areas and its percentage ofexports changed. During 1996 and1997 UNITA was producing abouttwo-thirds of all diamonds mined in

Angola69. During 1998 the return offormer UNITA areas to StateAdministration took place, a conditionof the 1994 Lusaka Protocol.

UNITA’s withdrawal from keyareas such as the lower Cuango Valleyhas had a major impact on its level ofproduction, with revenue estimated tobe US$200 million for 1998; a majordecline from previous years.

FAAThe generals of the Angolan ArmedForces (FAA) have played an activerole in diamond production in Angola,and their involvement is an opensecret. It is widely said that therevenue from the diamonds is a keypart of the FAA generals loyalty31.Companies such as Tricorn, whichoperates with ITM Mining in theNortheast of Angola, are connected toDe Matos, the Chief of Staff of theAngolan army and other officials68. Inmany cases diamond companies areclosely co-operating with securitycompanies in which FAA generals arealso involved, for example, Alpha 531.Diamond traders in Antwerp haveclaimed that FAA generals are alsoinvolved in selling diamonds onUNITA’s behalf, although it ispossible they simply use the samemiddlemen as UNITA.42

Companies active inAngolaA wide range of companies areoperating in Angola, buying,prospecting and mining. Many makeuse of security firms due to theinsecurity, and some of these firms areeither mercenaries or companiesassociated with mercenaries. This issuehas been well covered in press. Someof the major companies operating inAngola include De Beers, Steinmetz,Almazy Rossii-Sakha, Oderbrecht.

Left:Endiamabuilding,Luanda,Angola

Right:Alfa 5,Luanda,Angola

Diamond Export Routesfrom AngolaUNITA diamond export routes fromAngola used to be well established andwell known with a large percentagebeing taken to the DRC, to buyingoffices in Mbuji-Mayi, in East Kasaiprovince and Kinshasa. This began tochange with the territorial aggressionsof the Angolan government andKabila’s take-over of the DRC,although diamonds, after an initialhiatus, continued to move through theDRC.

More recently the Republic ofCongo-Brazzaville, another route forAngolan diamonds, has seen a steepreduction in the amount of roughdiamonds being traded42. Othertraditional routes involved flights fromSouth Africa, sometimes viaNamibia31, and flights to Europe andIsrael via countries friendly to Savimbiand UNITA in Central, West andNorth Africa. These countries includeIvory Coast, Morocco and the Central

African Republic61. Export routescontinue through Zambia.31

The UNSC embargo has furtherchanged export routes so that whilstmany of the traditional routes,particularly those to South Africa,Europe and Israel, continue, there isalso a regular switching of routes,sometimes on a monthly basisaccording to some observers70,71. It ispossible that the radar installationsupplied by the United States, as partof their non-lethal military support tothe Angolan government, at Lubangoin Huila Province, in southern Angolamay also have caused export andsupply routes to re-route72. There arealso reports of diamonds beingsmuggled to Antwerp via Burundi inexchange for arms73.

In essence smuggling and mis-declaration of diamonds will continueso long as major buyers are willing tobuy the product, claiming that it isimpossible to tell the origin ofdiamonds if the parcels are mixed.

Were this ever used as a defence forbreaking the UN embargo, it wouldnever work for the obvious reason thatin 1996 and 1997 Angola suppliedapproximately US$1 billion of roughdiamonds to De Beers. This accountsfor approximately 20% of De Beersstated sales for both years. With thesefigures one can only wonder whatAngolan diamonds are being mixedwith to avoid their identification.

Another problem is that of thebuyer’s acceptance of provenancebecause only Angolan diamondsrequire a Certificate of Origin.

The risk is that if UNITA repeatsits successful strategies of the past,regaining full control of Angola’s keydiamond areas, then on the currentlevel of embargo implementation, UNmember states will continue failing toprevent UNITA gaining revenue -meaning Angola’s conflict couldcontinue for years.

A R

OU

GH

TR

AD

E

13

4

2

110

14

15

16

18

5

19

17

201 1

16

78

6

9

13

6

3

12

11

3

1

Map courtesy ofHuman RightsWatch

Diamond miningcompanies operating inAngola

1 De Beers

2 SDM(Oderbrecht/Endiama)

3 Southern Era

4 IDASResources/Endiama

5 R & RR

6 Diamond Works

7 S.M.L.

8 Rivermar

9 Catoca

10 Sopemina & Power

11 Diacu

12 Rulth

13 Comisap

14 Somipa

15 Cimader

16 Moyo Weno

17 Marco

18 Bapsil

19 Gem Dourada

20 Artesanal

A R

OU

GH

TR

AD

E

14

CONCLUSIONAngola, as a mineral rich country, is avery valuable prize for its own leadingpolitical (and warring) factions, numerousmultinational corporations and thegovernments of their home countries.Clearly, the welfare of the Angolanpeople has taken second place in theconcerns of all these players who areprepared to tolerate or ignore the ravagesof corruption and a resource funded warin order to obtain a share of Angola’swealth.

