A ROUGH TRADE

The Role of Companies and Governments in the Angolan Conflict 1 ANGOLA: A BRIEF OUTLINE

The First War of 1961 Jonas Savimbi. However,the government. On 20th UN Security Council imposes to 1975, The War of election result is rejected by November 1994 The Lusaka a range of sanctions on Independence UNITA before the second Protocol is finally signed UNITA, although it does not Angola has been in conflict election, and it goes back to war. marking the end of the ‘Third include diamonds, and three since 1961 with massacres in War’.A Joint Commission is weeks later UNITA starts to the north of Angola, followed The Third War of late 1992 to late 1994, set up comprising the UN, cut its contacts with the by years of the struggle for Guerra das Cidades Government and UNITA Government and the United

A ROUGH TRADE A ROUGH independence. In 1975 (War of the Cities) representatives with the Troika Nations.Tension continues on Portugal, the colonial power of the USA, Portugal and Some of the worst fighting of into 1998 and increases, and abruptly pulls out, and more Russia as observers.The the entire conflict takes place, by July nearly two-thirds of the than half a million people leave presidential run-off election is with 182,000 people dying provinces are unsafe. Angola in the biggest airlift in postponed indefinitely. between May and October Thousands of people are history. Prior to this the three 1995 to 1998 displaced in the process. In July nationalist groups that had 1993.The cities of the central the UN Security Council fought colonial rule begin to high plains, which had been Localised fighting continues enacts further sanctions fight for control. Cold War relatively unscathed, are during 1995 and 1996 despite against UNITA, this time politics becomes a major destroyed, and virtually all the Lusaka Protocol, but including diamonds.Tension factor as the Soviet Union infrastructure, roads, railways negotiations continue. escalates and as of early backs the Marxist MPLA, and and bridges are destroyed. By However UNITA continue to the USA and China backs the late 1993 UNITA controls violate the cease-fire during December 1998 the UNITA Maoist, but anti-Marxist, over 70 per cent of the 1997, with many of the attacks headquarters of Andulo and UNITA.The MPLA form a country, although 1994 sees targeted at civilians, whilst the Bailundo are surrounded by single-party Socialist government troops advancing government also violates the government forces, whilst government in November and UNITA making cease-fire.There is a major UNITA hold UN staff hostage 1975 which gains widespread concessions in the Lusaka increase in tension, and in June in both towns.A renewal of diplomatic recognition, peace talks.The Lusaka 1997 the Government conflict seems almost although not from the United Protocol is initialled on 31st captures approximately 10-15 inevitable. States and South Africa. October 1994 but fighting per cent of diamond areas (with thanks to CIIR “Peace Fighting continues for control continues despite promises to formerly under UNITA Postponed:Angola Since the of territory. the contrary from the control. In October 1997 the Lusaka Protocol”, 1998)1 The Second War of 1975 to 1991, Guerra do Mato (War of the Bush) The civil war continues. In 1987-88 the horrific siege of Cuito Cuanavele marks a dramatic increase in the scale and ferocity of the war.The town is totally destroyed and many thousands die. In 1988 the New York agreement results in a peace treaty with interventionist foreign powers South Africa and Cuba, and foreign troops withdraw.The end of the Cold War has a significant effect on the foreign involvement in Angola, and as superpower patronage begins to dry up both sides need new sources of revenue. In 1989 the cease-fire breaks down and is followed by some of the most intense fighting of the war.The Bicesse Accords of 1991 create a temporary halt to a war that has already killed between 150,000 and 300,000 in battle. National Elections are held in October 1992 and the MPLA win, but a second presidential run-off election is required as the vote is closely split between MPLA’s Eduardo dos Santos and UNITA’s 2

INTRODUCTION A ROUGH TRADE This document was written to stimulate debate and action on a well known and much reported issue: the key role that THE ROLE OF COMPANIES diamonds have played in the Angolan conflict in the last ten AND GOVERNMENTS IN THE years. There is a dangerous acceptance amongst the ANGOLAN CONFLICT international community that the mechanics of the trade in diamonds, particularly from UNITA controlled areas, are beyond any real controls. Global Witness investigations show “UNITA keeps control of diamond areas in Northeastern that governments flout the United Nations Security Council Angola because for the [sic] sake of its own survival.” 2 TRADE A ROUGH (UNSC) embargo on unofficial Angolan diamonds (those not JONAS SAVIMBI, IN LE FIGARO, MAY 1996. sold under the control of the Angolan government diamond parastatal, Endiama). Furthermore, lack of understanding and government scrutiny of the functioning of the diamond trade has resulted in the absence of any serious examination of corporate culpability, allowing many diamond companies to continue to operate without fear that their actions may be called into question by consumers. For reasons of safety Global Witness has not identified the numerous individuals involved in the trade, interviewed in the course of investigations. This document must necessarily concentrate on one factor in the Angolan equation, diamonds, a difficult task given the extreme complexity of the ongoing war in Angola. This document does not seek to play down the political and social issues at stake, nor the way in which the international oil industry has underwritten a government widely seen as corrupt and unaccountable to its own electorate. © H Logan/Network Photographers Victims of war, Lunda Norte, Angola 1992 “But instead of going to pay for reconstruction efforts after 23 years of civil war, the oil revenues are being used by the MPLA government to fuel its side of the conflict with the rebel Unita movement.” BBC News, Online Network 4th November 19983 Contents But it is important that the role of diamonds in UNITA’s Angola: A Brief Outline 1 continued war and the serious lack of accountability within Introduction 2 the diamond trade be exposed and understood so that vital lessons can be learned from the tragedies of the mid 1990’s, Summary 3 including the deaths of an estimated 500,000 Angolans who died as a result of the return to civil war in this period. The Recommendations 3 international community must examine how it has become complicit with diamond barons and what this means for the 1. Role of Diamonds in Angola in the 1990s 4 effectiveness and reputation of the United Nations. It is time that a business which operates in an arcane 2.The Diamond Industry, De Beers and the CSO 5 way, like a family business, re-assess its operation and 3.The UNSC embargo 9 accepts that corporate accountability is now an important factor in international business. The South African-British Case Study 1: Belgium 10 group De Beers and its Central Selling Organisation (CSO), as the major player in the diamond trade, must assume Case Study 2: Zambia 11 significant responsibility for this. As they say themselves “De Beers is committed to a policy of fair dealing and 4.A Brief Overview of the Trade in Angolan integrity in the conduct of its business.This commitment is Diamonds 12 based on the belief that business should be conducted honestly, fairly and legally” 4. Leading companies should Conclusion 14 accept that the rationales used to justify the buying of ‘outside goods’ (unofficial diamonds) in countries such as References 14 Angola and Sierra Leone must be weighed in the balance with the possible and severe implications that such a purchase can have, including the destruction wreaked by Abbreviations conflict, the suffering of millions of people, the deaths of hundreds of thousands, the billions of dollars of lost DRC Democratic Republic of Congo development and the high cost of conflict resolution. ENDIAMA Empresa Nacional de Diamantes de Angola FAA Angolan Armed Forces “The country’s revenues are meant for resolving the country’s GURN Government of Unity and National Reconciliation problems,” said Fernando Dos Santos,Angola’s Internal HRD The Diamond High Council, Belgium Security Chief.“It would be ideal to spend them in the social MONUA The UN Observer Mission to Angola sector. But what use are social projects when Unita are MPLA Popular Movement for the Liberation of Angola blowing up power lines and bridges.” Quoted from BBC News UNDP United Nations Development Programme Online 4th November 19983 UNICEF United Nations Children’s Fund UNITA National Union for the Total Independence of Angola UNSC United Nations Security Council 3

RECOMMENDATIONS SUMMARY

All member states of the UN should fulfil their Diamonds and Angola’s Recent History reporting obligations under UNSC Res. 1173. It is well documented that the decline into renewed civil war, The UNSC should immediately amend UNSC following the failure of the 1992 elections, was financed for the Res. 1173 to require that all diamonds in trade major part by natural resources - oil and diamonds. The war carry a Certificate of Origin (CO) and be cost the lives of at least 500,000 Angolans, with thousands subject to independent scrutiny by more maimed due to land mines - a continuing blight for the

