When the power of WikiLeaks hit our industry

The diamond industry was caught in the crossfire as WikiLeaks published secret US cables.

Diamond boss implicated in Merange deals in secret US cables.

The media spent the latter part of 2010 fascinated with Julian Asange, founder of the whistle-blowing website WikiLeaks. While Assange fought in the courts, his site churned out an unprecedented number of secret cables sent by the US government and the fall out was far and wide.

As international figures such as Bank of England governor Mervyn King, Libyan leader Colonel Gaddafi and former prime minister Gordon Brown were hit by scandals, the jewellery industry also got caught in the crossfire.

A series of cables sent in 2008 by US ambassador for Zimbabwe James McGee exposed some of the intricacies of the export of dirty diamonds from the country.

The cables exposed the way in which diamonds are allegedly sourced and then exported through buyers, including European industry members, and then reintroduced into the main jewellery market by way of Dubai in shockingly deep detail.

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It was suggested by the cable that a chief executive of a British mining company gave McGee insight into the industry. McGee wrote: “High-ranking Zimbabwean government officials and well-connected elites are generating millions of dollars in personal income by hiring teams of diggers to hand-extract diamonds from the Chiadzwa mine in eastern Zimbabwe. They are selling the undocumented diamonds to a mix of foreign buyers including Belgians, Israelis, Lebanese, Russians and South Africans who smuggle them out of the country for cutting and resale elsewhere. Despite efforts to control the diamond site with police, the prospect of accessible diamonds lying just beneath the soil’s surface has attracted a swarm of several thousand local and foreign diggers. The police response has been violent, with a handful of homicides reported each week, though that number could grow as diggers arm themselves and attract police and army deserters to their ranks.”

McGee went on to explain how he understood diamonds are taken out of the country and introduced into the main jewellery trade. “Whether bought first by regime members or not, eventually the diamonds are sold to a mix of Belgians, Israelis, Lebanese, Russians, and South Africans. Once sold to foreigners, the majority of the diamonds are smuggled to Dubai and sold at the Dubai Multi Commodities Centre Authority, a dedicated economic free-trade zone created in 2002 for the exchange of metals and commodities, most notably gold and diamonds. Although Zimbabwe is a participant in the Kimberley process, the diamonds from Chiadzwa are undocumented and therefore are not in compliance with Kimberley, which requires loose uncut diamonds to be certified.”

Within the cables it states that African Consolodated Resources chief executive Andrew Cranswick named World Federation of Diamond Bourses (WFDB) vice-president Blom as being involved in the trading of illicit Merange diamonds. Cranswick claimed that not only was Blom, who was then president of South Africa’s Diamond Merchants Association at the time, involved in the illegal trade, he actually boasted about it.

Blom has denied the allegations. In a letter written to WFDB president Avi Paz protesting his innocence he said: “I categorically deny any illegal trading or [that I] boasted about it as Cranswick allegedly said in the dispatch. I had never travelled to Harare before I went up there as part of the KP review mission in 2007. I have only ever met Cranswick twice in my life. The last time [was] more than a year ago when he tried to elicit my assistance to get his mine back, which I declined.”

Summing up his report McGee stated: “In a country filled with corrupt schemes, the diamond business in Zimbabwe is one of the dirtiest. Mining in general remains the largest single source of foreign exchange, but the potential of Chiadzwa is being lost to Zimbabwean corruption. At present, police trying to bring order to Chiadzwa are benefiting Zimbabwean officials who see the diamond field as a new source of illegitimate income; the people of Zimbabwe are seeing little return. It is also clear that Cranswick is a businessman trying to find any pressure point he can through which to leverage his own claim. At the same time, he sheds light on an industry that is enriching many of the same old corrupt Zimbabwean elite–and causing violence and deaths that so far have received little attention.”

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