The long drawn out peace process,which has seen over 500,000 deaths since1989, is once again collapsing. If thishappens, the MPLA, which controls theoffshore oil wealth, and UNITA will fightfor control of diamond rich territory.Only the MPLA can legally benefit fromsuch control, but UNITA willundoubtedly find ready buyers for theirdiamonds, as they have done throughoutthe whole conflict.

The international community alreadyrecognises this state of affairs and, throughthe UN, has placed an embargo onUNITA’s diamond trade. In reality key UNmember states such as Belgium are doingvery little to enforce the UN embargo. Inthis they are wittingly or unwittinglyproviding the diamond industry with thewherewithal to exploit legal loopholesshould they wish to, and to maintain themulti-million dollar trade.

De Beers and the CSO, the public andwell groomed face of an industry withlittle transparency, has gone on the recordmany times promoting their corporateethos of a transparent trade that benefitsthe populations of the diamond producingcountries. In their own annual reports theyadmit that during the 1990’s they werebuying hundreds of millions of dollarsworth of diamonds which originated fromAngola. During the same time period,UNITA held much of the diamondproducing territory of Angola.Furthermore, the individual diamondtraders and trading houses who are theessential link between diamond producersand buyers appear to pay little heed to thelegal or ethical considerations ofpurchasing diamonds from combatants.

It is imperative that De Beers and theCSO as the major force in the worlddiamond trade, and the member states ofthe UN, act decisively to end once andfor all the trade that is the life blood of aguerrilla organisation. If they fail to dothis they are standing in the way of thepeace that the people and country ofAngola so desperately need.

Given the scale of the conflict inAngola, it is highly surprising that the1998 embargo was the first legal embargoto seek to limit UNITA’s diamond trade.Prior to this De Beers and the CSO werenot acting illegally in buying diamonds ofUNITA origin, and as yet it is too earlyto ascertain how fully De Beers have

complied with the UNSC embargo. It is afact that the outside market is a key partof the international business, which iswhere there has been such a high uptakeof Angolan diamonds, and that as thetrade currently operates it is difficult tosee how the embargo can be fullyimplemented; however it is encouragingto note that De Beers do have pre-existingcorporate statements on ethics andtransparency, and so Global Witnesschallenges De Beers to tackle thiscomplicated and necessary process ofchange to drag the diamond business intothe next century and ensure that keyissues of concern such as public scrutiny,accountability and ethical considerationsare put in place.

“De Beers points out that the existence ofan open market for diamonds, whatevertheir origin, prevents the trade from beingpushed underground and maintains theprice. Nonetheless, this trade has fundedthree wars in Africa, in Sierra Leone,Angolaand Liberia.” 74

CHRIS GORDON, MAIL & GUARDIAN, 22ND AUGUST 1997.

“Angola has become a gigantic corpsefilled with diamonds and bleeding oil.” 75

PEDRO ROSA MENDES, RDP AFRICA, OCTOBER 1997.

“Meanwhile, UNITA was extracting farlarger quantities and the movementincreasingly relied on diamonds forfunding. In 1996 UNITA mined some 70% ofAngola’s total US$1bn - US$1.2bnproduction.The rest was mined by thegovernment and non-UNITA illegal diggers.De Beers mopped up roughly two thirds ofthe official and non-official production in1996 through buying offices in Angola,Zaire and Antwerp.” 69

EIU COUNTRY PROFILE 1997-1998.

“The aims of this group have been - andthey still remain - to earn profits but toearn them in such a way as to make a realand permanent contribution to the well-being of the people and to thedevelopment of southern Africa.” 19

NICKY OPPENHEIMER, CHAIRMAN DE BEERS, 1997 ANNUALREPORT.

“...De Beers cannot afford not to be inAngola. For now, it is reduced to vacuumingup the diamonds that leak out out, eitherin Antwerp, or at its three Angolan buyingoffices.‘It’s uncontrolled, it’s very hardwork.We have to go round the worldchasing them,’ laments James McLuskie,who shuttles between Angola andJohannesburg for De Beers. De Beers stillspends about US$520 million a year onbuying some three-quarters of Angola’soutput - much of it from rebel heldareas.” 76

THE ECONOMIST, 14TH SEPTEMBER 1996.

REFERENCES1 CIIR Peace Postponed:Angola Since the LusakaProtocol, 1998.