A ROUGH TRADE A ROUGH internationally recognised diamond experts. population. Economic chaos suffered by the majority of the population has resulted in the country’s steep decline as The UN Secretary General, in his report to the defined by all internationally accepted social indicators. UNSC, which is due by 15th January 1999, Since 1992, UNITA have consistently controlled 60-70% should identify those countries not fully of Angola’s diamond production, generating US$ 3.7 billion in implementing the embargo, and specify actions revenue, enabling them to maintain their war effort. to be taken to improve implementation. UNITA’s diamonds reach the major international markets De Beers and the CSO should publicly clarify through a worldwide diamond industry that operates with what changes to their internal structures they little transparency or scrutiny from the international have made to ensure full compliance with community UNSC Res. 1173. De Beers, the CSO and the Diamond Industry De Beers and the CSO, as the most powerful and expert monitor of the diamond industry, The De Beers company and its Central Selling Organisation should notify the UN and relevant (CSO) have dominated the international diamond industry for governments and enforcement agencies of any the last 60 years; sorting, valuing and selling around 80% of company or trader that offers them Angolan the world’s diamond production. Company literature boasts that the cartel structure provided by the CSO is of benefit to diamonds, so that all documentation can be all involved in the international diamond trade. subject to official scrutiny. De Beers annual reports during the 1990’s clearly state the De Beers should revoke sight holder status company’s heavy involvement in buying Angolan rough from any trader found to be dealing in UNITA diamonds, at the height of resumed fighting and a time when sourced diamonds. UNITA controlled the majority of Angola’s diamond production. Given that De Beers were, according to their own De Beers and the CSO, as the original shaping reports, buying a substantial proportion of Angolan rough force behind the current way in which the diamonds, at a time when a large section of the country’s industry operates, should lead the necessary diamond mines were under Unita’s control, one could process of reform within the industry to conclude that the drive to keep the lucrative outside market address current issues of transparency and buoyant was a primary concern - despite the consequences this business ethics. might have for the people of Angola during this period. Traders that deal in UNITA sourced diamonds should be penalized with confiscation of The UN Security Council Embargo diamonds, heavy fines and, in Belgium for In response to the lack of progress over UNITA’s example, loss of tax concessions. Resulting implementation of the Lusaka protocol, the UN Security revenue should be put towards reconstruction Council passed Resolution 1173 and 1176, which prohibit the in Angola. direct, or indirect export of unofficial Angolan diamonds - those defined as not accompanied by a Certificate of Origin Any diamonds originating from Angola's (CO) issued by the Government of Unity and National neighbour states should be subject to especially Reconciliation (GURN) in Luanda. rigorous inspection, as it is known that they are Whilst resulting in some reduction of revenue for UNITA, recipients of UNITA sourced diamonds and the implementation of UNSC Res. 1176 appears token at best. that forged documentation is rife. Investigations reveal that significant diamond exports still take The governments of Angola’s neighbours and place, mainly by air and in smaller quantities, through major diamond trading nations (including countries such as Zambia. Most of the diamonds are sold on Belgium, Israel, South Africa and the UK) the open market in Antwerp and in other countries. Belgium, should exercise the precautionary principle and as home to the world’s premier diamond market, bears prohibit the import of diamonds unless it can significant responsibility for this situation. be proven that they do not originate from This illegal trade is made possible through a combination combatants. of inadequate control and verification of CO’s from the GURN, and the fact that diamonds imported from The Belgian Government needs to take neighbouring countries do not require any effective immediate action to improve the ability of the verification of source. The latter situation, especially given the diamond experts who work with Customs, to involvement of corrupt officials, provides a perfect loophole identify Angolan diamond imports. for the laundering of UNITA sourced diamonds through The government of Angola should ensure that Angola’s neighbouring countries, and on to the international official diamond exports are accompanied by market. internationally recognised COs, stamps and are Publicly, the diamond industry declares that it is not signed by named authorised officials. possible to identify the source of diamonds. In fact, notable international diamond experts are clear that diamonds are An independent review of the issues readily identifiable by source - often to the level of the mine surrounding the identification of the country of they were extracted from. It is clear that the professional origin of rough diamonds urgently needs to be capacity of the international diamond industry is such that carried out. Angolan sourced rough diamonds are clearly identifiable. 4

1. THE ROLE OF DIAMONDS IN ANGOLA IN THE 1990’S

“In the mining areas of Lunda Norte, historically the most exploited of the country’s range of reserves, diamonds have played an important role in sustaining the conflict since the 1992 elections. UNITA is thought to have reaped about US$1.5 bn from sales TRADE A ROUGH of diamonds mined in areas it has controlled during much of this phase of the civil war. In 1995 Angola’s total diamond output raised about US$700 m, according to industry sources, of which only US$147 m was accounted for by legal sales by minor producers and the parastatal company Endiama.

most of the rest was mined by UNITA and smuggled © H Logan/Network Photographers out unofficially.” 5 Illegal diamond mine, Lunda Norte,Angola 1992. ECONOMIST INTELLIGENCE UNIT (EIU) COUNTRY REPORT,4TH QUARTER 1996.

“Oil and diamonds, in particular, have been used to pay for the SOCIAL INDICATORS wars that have plagued the country since the 1960’s... Much of Angola’s wealth is unaccountably taken up by UNITA and “With a mortality rate of almost 30% among children government elites, with little reaching the grassroots.” 1 under the age of five,Angola ranks among the world’s 11 CIIR PEACE POSTPONED:ANGOLA SINCE THE LUSAKA PROTOCOL, 1998. worst for this critical health indicator.” KOFI ANNAN, UN SECRETARY GENERAL, 23 NOVEMBER 1998. S/1998/1110 “They [UNITA] have occupied the most [sic] productive areas REPORT TO THE SECURITY COUNCIL ON THE UNITED NATIONS MISSION IN ANGOLA (MONUA) than the government and the same thing (occupation of the diamond rich areas) is being used to buy the arms which they “Two-thirds of the Angolan population live on less than a 12 are using on innocent people.” 6 dollar a day.” PAULO MAFUNDAMA, ANGOLAN CONSUL GENERAL IN MONGU, ZAMBIA PRESIDENT EDUARDO DOS SANTOS, DIÁRIO DE NOTICIAS, 20TH APRIL 1997. “During the conflict, from 1992 - 1994, 27% of the children The importance of diamonds in funding UNITA’S war effort in Bie lost their parents, 89% were exposed to over the last decade is well known and fairly well understood. bombardments and 66% saw landmines blowing people Diamond revenue became increasingly important for a up.” 13 number of reasons including the political changes in the post- CCF REPORT, OCTOBER 1998. Cold War era. Diamonds have provided the majority of UNITA’s funding although gold, coffee and particularly in It is difficult to adequately convey the enormity of the human the late 1980’s wildlife products and timber were all sources of tragedy that has befallen the people of Angola. Over 20 years of funds. Between 1992 and 1998 UNITA obtained an estimated continuous conflict has resulted in hundreds of thousands of minimum revenue of US$3.72 billion from diamond sales. deaths and a population suffering one of the world’s highest This does not include revenue from other sources, nor rates of landmine victims.The physical and psychological interest generated in overseas bank accounts. suffering continues.The following few statistics gives only a bare The international trade in diamonds has become a major outline of the daily crises faced by Angolans. obstacle to any possible progress towards peace; and has 1997 HUMAN DEVELOPMENT INDEX RANKED ANGOLA 157TH OUT OF 175 COUNTRIES 14 played the major role in enabling UNITA to restock its POPULATION LIVING IN ABSOLUTE & RELATIVE POVERTY 14 82.5% munitions and maintain a flow of supplies which in turn has INFANT MORTALITY RATE FOR CHILDREN UNDER 5* 320 per 1000 enabled it to disregard the 1992 election results and to avoid DISABLED LAND MINE VICTIMS 16 200,000 meeting its obligations under the Lusaka Protocol. LIFE EXPECTANCY* 42 YEARS The workings of the international diamond trade are INTERNALLY DISPLACED PERSONS* 1.2MILLION opaque and difficult to penetrate. However, it is clear that 80 POPULATION WITHOUT ACCESS TO FRESH WATER* 53.9% per cent of the trade is controlled by De Beers through the POPULATION WITH ACCESS TO HEALTH CARE 15 35% CSO. It is also clear that the key role of the outside (UNICEF estimates) (unofficial) market in controlling the world price of PEOPLE REQUIRING FOOD AID* 3.2MILLION diamonds needs to be re-examined. RATE OF ILLITERACY* 50.9% To the millions of Angolans who have survived the repeated years of conflict and the estimated 300,000 that died violently (Source: UCAH) * - UNDP Human Development Report Angola 1997. between late 1992 and 1995, the workings of the international “In the men’s ward Augusto Jocinto is lying on a piece of diamond trade may seem an abstraction, but the revenue that cardboard covered by a blanket stained with pus seeping UNITA has been able to generate from diamonds and the direct out of the stump that was once his left leg. He is shaking so and indirect impacts of this revenue are real enough. badly that he can hardly form complete sentences.Augusto was airlifted from the eastern city of Luena four months The income generated from of UNITA’s diamond sales, as with much of the diamond business as it currently operates, is impossible to record with ago after a landmine ripped his leg off while he was absolute precision but it can be approximated as follows: searching for some manioc in an abandoned field. 1998 US$200m7 “Did he not know that there were mines around? ‘Yes, 1997 US$700 m8 but I had no choice. I have a wife and a baby son and we 1996 US$700 m8 had no food.We knew there were mines, but our stomachs 1995 US$320 m9 were empty.’Augusto does not have any money to buy 1994 US$600 m10 medicines or proper bandages. He has no idea what has 17 1993 US$600 m10 become of his wife and son.” 1992 US$600 m10 KARL MAIER,‘ANGOLA- PROMISES AND LIES’, 1996 5

2. THE DIAMOND Similarly there is an unquestioning acceptance of the way in which the INDUSTRY, DE BEERS outside market operates. The case has AND THE CSO been made, and repeatedly stated by De Beers and the CSO that “Our outside “In recent years De Beers has limited its buying operations are a vital ingredient of involvement to buying up government- our management of the world market for produced and smuggled gems on the rough gem diamonds.” 22. These operations world’s diamond exchanges and across the are a system of buying offices and

A ROUGH TRADE A ROUGH border in Zaire, in an attempt to prevent individuals located in countries where the flow of Angolan gems from diamonds originate, such as Angola, destabilising world prices.”18 Guinea and the DRC23, in others which EIU 3RD QUARTER 1996 are key routes for unofficial diamonds such as the DRC23 and in end markets “De Beers is committed to a policy of fair such as Antwerp23. Of the diamonds dealing and integrity in the conduct of its bought on behalf of the CSO the business.This commitment is based on the majority are taken to London24 and either belief that business should be conducted stockpiled or sold on to De Beers honestly, fairly and legally.To this end,the CSO Head Office, London UK. sightholders (see DIY guide to diamond Company’s Code of Business Conduct and trading). Another key factor has been the Ethics requires employees to maintain the highest ethical number of middlemen involved in the trading process. This standards in ensuring that business practices are conducted in makes it extremely difficult to accurately trace the a manner which in all reasonable circumstances is above movement of diamonds around the world. 19 reproach.” This system has resulted in unaccountability and created DE BEERS 1997 ANNUAL REPORT. an opaque screen, enabling the diamond industry to buy diamonds regardless of ethical considerations, such as its “What we would hope to happen in Angola is for peace to be suppliers could be combatants and/or terrorists in warring properly established, for there to be a proper peaceful countries. settlement between the MPLA and UNITA.” 20 Another key factor relating to acceptance of the outside NICKY OPPENHEIMER, CHAIRMAN, DE BEERS, INTERVIEW, 22ND DECEMBER 1997, DE BEERS WEBSITE. market is that of identification. De Beers claim it is not possible to identify many of the rough diamonds that their “The De Beers diamond cartel and other international dealers buyers are offered25 . The reasons given include the difficulty are buying gems mined in rebel-held territory in violation of of identifying parcels of diamonds containing mixed stones Angolan law.” 21 from several countries as there can be strong similarities. HUMAN RIGHTS WATCH ANGOLA REPORT 1994. However Angola’s diamonds are some of the best in the world and are very distinctive. This poses a problem for “De Beers has admitted spending US$500 million to buy people seeking to mix them with stones from other legally and illegally mined diamonds originating in Angola in countries to avoid identification, particularly as significant 21 1992 in ‘open market transaction’.” quantities of similar stones are required. This is further HUMAN RIGHTS WATCH ANGOLA REPORT 1994. complicated by the volumes of stones leaving Angola. For example diamond production in Zaire is predominantly of a “What is true is that diamonds are a family business and a lesser quality, the stones are flattish in shape and greenish in complete anomaly in the world of today.” 20 colour: thus both shape and colour are different from much NICKY OPPENHEIMER, CHAIRMAN, DE BEERS, INTERVIEW, 22ND DECEMBER 1997, DE BEERS WEBSITE. of the Angolan production. It is difficult to understand how buying offices of international companies, that were The diamond business, which has been dominated by De operating in the DRC up to 1997, could confuse such Beers and the CSO since the 1930s, operates with an diverse stones on such a continuing basis. The director of extraordinary lack of accountability, as the methods of one Diamond Trading School in South Africa noted that one operation are widely accepted by many in the international could identify a mixed parcel from the shape of the stones.26 community, and the underlying ethics are not questioned. Other traders have also privately stated that it is possible to

“The UNITA rebel border and they all end up in maintains that the first it a long time, but we used to movement in Angola is the hands of De Beers. It knows of any transaction is deal with individuals. Many helping to fund to guerrilla knows where they come when it views the diamonds were Zaireans we knew who war by selling hundreds of from, that’s De Beers’ job.” it is about to purchase, the acted as traffickers from the thousands of pounds’ worth The article quotes a cartel usually has knowledge diggers. Now they come with of illegally mined diamonds statement by Tom Tweedy, a of important deals from an Angolans who don’t speak to international buyers.” 27 spokesman for De Beers, “The early stage, because it wants French.The Angolans come THE GUARDIAN 4TH MARCH 1993. buying offices are open to to ensure high quality gems in uniforms and there are all comers and unless an do not stray into always Zairean soldiers - The article goes onto describe offerer of diamonds openly competitors’ hands. Others officers - with them.The a US$400,000 payment showed his affiliation we in the industry say De Beers Zaireans do the negotiating received by UNITA officials for wouldn’t be aware of it.We cannot be in any doubt but the Angolans take the a diamond deal in late January have no arrangement with about the source of money. we know who we are 1993, and to quote a dealer in Unita to buy diamonds diamonds, which experts can dealing with: it’s Unita.” Tshikapa in the Democratic illegally exported from determine.” Tshikapa is 110 kms from Republic of Congo (DRC) “I Angola.” The article also quotes the the border opposite the would say about one-third of The article also notes that Tshikapa diamond dealer as Angolan province of Lunda all the diamonds we handle “Dealers in Tshikapa say noting that “The cross- Norte, under UNITA control comes from across the that although De Beers border trade has been on for in 1993. 6 identify parcels of unmixed diamonds to the mine they The CSO originate from, and that it is possible to identify gems from specific countries. De Beers however have stated to Global “The Central Selling Organisation, or CSO, was established by Witness that “...if you are sitting in Tel Aviv or Moscow or New De Beers and its associates in the 1930’s to create a reliable York whatever the potential for positive identification you and enduring system to balance supply and demand, and have not a clue where they came from. Just to be clear if he prevent wild fluctuations in the market for diamonds.This [diamond seller] says they are Scottish diamonds [there are no single channel marketing system remains fundamental to the stability and prosperity of the entire diamond industry diamond mines in Scotland], you take his word for it...”.25 today...” 24 “...they could be diamonds from the moon.” 25. It would seem DE BEERS AND THE DIAMOND INDUSTRY. that an independent review of diamond identification issues TRADE A ROUGH is required (it is generally accepted that polished stones Outside buying cannot be identified). De Beers through the CSO buys up approximately 80% “Outside Buying.The CSO buys diamonds in substantial 24 of the rough diamonds that reach the ‘outside’ market . It is volumes on the open market, both in Africa and in the well established that De Beers through the CSO has diamond centres, through its extensive network of buying consistently bought up Angolan gem quality diamonds of offices, staffed by young diamond buyers often working in 4,22,23 the type which dominate Angolan supply difficult conditions. Purchases in 1996 reached record levels (approximately 80-90% of Angola’s production is gem largely owing to the increased Angolan production.Angolan 28 quality) and this has been the case all through the 1990’s. diamonds tend to be in the categories that are in demand, Indeed in 1992 De Beers boasted “That we should have been although in the main these buying activities are a mechanism able to buy some two thirds of the increased supply from to support the market.” 4 Angola is testimony not only to our financial strength but to JULIAN OLGIVIE THOMPSON IN THE CHAIRMAN’S STATEMENT, DE BEERS 1996 ANNUAL the infrastructure and experienced personnel we have in REPORT. place.”29. The problem has been that for much of this time the majority of the diamond areas have been under the The Year by Year tables (see over page) show the operation control of UNITA. of the international diamond business and the impact that diamond revenue can have in one country in a relatively “Although revenue has plummeted, the leader of UNITA, Jonas short period of time. Savimbi, still has access to significant stock of diamonds, The issue of natural resources and their use to fund which he continues to sell on international markets, and even conflicts is of major importance on the African continent, and to use in barter trade with arms dealers.” 30 its importance is set to grow. The process of pushing EIU COUNTRY REPORT, 1ST QUARTER 1998. companies towards corporate accountability over their operations is already well developed in other extractive The Role of De Beers and the CSO in the industries, for example Shell and RTZ. Diamond companies Diamond Business need to develop new ways of operating that will ensure that combatants in conflict zones, such as Angola, Sierra Leone “De Beers has been involved in all aspects of the diamond and Guinea are not able to derive revenue from diamond business for more than 100 years.Today, it is the largest sales. diamond mining company in the world, producing about half It is very easy for companies to respond that it is not of the world’s gem diamonds by value from its mines in South possible to alter the way in which they do business, but this Africa and, in partnership with government, in Botswana and response, especially when set against the scale of recurring Namibia. tragedies across the African continent, is no longer “Through agreements with the major diamond producing acceptable. This is not to underestimate the scale of the nations, the De Beers Central Selling Organisation (CSO) challenge nor the great difficulties that will need to be sorts, values and sells about 80 per cent of the world’s annual overcome. There is a clear role for De Beers and the CSO to production of rough diamonds. take the lead on this process of transformation because given “De Beers undertakes the advertising and promotion of the scale of their involvement in, and control of the industry, diamond jewellery on behalf of the entire diamond industry - no progress can be made without their willing participation. spending many millions of dollars annually in 28 countries, in Indeed as the organisation which set up the CSO to deal close co-operation with the jewellery trade [close to US$200 with a crisis in production and supply in the late 1920’s and million annually according to the 1997 Annual Report].19 De 1930’s, it is now time for it to face up to a new crisis in the Beers’ support for the diamond industry brings very significant diamond business; that of how to reform the industry to benefits to every diamond producing nation.”24 keep in step with the vital changes in the late 20th Century DE BEERS AND THE DIAMOND INDUSTRY in how corporates carry out their business. De Beers should endeavour to live up to its own rhetoric on corporate ethics. The corporate structure of De Beers is complex with a variety of subsidiary companies involved in different aspects The CSO’s sales of rough diamonds for the last ten year’s are shown of the business, for example Codiam in Antwerp carry out below:34 much of the buying31. De Beers is essentially divided into 1987 US$3,075 million two main companies: De Beers Consolidated Mines Ltd, 1988 US$4,172 million registered in Kimberly, South Africa which manages the 1989 US$4,086 million arrangements De Beers has with major diamond producing 1990 US$4,167 million countries particularly South Africa, Botswana and Namibia; 1991 US$3,927 million and De Beers Centenary AG, registered in Lucerne, 1992 US$3,417 million Switzerland, which controls around 80% of the world’s 1993 US$4,366 million diamond sales through the CSO19. 1994 US$4,250 million De Beers mines, including those in Botswana, Namibia 1995 US$4,351 million and South Africa produce half the world’s rough gem stones 1996 US$4,834 million calculated by value; Russia produces about a quarter, valued 1997 US$4,640 million at US$1.2 billion; Angola produces an estimated US$700 million of rough diamonds. The Angolan production is a significant force affecting the world market. 7 BUSINESS IS BUSINESS YEAR BY YEAR

As Global Witness investigations into the trade in rough diamonds from THE ANGOLAN CONFLICT Angola show, the lack of transparency and corporate responsibility in the diamond industry has been central to the continued financing of UNITA, and hence the fuelling of civil war in Angola. If transparent and responsible APRIL 1990 TO MAY 1991 business practices had been in place, as claimed in corporate statements, this “Some of the fiercest fighting of the entire war.”1 situation would not have arisen. Bilateral and Multilateral institutions such as the International Monetary Fund (IMF),World Bank, Organisation for APRIL 1991