2 Jonas Savimbi, Le Figaro, May 1996.

3 BBC News Online Network 4th November1998.

4 De Beers 1996 Annual Report.

5 Economist Intelligence Unit (EIU) CountryReport, 4th Quarter 1996.

6 The Post of Zambia 30th September 1998.

7 Mail and Guardian, 4th December 1998.

8 EIU Country Report, 4th Quarter 1997.

9 EIU Country Report, 2nd Quarter 1996.

10 EIU Country Report, 2nd Quarter 1997.

11 Kofi Annan, UN Secretary General, 23rd ofNovember 1998. Report to the UNSC onMONUA.

12 President Eduardo dos Santos, Diaro DeNoticias, 20th April 1997.

13 CCR report, LUSA, 24th October 1998.

14 Fatima Roque,“Building the Future in Angola”,1997.

15 UNDP Human Development Report Angola1997.

16 PÚBLICO, 20th August 1996.

17 Karl Maier ‘Angola:Promises and Lies.’ 1996.

18 EIU Country Report, 3rd Quarter 1996.


20 Nicky Oppenheimer 22nd December 1997.Interview on De Beers website.

21 Human Rights Watch,Angola - Arms Tradeand Violations of the Laws of War since the 1992Elections, 1994.



24 De Beers and the Diamond Industry.

25 Global Witness meeting with De Beers 1stDecember 1998.

26 Director of Diamond Training School, Personalcommunication. 3rd December 1998.

27 The Guardian, 4th of March 1993.



30 EIU Country Report, 1st Quarter 1998.

31 Global Witness investigations 1997 & 1998.

34 De Beers website, December 1998.

35 International Monetary Fund, Manual onTransparency, October 1998.

36 Anglo American, Environmental PolicyStatement, 1998.

37 John Browne CEO, BP,Amnesty InternationalConference, 26th September 1997.

38 Face to Face with Nicky Oppenheimer, DeBeers website, 24th April 1998.

39 Angola Peace Monitor,Vol V, No 1, 7thOctober 1998.


41 Gary Ralfe, Managing Director De Beers,Investir Magazine 11th May 1998.

42 Africa Energy & Mining, No:235, 9thSeptember 1998.

43 Antwerp Confidential, August 1998.

44 UNSC Resolution 1176, S/RES/1176(1998).

45 Angola News June/July 1998.

46 Namibian businessman, November 1998.

47 Lusaka diamond trader, November 1998.



50 World Diamond Industry, Directory &Yearbook 1996/97, Diamond International 1997.

51 British Customs Official, Pers Com, December1998.


53 Import & Export Procedures for Diamonds inBelgium, HRD, January 1998.

54 Diamonds, Kompass, 1998.

55 Belgian Ministry of Economics, Pers Com,October 1998.

56 Not Quite Forever, Channel 4 Dispatches,1992.

57 Weekly Mail & Guardian, March 20th 1998.

58 Africa Confidential,Vol 39, No 16, 7th August1998.

59 Zambian Government Document 1998.

60 Senior Official, Geological Survey, ZambiaMinistry of Mines, November 1998.

61 Weekly Mail & Guardian, May 29th 1998.

62 Angola News, March 1998.

63 Milkwood Zambia Ltd, November 1998.

64 Aid worker, anon, November 1998.

65 Ex-Diamond sorter, anon. 1997.

66 Former De Beers buyer, anon, 1997.

67 Government of Angola, Diamond Law, 1994.

68 Africa Confidential,Vol 37, No 12, 7th June1996.

69 EIU, Country Profile 1997-1998.

70 Institute of Strategic Studies, Pers Com,November 1998.

71 A Senior Superintendent, Diamond & GoldBranch, South African Police Force, Pers Com,November 1998.

72 Weekly Mail & Guardian, 6th February 1998.

73 International Institute of Strategic Studies,Paper 30,April 1998.

74 Mail & Guardian, 22nd August 1997.

75 Pedro Rosa Mendes, RDP Africa, October1997.

76 The Economist, 14th September 1996.

77 SAPA -AP, 25th November 1998.

GLOBAL WITNESS is a British based non-governmental organisation which focuses onthe links between environmental and human rights abuses, especially the impacts ofnatural resource exploitation upon countries and their people. Using pioneeringinvestigative techniques Global Witness compiles information and evidence to be usedin lobbying and to raise awareness. Global Witness’ information is used to briefgovernments, inter-governmental organisations, NGOs and the media. Global Witnesshas no political affiliation.

This new campaign to expose the lack of corporate accountability in the internationaldiamond trade, expands upon the work Global Witness initiated in 1995, in Cambodia.Here, illegal timber exploitation has funded the Khmer Rouge/Royal Government civilwar, the leading political parties, their allied military factions and elite businesssupporters. Global Witness’ work in this area has illustrated that natural resourceexploitation can undermine democracy, fuel corruption, seriously impact onagriculture, provoke abuses of human rights and undermine national stability, inaddition to causing severe environmental degradation.