A ROUGH TRADE A ROUGH Economic Community and Development (OECD) and the World Trade The Bicesse Accords bring a temporary halt to the Organisation (WTO) now consider transparency and corporate conflict which killed between 100,000 and 350,000 in responsibility to be essential to all areas of business. the previous twelve months. 1 However the International Chamber of Commerce - ICC,WTO and OECD all refuse to accept a need for legally binding codes of conduct for SEPTEMBER 1992 multinationals.As this document details, it is the inability of the diamond National Elections are held, the MPLA win, but do not industry to adhere to its own corporate codes of conduct that has attain the 50% majority required, and UNITA return to contributed to the continuation of the conflict in Angola. It is internationally war in October 1992. accepted that the sale of rough diamonds by Unita has been an integral factor in the continuation of the conflict.Yet the diamond industry has done nothing to ensure that they are transparent or accountable.The diamond OCTOBER 1992 TO industry does not have to deal with public scrutiny in the way that many NOVEMBER 1994 multinationals now have to. An estimated 300,000 people died as a result of the fighting. “Accountability imposes discipline on management; firms that have to justify their actions publicly are less likely to take actions of which “This extremely destructive conflict was notable for their shareholders and creditors might disapprove.” 35 systemic violation of the laws of war by both the government and the UNITA rebels. Indiscriminate SOURCE: IMF MANUAL OF TRANSPARENCY,1998. shelling of starving besieged cities by UNITA resulted “There is no one concerned with diamonds, whether as producer, in massive destruction, and the loss of untold dealer, cutter, jeweller or customer who does not benefit from it. It numbers of civilian lives. Indiscriminate bombing by benefits not only the shareholders of diamond companies, but also the the government also took a high civilian toll, as did miners they employ and the communities that are dependent on their landmines, starvation and disease. It is estimated operations.We are very conscious of our responsibilities not only to that 300,000 Angolans - 3 per cent of the our shareholders, to the industry as a whole and to the consuming population - died as a result of the fighting between public, but also to the governments of the countries in which we October 1992 and late 1994; probably more than in 22 operate.” the preceding 16 years of war.” 1 HARRY OPPENHEIMER, DE BEERS 1995 ANNUAL REPORT. “The Corporation (Anglo American) and the companies with which it 1993 is associated strive to create wealth and to contribute to sustainable “The United Nations reported that between May development by operating their businesses with due regard for and October 1993 as many as 1,000 people were economic, social, cultural and environmental concerns.” 36 dying every day in Angola - more than in any other ENVIRONMENTAL POLICY DOCUMENT OF ANGLO AMERICAN CORPORATION FEBRUARY 1998. conflict in the world at the time.” 1 The diamond industry must include themselves in the debate on transparency This totals 184,000 people. and accountability if they are to be taken seriously.There are numerous examples of companies that have done too little too late and are now spending millions of dollars in order to preserve their corporate reputation. John 1994 Browne, CEO of BP , (member of the Corporate Advisory council of the US - 31st October the Lusaka Protocol is initialled, marking Angola Chamber of Commerce), is clear that responsibility in business is key: the end of the ‘Third War’. “So business has a key Illegal diamond mine, Lunda Norte, Angola 1992 1995 role to play. But it Localised fighting continues. must do it responsibly. With economic development must 1996 Fighting continues in diamond areas. come environmental stewardship and “UNITA appeared determined to maintain its grip social responsibility on its remaining diamond assets in 1996. Neither and there must be a side was prepared to concede this lucrative asset.” 1 new acceptance of this responsibility.”37 1997 JOHN BROWNE CEO BP AT There is an increase in serious violations of the AMNESTY INTERNATIONAL ceasefire, many of which are attacks on civilians, this is DUBLIN 26TH SEPTEMBER 1997. carried out by both UNITA and the Government.The diamond producing areas, including Lunda Norte, suffer. Nicky Oppenheimer In June FAA capture an estimated 10 to 15 percent of recently stated, “I do UNITA’s diamond producing areas. On 29th October, hope people will the UNSC unanimously adopts Resolution 1135, which think that we are imposes a range of sanction measures on UNITA, which open and prepared includes freezing of UNITA bank accounts and closing to answer real their offices abroad.1 questions and tell them what we are 1998 up to as far as we There is an escalation in tension as attacks by both are able.”38 It remains sides increase. Both FAA and UNITA lay landmines to be seen how around their positions39.As of early December FAA serious about forces have surrounded Bailundo and Andulo and many ‘openness’ Nicky within the country and outside observers are predicting Oppenheimer will be.

© H Logan/Network Photographers imminent full scale conflict. 8 YEAR BY YEAR STATEMENTS FROM DE BEERS’ ANNUAL REPORTS

1991 1993 Angola, were at higher levels than the “Our discussions with the Angolan previous year, owing mainly to the “Diamonds have continued to be larger quantity of Angolan goods delivered to the CSO in terms of the government will, it is hoped, lead to important decisions on buying, coming on to the market in the second contract covering production from the half of 1995.” Cuango area on behalf of the Angolan prospecting, mining, and marketing that TRADE A ROUGH could make a major contribution to “..the substantially increased state diamond mining company, production of Angolan diamonds - Endiama.An unfortunate side-effect of economic recovery when peace is fully restored.” 23 mainly in the higher value gem qualities the cease fire in Angola is that the - coming on the outside market, of activities of unlicensed diggers in both CHAIRMAN’S STATEMENT, DE BEERS 1993 ANNUAL REPORT. which the CSO successfully bought up the Cuango and Lucapa/Andrada areas about two-thirds.” 22 have increased, and that theft appears Further on it notes: CHAIRMAN’S STATEMENT, DE BEERS 1995 ANNUAL to be taking place on a large scale, “Demand for rough diamonds from REPORT. depriving the government of revenue the CSO was extremely strong in the and foreign exchange and, in so far as first quarter thanks to improved 1996 the CSO is concerned, weakening the confidence in rough markets.This “In Angola we were able to commence market.” 40 followed the measures taken by the only limited aerial exploration of our CHAIRMAN’S STATEMENT, DE BEERS 1991 ANNUAL CSO in the second half of 1992 to three prospecting areas.We hope that REPORT. restrict sales while at the same time peace will soon be restored and so making substantial purchases of allow the full exploration programme to 1992 diamonds (mainly Angolan) on the open proceed.” 4 “Secondly, the surge in illicit production market.” 23 CHAIRMAN’S STATEMENT, DE BEERS 1996 ANNUAL and theft of diamonds from Angola, as CSO COMBINED REVIEW WITHIN THE ANNUAL REPORT. diggers rushed in to the alluvial areas REPORT. However the same Chairman’s Statement when the rains ended and rivers It goes on to note: declares: subsided, proved far greater than “In early 1993 fewer diamonds were “...the increasing outflow of anyone had expected, substantially coming out of Angola because of the Angolan diamonds to the major cutting increasing the quantity of diamonds resumption of the civil war and the centres, much of which De Beers was being offered on the open market.The onset of the rainy season.” combined effect of these developments able to purchase through its outside was to curtail demand for rough The Combined Review goes on to note buying offices.” diamonds from the CSO below the level other events: This, at a time when UNITA controlled forecast for 1992.” 29 “All of these factors contributed to the majority of Angola’s diamond areas. CHAIRMAN’S STATEMENT, 1992 DE BEERS ANNUAL the good sales achieved by the CSO.” REPORT. “De Beers provides substantial support, 1997 [It is interesting to note that although both financially and in kind, to “The much quoted remark of my there was a large inrush of garimpeiros educational, health, social and cultural grandfather Sir Ernest Oppenheimer (illegal miners), with thousands coming projects aimed mainly at improving the remains as true a reflection of the from the DRC (former-Zaire), the areas living conditions and opportunities of Company’s intentions today as it was 40 remained under the control of UNITA, underprivileged people in South Africa.” years ago when he said:The aims of this which continued to benefit from the sales] DE BEERS 1993 ANNUAL REPORT. group have been - and they still remain “Buying offices have been operating - to earn profits but to earn them in The Report goes on to state: successfully in Antwerp,Angola, Zaire, such a way as to make a real and “That we should have been able to Guinea.” 23 permanent contribution to the well- buy some two thirds of the increased being of the people and to the CHAIRMAN’S STATEMENT, DE BEERS 1993 ANNUAL 19 supply from Angola is testimony not REPORT. development of southern Africa.” only to our financial strength but to the NICKY OPPENHEIMER, CHAIRMAN’S STATEMENT, DE infrastructure and experienced 1994 BEERS 1997 ANNUAL REPORT. personnel we have in place.” “..supplies from Angola continued to “The CSO’s purchases of outside goods CHAIRMAN’S STATEMENT. decline as a result of both the security through its offices in Antwerp and Africa situation and the higher than normal “CSO sales at the first three sights of continued in 1994 at about the same seasonal rainfall..” 19 the year have been very good, though level as in 1993, that is to say influenced by exceptional factors, considerably lower than in 1992. DE BEERS 1997 ANNUAL REPORT. principally the scarcity of diamonds Occupation of the main diamond areas coming out of Angola as a result of the in Angola by UNITA led to diminished 1998 rainy season and the resumption of civil activity by illicit diggers and lower “In 1996, the country [Angola] war...” quantities of rough reaching the produced between 1 and 1.2 billion CHAIRMAN’S STATEMENT. market.A new law was brought into dollars’ worth of diamonds. In 1997, It goes on to detail other factors which had force in January 1995 prohibiting production fell to between 800 million an impact. individuals from holding rough and 1 billion, and this year we are diamonds, to help reassert government expecting a further drop....Two thirds of The report later, when describing retail control of the industry through the state production in 1996 and 1997 came from markets, notes: corporation Endiama.” 28 a region where resources have been “The difference between that [sic] CSO COMBINED REVIEW WITHIN THE ANNUAL exhausted. In order for work to begin stable retail performance and the REPORT again, dams must be built across the decline in CSO sales of rough diamonds river. Some companies are still mining was attributable principally to de- 1995 alluvial deposits and we are continuing stocking in major markets, especially “The CSO’s purchases of diamonds on to buy any available diamonds, but Japan, and to increased sales outside the open market in Antwerp,Tel Aviv there are fewer of them.” 41 the CSO of illicit production from and in Africa, helped by the MR GARY RALFE, MANAGING DIRECTOR OF DE Angola.” establishment of buying offices in BEERS, 11TH MAY 1998 IN INVESTIR MAGAZINE. A ROUGH TRADE 9 1173 of12thJune 1998 This relates toUNSCResolution of resolution of1173(1998).” obligations under paragraph 2 complied withallits thatUNITA hasfully General, byof areport theSecretary- onthebasis Council decides, unlesstheSecurity July 1998, Eastern Daylight Time on1 noticeat01.00 without further 12 shallcomeintoforce specified inparagraphs 11and themeasures 1173 (1998), paragraph14 ofresolution notwithstanding “Decides that, Ministers wereadoptedonthe28thJuly1998 which implementedthedecisionofEUCouncil became bindingonall15memberstates.Theregulations that ithadformallyadoptedtheUNSCsanctions,thusthey National Reconciliation(GURN). Certificate ofOriginissuedbyGovernmentUnityand Angolan diamonds,definedasthosenotaccompaniedbya prohibited thedirectorindirectexportofunofficial Amongstanumberofmeasures,it Resolution 1173. adopted UNSCResolution1176whichactivated On June24th1998,theUNSecurityCouncil(UNSC) The UNSecurityCouncilEmbargoes AUGUST 1998. ANTWERP CONFIDENTIAL, Customs cannottellwhere they are from’.” the originofgoodsasCongoleseorSouth African andthe they declare rough outof Angola andlandtheminBelgium, smuggle the buyers said:‘...when wished toremain anonymous, who whichisthemainmarket....One dealer, into Belgium, the slightestdifference tosuppliesof Angolan rough coming wouldnotmake designed tocutUNITA’s economiclifeline, in “Dealers Antwerp toldDiamantaire thattheUNmove, 9THSEPTEMBER1998. NO:235, ENERGY&MINING, AFRICA oforiginraises alaughamongUNITAcertificates stalwarts.” of banonimports to agree....The Angolan diamondswithout anddiamond circlesandEuropean diplomatstend are saying, At leastthat’s whatfollowers ofJonasSavimbi’s organization their own onJuly18themove hashadnodiscernableimpact. SecurityCouncilsanctionsagainst UNITA witharulingof U.N. “Over backed amonthafterEuropean up Unionministers the UNembargo. funding oftheconflictinAngolaandimplementation This sectionincludestwoCaseStudiesrelatingtothe ANGOLAN DIAMONDS ON UNOFFICIAL COUNCIL EMBARGO THEUNSECURITY 3. impact oftheembargohasbeenminimalandresultedin UNITA diamondexportsduring1998,butoverallthe although nominalinsomecases,didresultadecrease GURN insurroundingcountries. this hasbeenthehighlyaggressivemilitarypolicyof UNITA, includingmunitions,althoughamajorfactorin that therehasbeenasubsequentdecreaseofsuppliesto On the8thJuly1998EuropeanUnionannounced The extensionofStateAdministrationinAngola, Observers havenoted(includingHumanRightsWatch) 52 , 44 their territory ofalldiamonds their territory from indirect import Angola to (b) toprohibit thedirect or States totheLusakaProtocol; Nations andoftheObserver oftheUnited the GURN, for thoseby representatives of except has notbeenextended, to whichState Administration inareas of leadership Angola contacts withtheUNITA (a) toprevent allofficial measures: States shalltake thenecessary Decidesalsothatall “12. detailsfour issues: section B, under S/RES/1173 (1998)which, 44 43 45 . 42 mining services; equipment usedin miningor of their flagvessels oraircraft, or using from theirterritory, by theirnationals or extended, administration hasnotbeen Angola towhichState orentitiesof to persons thesale orsupply Committee, of guidelinesapproved by that (1993) toallMemberStates toresolution 864 pursuant of theCommitteecreated notification by theChairman upon (c) toprohibit, Origin regime ofthe GURN; of through theCertificate that are notcontrolled based there.ThereisalsosomeimportofunofficialAngolan elsewhere, notleastbecauseDeBeersCentenaryAGare a legaltrafficindiamondsbetweenSwitzerland,theUKand rather belatedlyenactedembargoesagainstUNITA. Thereis referred toinparagraph 13below;” accordance withtherecommendations containedinthereport readiness toconsiderappropriate reinforcing stepsin andexpresses its 1127(1997)and1173(1998), (1993), of themeasures against UNITA containedinresolutions 864 process in Angola through fullandimmediateimplementation thepeace UrgesallMemberStatestosupport “Paragraph 9: areas and furtherafield,whichcontinuetoflyintoUNITA involve theuseofsmallplanesfromsurroundingcountries affected bytheembargothanmajorexportswhichoften routes, someofwhicharesmall-scale,havebeenmore Certificate ofOrigin export. AtpresentonlyAngolandiamondsrequireanofficial difficult bytheveryopensystemofdiamondimportand paperwork fromobligingcountries have simplyalteredtheroutesandobtaineddeceptive embargo hasnothadamajorimpactontrade.Thetraders volume. Diamondtradersandanalystsconfirmthatthe changes ofexportlogisticsratherthanmajoralterationsin implementation ofthemeasures referred toinParagraph 9.” technical andotherways forMemberStatestoimprove the not boundbyUNembargoes,on25thNovember1998 is anobviousloopholeandcouldbeaddressed. a customsdeclarationandsomesupportingpaperwork.This Belgium October 1998whichasks repeats arequest,madeinUNSCresolution1202of15th force.Italso and thefutureroleofUNitsMONUA January 1999andistoaddressthestatusofpeaceprocess is duetobesubmittedbytheSecretary-General15th Resolution 1213states,amongstaseriesofpoints, address theissue,foron3rdDecember1998UNSC stones processedinIsraelareboughtontheopenmarket. demand forAngolantyperoughstonesandthatmuchofthe little publiccensure.ItisworthnotingthatIsraelhasastrong UNSC Resolution1173;aseriousfailingwhichhasresultedin notify therelevantUNcommitteeoftheirimplementation Belgium andIsrael(asof4thDecember1998)havefailedto not beenasimpressiveitshouldbe.Countries,including on implementationofUNSCembargobymemberstateshas welcomed, thereareareasofconcern.Therecenttrackrecord UNSC ontheimplementationofembargoesistobe The possibleworkingoftheembargoisfurtherrendered Switzerland, whichisnotamemberoftheUNandso The UNSCdoesappeartohaverealisedthatitmust Whilst thecontinuingandheightenedfocusingof 43 . ThetradecontinuestoSouthAfrica ), whilstdiamondsfromothercountriesrequireonly 51 (also problematic,see “..for recommendations regarding services;” waterborne transportation orground or such vehicles, watercraft for orspare parts motorized vehicles or of their flagvessels oraircraft, or using from theirterritory, by theirnationals or extended, administration hasnotbeen Angola towhichState orentitiesof to persons thesaleorsupply Committee, of guidelinesapproved by that (1993) toallMemberStates toresolution 864 pursuant of theCommitteecreated notification by theChairman upon (d) toprohibit, 48 31 . Thereportinquestion . Itappearsthatland 46,47 Case StudyOne: . 77 50 , 49 . 10 diamonds into Switzerland, although the scale of this trade visits by suitable UN teams with a mandate to investigate is not clear31. and to report back to the UNSC Committee. The visits There is another obvious loophole that the current should then be repeated in April or May of 1999 after the embargo fails to address which is that of laundering end of the rains in Angola, which have a major impact on unofficial Angolan rough into trade by polishing it first.31 diamond extraction and supply. The UN should immediately censure those countries National government must also take action to ensure that have so far failed to comply with UNSC 1173 and 1176, that companies operating in their territory comply fully and to further censure those countries actively evading the with the embargo. Countries with significant flows of terms and spirit of the resolutions. These countries include ‘outside’ goods, including the UK, South Africa, Belgium

Belgium and Zambia which should be subject to immediate and Israel should be placed under UN scrutiny. TRADE A ROUGH