Global Witness’ analysis of this US$200 million a year timber trade (the NationalBudget for 1998 is US$419 million) remains the single most reliable source ofinformation on the issue and has raised it from one of tangential concern to what theIMF in 1997 stated was “...the single most critical issue facing Cambodia”. GlobalWitness’ exposées of the Thai/Khmer Rouge timber trade, the signing of extra-constitutional concessions and illegal timber exports has resulted in forestry being apivotal part of Cambodia’s political agenda.The 1995 closure of the Thai/Cambodiaborder to log imports deprived the Khmer Rouge of between US$10-20 million peryear; the completion of four major World bank funded Technical Assistance projects haspaved the way for complete forest policy reform: both are direct results of GlobalWitness’ information gathering and lobbying.

Global Witness’ previous publications(also available on our website: http://www.oneworld.org/globalwitness/)

“Going Places — Cambodia’s Future on the Move”published March 1998

“Just Deserts for Cambodia — Deforestation & the Co-Prime Ministers’ Legacy to the Country”published June 1997

“A Tug of War — the Struggle to Protect Cambodia’s Forests”published March 1997

“Cambodia,Where Money Grows on Trees — Continuing Abuses of Cambodia’s Forest Policy”published October 1996

“RGC Forest Policy & Practice — the Case for Positive Conditionality”published May 1996

“Corruption,War & Forest Policy — the Unsustainable Exploitation of Cambodia’s Forests”published February 1996

“Thai-Khmer Rouge Links & the Illegal Trade in Cambodia’s Timber”published July 1995

“Forests, Famine & War — the Key to Cambodia’s Future”published March 1995

With thanks to Allan Thornton of the Environmental Investigation Agency, for his original inspiration for thisproject and financial support.

With many thanks to Human Rights Watch for their time and input.

This report is the copyright of Global Witness, and may not be reproduced in any form without the writtenpermission of the organisation, except by those who wish to use it to further the protection of human rightsand the environment.

Design by Daniel Brown (0171 225 1282).

Front Cover photographs: rough diamonds © Marc Schlossman/Panos Pictures;soldier © David Orr/Panos Pictures.

All other photographs copyright © Global Witness except where indicated.

Printed on 100% unbleached recycled paper.

ISBN 0 9527593 5 7Published by Global Witness Ltd,P O Box 6042, London N19 5WP, United KingdomTelephone: + 44 (0)171 272 6731Fax: + 44 (0)171 272 9425e-mail: [email protected]://www.oneworld.org/globalwitness/

Do-It-Yourself DiamondTrading Guide

Carat Unit of measurement of a diamond,there are five carats to onegramme. Diamonds vary from afraction of one carat upto a veryrare couple of thousand. In trade astone of 60 carats wuld beconsidered large.

The 4 c’s Colour, clarity, cut, carat.These fourfactors are considered when valuinga stone.

Colour Diamonds come in a wide range ofhues, tints and colours; they can bedescribed as whitish, yellowish,greenish, brownish, pinkish, bluishand so on. Stones from differentcountries can vary in colour.

Inclusions The particles and matter sometimesfound within a diamond.

Rough Rough diamonds are unworked, andin their natural state

Official The diamond market operatedthrough the CSO; it includesproduction market fromgovernment run mines in Namibiaand Botswana.

Unofficial This is the part of the market thatbuys rough diamonds outside of themarket CSO.

Outside market The unofficial market.

Polished The term used to describe stoneswhen they have been worked. Up tofifty per cent of the diamond can belost when polished, depending onthe shape of the stone.

Gem quality The highest quality of diamond,which is normally in high demandand commands top prices.

Parcel This is a quantity of diamonds, andcan vary from 10 carats up tothousands of carats

Mixed parcel This is parcel of rough diamondsfrom more than one country.

Run of mine All the diamonds are from the samemine.

Garimpeiros Illegal miners; usuallly artesanal.

Comptoir Small-scale diamond buyers, who actas middlemen.

Kimberlite The name of a type of diamond andthe type of mine it is extractedfrom, which has deep subterraneanvolcanic pipes.

Alluvial The name of a type of diamond andthe type of shallow mine it isextracted from, with diamondsfound in river beds and in shallowdeposits.A form of mine that can beexploited by artesanel techniques.

Sights Approximately ten sights a year areheld by the CSO at whichSightholders are allocated a quota ofdiamonds for purchase at a pricedetermined by De Beers.Sightholders are chosen by DeBeers and numbers are strictlylimited; there are less than 200sightholders worldwide.

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