CASE STUDY ONE: BELGIUM

ANTWERP, the Belgian centre of the When diamonds are imported into, or diamond trade, is a key player in the exported from, Belgium the goods are international diamond business with more declared at the Diamond Office, which than half the world consumption of rough, works in co-operation with Belgian polished and industrial diamonds passing Customs on the import, export and through the city. It has the largest verification of diamonds.There is an community of dealers, and more than 50% expertise department where all parcels of of all CSO sightholders live in Antwerp. diamonds entering or leaving the country There are four diamond bourses where are checked on behalf of the Ministry of much of the diamond trading is carried Economic Affairs under supervision from out. an officer from the Licensing Department.53 At time of going to press, the Belgian There are normally ten diamond authorities have yet to notify the UNSC of Angolan Certificate of Origin for diamonds. experts on duty at any one time who check their compliance with UNSC Resolutions all diamond parcels for weights and value. 1173 and 1176, but have taken some action Diamond Bourse, In 1995 an average of 312 parcels a day over imports from Angola. However, they Antwerp, were processed, meaning that each expert have failed to close a number of loopholes Belgium. would have had to check approximately in the import control system which has thirty parcels of varying sizes per day55.Thus resulted in Antwerp continuing to be a technically every diamond entering major importer of Angolan rough Antwerp is checked by an expert. diamonds.Although De Beers is a major Angolan diamonds, which are being buyer of rough diamonds in Antwerp, at imported into Belgium, are being mis- present it is too early to assess their described as originating from other compliance with the UNSC embargo of countries.The experts who work on behalf July 1998.As one of the world’s key of the Ministry of Economic Affairs to check diamond trading centres,Antwerp must be the parcels are failing to spot the mis- aware that its full compliance with the described parcels. It would seem this is UNSC embargo would be crucial to its because they are generalists and cannot success. necessarily identify the Angolan gems.The The Belgian government is failing in its Belgian government needs to take immediate obligations to the UN by tolerating the action to train the experts, or find others Angolan government’s ambiguous import who can assist in implementing the UN documentation and procedures. embargo. In 1992 Channel 4’s Dispatches broadcast There are further problems caused by “The Belgian government encourages ‘Not Quite Forever’, a documentary about the trade through a generous system of the Angolan government’s failure to De Beers which included an interview with operate a rigorous system of controls tax breaks.All diamond exports are a buyer working for the company in exempt from taxes, and most diamond because: Antwerp: imports are exempt from import duties. the Angolan Certificates of Origin “My role here is to buy as many (COs) do not include a printed name A Value Added tax of 21% is payable but rough diamonds as I can that come on there is a unique system of VAT nor title under the signature; the market at an agreed price by the exemption for imported diamonds.” 53 the COs are signed by a number of head office in London...We are always different people who cannot be readily There is a Diamond High Council (HRD) busy - our level of activity will obviously identified; in Antwerp which was set up to: fluctuate, depending on the actual the Angolan government has not “..serve and defend the interests of current state of the diamond market. responded to requests from the the whole diamond sector...[its] When the market tends to be weaker, Belgian Government for a list of activities are conducted for the general we tend to be busier, and when the approved signatories to the COs; benefit of the Belgian diamond trade market is strong...we’re not quite so the Angolan government has not 56 and industry. Its administration and busy...” defined what constitutes an official management are solely entitled to act The buyer goes on to confirm that the stamp, and COs have different types of in the name of the whole Belgian majority of the diamonds brought to his stamps; diamond trade.” 54 office are Angolan, and admits in an average the name of the exporting company is week to buying US$3-5 million of Angolan KOMPASS DIAMONDS 1998 BELGIUM. on the CO but not on the Import diamonds during 1992. License which allows for confusion The HRD contains a department called: When asked what is the most spent in over who is actually receiving the “The Diamond Office [which] is a week the buyer replies “It would be goods unique in the world and acts as a somewhere in the region of about customs broker for the import and US$40 million dollars.” 56 The importance of the diamond industry export of diamonds and handles all the This was at a time of renewed and to the Belgian economy is a counter- paperwork for this process - a very intense fighting following the elections incentive to a rigorous application of the considerable service to the diamond of late 1992. embargo. companies.” 54 11 CASE STUDY TWO: ZAMBIA

ZAMBIA’S importance as a diamond route for UNITA increased with the fall of Mobutu and the incursion of Angolan army troops into the DRC which initially closed off the traditional and major route from UNITA territories through DRC to Kinshasa. Historically Zambia has A ROUGH TRADE A ROUGH supported UNITA, with the presence of Angolan refugee camps in which there was an element of UNITA infiltration57.This changed due to pressure and threats from the Angolan government following detailed reports of major arms Leaflet offered at shipments transiting through Zambia.58 Caltex petrol Global Witness investigations have station (right), shown that obtaining, laundering and Mongu, Zambia. exporting Angolan diamonds remains a relatively simple process in Zambia, with compliance of Zambian border officials, or by of diamonds for cattle64.There is also a very the facilitation of government officials.The hiring guides acting as purchasers.The small-scale pattern of fish trading, with Zambian government note in their export purchasing process can take up to two weeks Angolans carrying 20 to 30 kgs at a time to information on gemstones, “Changing as buyers may have to walk to the right area Zambia, a journey of several days, and customer requirements offer in Angola, obtain the diamonds and walk selling the fish for soap, clothes and goats opportunity for marketing expansion. back. Mavinga, in Cuando Cubango province, which will then be taken back to areas such Certain products are prepared in a is a popular destination31 and UNITA are as the Lundas or Luau, where a goat can be certain way in order just to meet the currently encouraging significant buying worth up to US$300, and exchanged for customer specifications.This results in activity in the area, as well as permitting 30- dollars or diamonds different marketing areas...” 59 40 small concessions to operate47. The third stage is somewhat easier Mavinga was handed over to the State than the second, and less fraught with risk, Global Witness investigations reveal that Administration on 21st October 1997 and namely that of acquiring the necessary the Zambian Ministry of Mines and its De Beers, which has a concession in the paperwork to turn the unofficial diamonds Geological Survey are not only happy to area, set up a small base camp for into a legal commodity and thus exportable provide false Certificates of Origin but are prospecting8 but most of it was reclaimed under the terms of the UNSC embargo. It clear that “Basically all diamonds here by UNITA in the following months. It is can then be accepted by the import 60 are Angolan.” possible to obtain diamonds from the authorities of any country that do not raise How Zambia is undermining the Lundas in the Northeast of Angola but questions about the high gem value UNSC embargo these are difficult to access from the diamonds that appear to originate from a It is difficult to ascertain the scale and value Southeast of Zambia. country which has virtually no production. of the Zambian trade in Angolan diamonds, The guides would normally have Such countries include the USA, although it does seem to have decreased existing UNITA contacts in the diamond Britain, the Netherlands, Belgium, South 31 during 1998.31 It is likely that most of the producing areas.Alternatively parcels can Africa and Israel. Other countries with an current trade is small-scale with a large be bought in Zambia: the three towns of interest in so-called ‘Zambian’ diamonds are number of people handling relatively small Senanga, Mongu and Zambezi, south east of Saudi Arabia, Hong Kong and Japan, amounts of stones. the Zambian-Angolan border are all although there has been a decline in Far The UN embargo does appear to have recognised sources for the acquisition of Eastern demand due to the economic reduced supplies of medicines and other diamonds.Angolans and Zambians based problems in the region.According to one important items to UNITA but in Zambia here are prepared to act as guides or international trader the export documents this has become a mechanism used to drive arrange for diamonds to be brought out of will sometimes include the phrase “Likely of down the price of UNITA diamonds, as the Angola. In November 1998 one company, Angolan origin” but that does not hinder 31 value of barter goods increases.31 However, Milkwood Ltd Zambia, were distributing exports. of great concern is that there is a well leaflets in Mongu, advertising for both The diamonds are evaluated by the 63 established structure in place for handling diamonds and gold (see picture above) .The office of the Geological Survey, and the quantities of diamonds, and that official company is Lusaka based and buys on a resultant ‘Valuation Certificate’ details a collusion continues despite international regular basis in Mongu.The diamonds come description of the stones, grade, quantity, pressure, and threats from Angola61.A visit through the border crossings of colour and valuation in US dollars.The of Angolan and Zambian officials to Mongu Shangombo, Kalabo and Mwinilunga. document is examined, certified and signed and other areas in March 1998 has not Diamond prices vary greatly depending by two officials.The official noted that it stopped the flow of diamonds.62 on where the sale is taking place and who was their usual custom to undervalue The process of laundering unofficial is buying. In cash terms diamonds are stones due to the high rate of tax, “We Angolan diamonds falls into three stages: cheaper in Angola at approximately US$100 understand...[so we] normally don’t put 60 The first is to acquire Zambian upwards per carat although UNITA seem stones at the highest value.” He noted government authorisation to purchase to keen to encourage barter for medicine, that a small amount of South African, precious and semi-precious stones.The clothes, electrical equipment and other Botswanan and Namibian diamonds were document required is a Gemstones Sales supplies.Again rates given for barter vary being brought into Zambia to obtain Certificate which is valid for one year and widely from a couple of pairs of trousers Zambian export documents. permits the possession and export of for a small diamond or a ‘Sharp’ cassette The Valuation Certificate is required by gemstones. It is obtainable from the player for a larger stone from an individual The Mines Development Department Ministry of Mines and costs 200,000 seller, to the agreement of orders in which then issues a clearance document, Zambian Kwacha (about US$100 depending advance with UNITA officials for quantities the ‘Authorisation to export rough on the exchange rate), and is easy to obtain. of medicines and other supplies to be gemstones’.This goes to Customs, and is The second stage, the acquisition of brought in by a four-wheel drive vehicle, stamped for approval by both them and the diamonds is somewhat more expensive and whilst placing a counter order for Development Department. Once the risky. Diamonds can be purchased at first diamonds at the same time. In Mwinilunga documentation is complete the stones can hand by entering Angola, usually with the and Zambezi there is an established barter be legally exported. fissures, cracksandcolours. distinctive characteristicssuchas different minesgenerallyhave Diamonds fromdifferentareasand are generallyinthetopthree. quality scaleandAngolandiamonds There areninecolourstothediamond Diamantes deAngola)istheparastatal Endiama (EmpresaNacionalde Endiama the worldsgemsareofgemquality of worldproductiononly5-10% of totalproductionin1998.Interms predominate; comprising70%-80% highest value,consistently where gemqualitystones,thoseofthe Angola isoneofthefewcountries in Industry Angola Diamond Background: DIAMONDS ANGOLAN TRADE IN OVERVIEW OF THE ABRIEF 4. area. whoever isincontrolofthemining finders agreementwithUNITA, or rights. Theyoftenworkona50:50 than bondedlabour, andhavefew cases thegarimpeirosarelittlebetter basic miningequipment.Inmany (buyers) andtothosewhoprovide permanent debttothecomptoirs conditions. Theyareofteninsemi- miners) inverypooranddangerous carried outbygarimpeiros(illegal a largeinvestmenttogetanyreturn. subterranean volcanicpipesrequiring kimberlite mines,whicharedeep machines. Thereisalsopotentialfor by unskilledworkerswithout mining ordivinginrivers,carriedout alluvial production,requiringsurface in Angolawithsignificantcurrent Much ofthemininginAngolais Diamonds areextremelyplentiful 66 65 . Angola Luanda, Alfa 5, Right: Angola Luanda, building, Endiama Left: of Origin. controls overitssystemofCertificates government toimposemorerigorous for thefailureofAngolan production issoldcouldalsoaccount ensure thatsomeoftheunofficial two-thirds ofalldiamondsminedin 1997 UNITA wasproducingabout exports changed.During1996and many areasanditspercentageof exports controlled 90%ofAngolandiamond Between 1992and1994UNITA both importantareasofproduction. Cuango rivervalleyandtheLundas, major diamondareas,suchasthe shifting controlovermanyofthe have retainedapredominantbut business, sincethelate1980’s. They hence intheinternationaldiamond Angolan diamondproductionand havebeenkeyplayersin UNITA UNITA key FAA generals much ofwhichissaidtobelinked non-UNITA unofficialproduction, help solvetheproblemofsubstantial unofficial diamondproductionwill Oderbrecht andAlmazyRossii-Sakha. permission: DeBeers,Steinmetz, well knowncompanieswithsuch diamond exports receives ataxof2.5%onallofficial Luanda andintheprovinces.It them tobuyunofficialproductionin issuing licensestobuyers,permitting mining. Itisalsoresponsiblefor and isactivelyinvolvedindiamond which agreesdiamondconcessions, production licensed tobuyunofficialAngolan increased thenumberofcompanies Geology informed keeping theMinistryofMinesand Trade, whichisresponsiblefor however, ishandledbytheMinistryof In 1995UNITA lostcontrolof This increasedcapacitytobuyup In recentmonthsEndiamahas 50 . 31 . Thereareatleastfour 67 68 . Exportlicensing 67 . Thisneedto . Angola part oftheFAA generalsloyalty revenue fromthediamondsisakey secret. Itiswidelysaidthatthe and theirinvolvementisanopen role indiamondproductionAngola, Forces (FAA) haveplayedanactive The generalsoftheAngolanArmed FAA Almazy Rossii-Sakha,Oderbrecht. Angola includeDeBeers,Steinmetz, of themajorcompaniesoperatingin has beenwellcoveredinpress.Some associated withmercenaries.Thisissue either mercenariesorcompanies insecurity, andsomeofthesefirmsare use ofsecurityfirmsduetothe prospecting andmining.Manymake operating inAngola,buying, A widerangeofcompaniesare Angola Companies active in middlemen asUNITA. possible theysimplyusethesame UNITA’s behalf,althoughitis involved insellingdiamondson claimed thatFAA generalsarealso Diamond tradersinAntwerphave Angolan armyandotherofficials De Matos,theChiefofStaff Northeast ofAngola,areconnectedto operates withITMMininginthe Companies suchasTricorn, which decline frompreviousyears. be US$200millionfor1998;amajor production, withrevenueestimatedto has hadamajorimpactonitslevelof areas suchasthelowerCuangoValley of the1994LusakaProtocol. Administration tookplace,acondition former UNITA areastoState also involved,forexample,Alpha5 companies inwhichFAA generalsare closely co-operatingwithsecurity many casesdiamondcompaniesare UNITA’s withdrawalfromkey 69 . During1998thereturnof 42 31 68 . . In 31 .

A ROUGH TRADE 12 13

Diamond Export Routes African Republic61. Export routes Were this ever used as a defence for from Angola continue through Zambia.31 breaking the UN embargo, it would UNITA diamond export routes from The UNSC embargo has further never work for the obvious reason that Angola used to be well established and changed export routes so that whilst in 1996 and 1997 Angola supplied well known with a large percentage many of the traditional routes, approximately US$1 billion of rough being taken to the DRC, to buying particularly those to South Africa, diamonds to De Beers. This accounts offices in Mbuji-Mayi, in East Kasai Europe and Israel, continue, there is for approximately 20% of De Beers province and Kinshasa. This began to also a regular switching of routes, stated sales for both years. With these change with the territorial aggressions sometimes on a monthly basis figures one can only wonder what 70,71 A ROUGH TRADE A ROUGH of the Angolan government and according to some observers . It is Angolan diamonds are being mixed Kabila’s take-over of the DRC, possible that the radar installation with to avoid their identification. although diamonds, after an initial supplied by the United States, as part Another problem is that of the hiatus, continued to move through the of their non-lethal military support to buyer’s acceptance of provenance DRC. the Angolan government, at Lubango because only Angolan diamonds More recently the Republic of in Huila Province, in southern Angola require a Certificate of Origin. Congo-Brazzaville, another route for may also have caused export and The risk is that if UNITA repeats Angolan diamonds, has seen a steep supply routes to re-route72. There are its successful strategies of the past, reduction in the amount of rough also reports of diamonds being regaining full control of Angola’s key diamonds being traded42. Other smuggled to Antwerp via Burundi in diamond areas, then on the current traditional routes involved flights from exchange for arms73. level of embargo implementation, UN South Africa, sometimes via In essence smuggling and mis- member states will continue failing to Namibia31, and flights to Europe and declaration of diamonds will continue prevent UNITA gaining revenue - Israel via countries friendly to Savimbi so long as major buyers are willing to meaning Angola’s conflict could and UNITA in Central, West and buy the product, claiming that it is continue for years. North Africa. These countries include impossible to tell the origin of Ivory Coast, Morocco and the Central diamonds if the parcels are mixed.

Map courtesy of Human Rights Watch

4

19 1 1 20 2

1 Diamond mining 6 companies operating in 8 17 7 Angola 6 1 De Beers 9 18 2 SDM (Oderbrecht/Endia 16 ma) 10 1 5 3 Southern Era

15 4 IDAS

14 Resources/Endiama 5 R & RR

6 Diamond Works

3 7 S.M.L. 13 8 Rivermar 6 9 Catoca

10 Sopemina & Power

11 Diacu 1 12 Rulth 12 13 Comisap

14 Somipa 11 15 Cimader

16 Moyo Weno

3 17 Marco

18 Bapsil

19 Gem Dourada

20 Artesanal to ascertainhow fullyDeBeershave UNITA origin,andasyetit is tooearly not actingillegally inbuyingdiamondsof Prior tothisDeBeersandthe CSO were to seeklimitUNITA’s diamondtrade. 1998 embargowasthefirstlegal embargo Angola, itishighlysurprisingthat the Angola sodesperatelyneed. peace thatthepeopleandcountryof this theyarestandinginthewayof guerrilla organisation.Iftheyfailtodo for allthetradethatislifebloodofa the UN,actdecisivelytoendonceand diamond trade,andthememberstatesof CSO asthemajorforceinworld purchasing diamondsfromcombatants. legal orethicalconsiderationsof and buyersappeartopaylittleheedthe essential linkbetweendiamondproducers traders andtradinghouseswhoarethe Furthermore, theindividualdiamond producing territoryofAngola. UNITA heldmuchofthediamond Angola. Duringthesametimeperiod, worth ofdiamondswhichoriginatedfrom buying hundredsofmillionsdollars admit thatduringthe1990’s theywere countries. Intheirownannualreportsthey the populationsofdiamondproducing ethos ofatransparenttradethatbenefits many timespromotingtheircorporate little transparency, hasgoneontherecord well groomedfaceofanindustrywith multi-million dollartrade. should theywishto,andtomaintainthe wherewithal toexploitlegalloopholes providing thediamondindustrywith this theyarewittinglyorunwittingly very littletoenforcetheUNembargo.In member statessuchasBelgiumaredoing UNITA’s diamondtrade.InrealitykeyUN the UN,hasplacedanembargoon recognises thisstateofaffairsand,through the wholeconflict. diamonds, astheyhavedonethroughout undoubtedly findreadybuyersfortheir such control,butUNITA will Only theMPLAcanlegallybenefitfrom for controlofdiamondrichterritory. offshore oilwealth,andUNITA willfight happens, theMPLA,whichcontrols 1989, isonceagaincollapsing.Ifthis which hasseenover500,000deathssince wealth. in ordertoobtainashareofAngola’s of corruptionandaresourcefundedwar prepared totolerateorignoretheravages concerns ofalltheseplayerswhoare people hastakensecondplaceinthe Clearly, thewelfareofAngolan governments oftheirhomecountries. multinational corporationsandthe political (andwarring)factions,numerous very valuableprizeforitsownleading Angola, asamineralrichcountry, isa CONCLUSION Given thescaleofconflictin It isimperativethatDeBeersandthe De BeersandtheCSO,public The internationalcommunityalready The longdrawnoutpeaceprocess, are putinplace. accountability andethicalconsiderations issues ofconcernsuchaspublicscrutiny, the nextcenturyandensurethatkey change todragthediamondbusinessinto complicated andnecessaryprocessof challenges DeBeerstotacklethis transparency, andsoGlobalWitness corporate statementsonethicsand to notethatDeBeersdohavepre-existing implemented; howeveritisencouraging see howtheembargocanbefully trade currentlyoperatesitisdifficultto of Angolandiamonds,andthatasthe where therehasbeensuchahighuptake of theinternationalbusiness,whichis fact thattheoutsidemarketisakeypart complied withtheUNSCembargo.Itisa H CNMS,14THSEPTEMBER1996. THE ECONOMIST, areas.” output -much ofitfrom rebel held of buying somethree-quarters Angola’s spends aboutUS$520milliona year on still DeBeers Johannesburg forDeBeers. who shuttlesbetween Angola and lamentsJames McLuskie, chasing them,’ have togoroundwork.We theworld it’s hard very uncontrolled, offices.‘It’s oratitsthree Angolan buying in Antwerp, either up thediamondsthatleakoutout, itisreduced tovacuuming For now, Angola. cannotafford nottobein “...De Beers REPORT. 1997 ANNUAL CHAIRMANDEBEERS, NICKY OPPENHEIMER, development ofsouthern Africa.” being ofthepeopleandto and permanentcontributiontothewell- earn theminsuchaway astomake areal they stillremain -toearnprofits butto “The aimsofthisgroup have been-and EIU COUNTRY PROFILE 1997-1998. Zaire and Antwerp.” 1996 through buyingofficesin Angola, the officialandnon-officialproduction in moppeduproughly twothirdsDe Beers of government andnon-UNITA illegal diggers. restproduction.The was minedby the Angola’s totalUS$1bn-US$1.2bn In1996UNITA minedsome70%of funding. increasingly relied ondiamondsfor larger quantitiesandthemovement UNITA was extracting far “Meanwhile, OCTOBER 1997. RDP AFRICA, PEDRO ROSA MENDES, filled withdiamondsandbleedingoil.” “Angola hasbecomeagigantic corpse 22ND AUGUST 1997. MAIL&GUARDIAN, CHRIS GORDON, and Liberia.” inSierra Leone,Angola three wars in Africa, thistrade hasfunded Nonetheless, price. pushed underground andmaintainsthe prevents thetrade from being their origin, whatever an openmarket fordiamonds, pointsoutthattheexistence of “De Beers 76 74 69 19 75 REFERENCES 77 76 1997. 75 74 1998. April Paper 30, 73 72 November 1998. Pers Com, South PoliceAfrican Force, Branch, 71 November 1998. 70 69 1996. 68 67 66 65 64 63 62 61 November 1998. ofMines, Ministry 60 59 1998. 58 57 1992. 56 October 1998. 55 54 1998. January HRD, Belgium, 53 52 1998. 51 1997. International Diamond Yearbook 1996/97, 50 49 48 47 46 45 44 43 September 1998. 42 Investir Magazine11thMay 1998. 41 40 October 1998. 39 24th 1998. April website, Beers 38 1997. 26thSeptember Conference, 37 1998. Statement, 36 October1998. Transparency, 35 34 31 30 29 28 27 1998. 3rdDecember communication. 26 December 1998. 25 24 23 22 1994. Elections, and Violations oftheLaws of War sincethe1992 21 website. onDeBeers Interview 20 19 18 17 16 1997. 15 1997. 14 13 1997. 20thApril Noticias, 12 MONUA. totheUNSCon Report November 1998. 11 10 9 8 7 6 1996. 4thQuarter Report, 5 4 1998. 3 2 1998. Protocol, 1 EIU Country Report, 2nd Quarter 1996. 2ndQuarter Report, EIU Country 1997. 4thQuarter Report, EIU Country 4thDecember1998. Mail andGuardian, The Post ofZambia30thSeptember1998. Economist IntelligenceUnit(EIU)Country 1996 De Beers Annual Report. 4thNovemberBBC NewsOnlineNetwork May 1996. LeFigaro, Jonas Savimbi, CIIR Peace Postponed:Angola SincetheLusaka SAPA 25thNovember -AP, 1998. 14thSeptember1996. The Economist, October RDP Africa, Pedro RosaMendes, 22nd August 1997. Mail &Guardian, Studies, InstituteofStrategic International 1998. 6thFebruary Weekly Mail&Guardian, Diamond&Gold A SeniorSuperintendent, Pers Com, Studies, Institute ofStrategic Profile 1997-1998. Country EIU, 7thJune No12, Confidential,VolAfrica 37, 1994. DiamondLaw, Government of Angola, 1997. anon, buyer, DeBeers Former 1997. anon. Ex-Diamond sorter, November 1998. anon, Aid worker, November 1998. Milkwood ZambiaLtd, March1998. Angola News, May 29th1998. Weekly Mail&Guardian, Zambia GeologicalSurvey, Senior Official, Zambian Government Document1998. 7th August No16, Confidential,VolAfrica 39, March20th1998. Weekly Mail&Guardian, Channel4Dispatches, Not QuiteForever, Pers Com, ofEconomics, Belgian Ministry 1998. Kompass, Diamonds, Proceduresfor Diamondsin &Export Import S/RES/1173(1998). UNSC Resolution1173, December Pers Com, CustomsOfficial, British & Directory World DiamondIndustry, S/RES/1202(1998). UNSC Resolution1202, S/RES/1213(1998). UNSC Resolution1213, November 1998. Lusaka diamondtrader, November 1998. Namibian businessman, Angola NewsJune/July 1998. S/RES/1176(1998). UNSC Resolution1176, August1998. Confidential, Antwerp 9th No:235, &Mining, Energy Africa ManagingDirectorDeBeers, Ralfe, Gary 1991 De Beers Annual Report. 7th Angola Peace Monitor,Vol No1, V, De Face towithNickyOppenheimer, BP, AmnestyInternational John Browne CEO, Policy Environmental Anglo American, Manual on Fund, Monetary International December1998. website, De Beers Global Witness investigations 1997&1998. 1998. 1stQuarter Report, EIU Country 1992 De Beers Annual Report. 1994 De Beers Annual Report. 4thofMarch1993. The Guardian, Director ofDiamond Personal Training School, Global 1st Witness meetingwithDeBeers andtheDiamondIndustry. De Beers 1993 De Beers Annual Report. 1995 De Beers Annual Report. Human Rights Angola- Arms Watch, Trade Nicky Oppenheimer22ndDecember1997. 1997 De Beers Annual Report. 1996. 3rdQuarter Report, EIU Country 1996. Maier Karl ‘Angola:Promises andLies.’ 1996. 20thAugust PÚBLICO, Angola UNDP HumanDevelopment Report theFuturein Angola”, Fatima Roque,“Building 24thOctober1998. 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A ROUGH TRADE 14 GLOBAL WITNESS is a British based non-governmental organisation which focuses on the links between environmental and human rights abuses, especially the impacts of natural resource exploitation upon countries and their people. Using pioneering investigative techniques Global Witness compiles information and evidence to be used in lobbying and to raise awareness. Global Witness’ information is used to brief governments, inter-governmental organisations, NGOs and the media. Global Witness has no political affiliation.

Do-It-Yourself Diamond This new campaign to expose the lack of corporate accountability in the international Trading Guide diamond trade, expands upon the work Global Witness initiated in 1995, in Cambodia. Here, illegal timber exploitation has funded the Khmer Rouge/Royal Government civil Carat Unit of measurement of a diamond, there are five carats to one war, the leading political parties, their allied military factions and elite business gramme. Diamonds vary from a supporters. Global Witness’ work in this area has illustrated that natural resource fraction of one carat upto a very exploitation can undermine democracy, fuel corruption, seriously impact on rare couple of thousand. In trade a stone of 60 carats wuld be agriculture, provoke abuses of human rights and undermine national stability, in considered large. addition to causing severe environmental degradation. The 4 c’s Colour, clarity, cut, carat.These four factors are considered when valuing Global Witness’ analysis of this US$200 million a year timber trade (the National a stone. Budget for 1998 is US$419 million) remains the single most reliable source of Colour Diamonds come in a wide range of information on the issue and has raised it from one of tangential concern to what the hues, tints and colours; they can be described as whitish, yellowish, IMF in 1997 stated was “...the single most critical issue facing Cambodia”. Global greenish, brownish, pinkish, bluish Witness’ exposées of the Thai/Khmer Rouge timber trade, the signing of extra- and so on. Stones from different constitutional concessions and illegal timber exports has resulted in forestry being a countries can vary in colour. pivotal part of Cambodia’s political agenda. The 1995 closure of the Thai/Cambodia Inclusions The particles and matter sometimes found within a diamond. border to log imports deprived the Khmer Rouge of between US$10-20 million per Rough Rough diamonds are unworked, and year; the completion of four major World bank funded Technical Assistance projects has in their natural state paved the way for complete forest policy reform: both are direct results of Global Official The diamond market operated Witness’ information gathering and lobbying. through the CSO; it includes production market from government run mines in Namibia Global Witness’ previous publications and Botswana. (also available on our website: http://www.oneworld.org/globalwitness/) Unofficial This is the part of the market that “Going Places — Cambodia’s Future on the Move” buys rough diamonds outside of the published March 1998 market CSO. Outside market The unofficial market. “Just Deserts for Cambodia — Deforestation & the Co-Prime Ministers’ Legacy to the Country” published June 1997 Polished The term used to describe stones when they have been worked. Up to “A Tug of War — the Struggle to Protect Cambodia’s Forests” fifty per cent of the diamond can be published March 1997 lost when polished, depending on “Cambodia,Where Money Grows on Trees — Continuing Abuses of Cambodia’s Forest Policy” the shape of the stone. published October 1996 Gem quality The highest quality of diamond, which is normally in high demand “RGC Forest Policy & Practice — the Case for Positive Conditionality” and commands top prices. published May 1996 Parcel This is a quantity of diamonds, and “Corruption,War & Forest Policy — the Unsustainable Exploitation of Cambodia’s Forests” can vary from 10 carats up to published February 1996 thousands of carats “Thai-Khmer Rouge Links & the Illegal Trade in Cambodia’s Timber” Mixed parcel This is parcel of rough diamonds published July 1995 from more than one country. “Forests, Famine & War — the Key to Cambodia’s Future” Run of mine All the diamonds are from the same published March 1995 mine. With thanks to Allan Thornton of the Environmental Investigation Agency, for his original inspiration for this Garimpeiros Illegal miners; usuallly artesanal. project and financial support. Comptoir Small-scale diamond buyers, who act With many thanks to Human Rights Watch for their time and input. as middlemen. Kimberlite The name of a type of diamond and This report is the copyright of Global Witness, and may not be reproduced in any form without the written the type of mine it is extracted permission of the organisation, except by those who wish to use it to further the protection of human rights from, which has deep subterranean and the environment. volcanic pipes. Design by Daniel Brown (0171 225 1282). Alluvial The name of a type of diamond and Front Cover photographs: rough diamonds © Marc Schlossman/Panos Pictures; the type of shallow mine it is soldier © David Orr/Panos Pictures. extracted from, with diamonds found in river beds and in shallow All other photographs copyright © Global Witness except where indicated. deposits.A form of mine that can be Printed on 100% unbleached recycled paper. exploited by artesanel techniques. Sights Approximately ten sights a year are ISBN 0 9527593 5 7 held by the CSO at which Sightholders are allocated a quota of Published by Global Witness Ltd, diamonds for purchase at a price P O Box 6042, London N19 5WP,United Kingdom determined by De Beers. Sightholders are chosen by De Telephone:+ 44 (0)171 272 6731 Beers and numbers are strictly Fax: + 44 (0)171 272 9425 limited; there are less than 200 sightholders worldwide. e-mail: [email protected] http://www.oneworld.org/globalwitness/