Conflict Diamonds or Blood Diamonds

Conflict Diamonds are also sometimes referred to as "Blood Diamonds". Conflict Diamonds are diamonds that originate and are mined from areas controlled by forces at war, or otherwise in armed conflict with the region's existing officially recognized government. The diamonds produced from these areas are used to illegally and often brutally fund military action in opposition to those governments, or in contravention of the decisions of the United Nations Security Council.

The History of Conflict Free Diamonds

Although blood diamonds have been in existence for decades, they gained international attention during the Sierra Leone civil war in the 1990s. The nine-year war caused over 75,000 deaths and displaced over 2 million people. Rebel groups who used heinous tactics, including rape and mutilation, financed their efforts by smuggling and selling diamonds. The brutality of the conflict caught the attention of people around the world, and brought conflict diamonds into the spotlight for the first time.

But, this wasn’t the only conflict that shined the light on blood diamonds. In the late 1990s, it was revealed through the Fowler Report that the National Union for the Total Independence of Angola (UNITA) was also using conflict diamonds to finance war efforts in Angola. The report specifically named countries and companies that were involved in the blood diamond trade in Africa. The United Nations established embargos against UNITA after learning this information, and pushed for an end to conflict diamonds once and for all. In May of 2000, representatives from the major diamond producing countries in Southern Africa met and the Kimberley Process was born.

The Kimberley Process

At the time of the Sierra Leone war, it is estimated that conflict diamonds accounted for about 4% of the world’s diamond production, however this number has now dropped down to 1%. What caused this drop? The Kimberley Process. Formed in 2000, the Kimberley Process (KP) is a binding agreement among governments, civil society and industry leaders to remove conflict diamonds from the global supply chain.

Membership imposes extensive requirements on every participant including adherence to the Kimberley Process Certification Scheme (KPCS) that both safeguards the shipment of rough diamonds and certifies them as conflict free.

Kimberley Process Certification Scheme

The Kimberley Process Certification Scheme (KPCS) was first implemented in 2003. Today 81 governments have included the Kimberley Process Certification System in their national law.

Under the terms of the KPCS, members must:

Satisfy ‘minimum requirements’ and establish national legislation, institutions and import/export controls

Commit to transparent practices and to the exchange of critical statistical data

Trade only with fellow members who also satisfy the fundamentals of the agreement

Certify shipments as conflict-free and provide the supporting certification

Monitoring Process

Kimberley Process participants undergo periodic reviews, along with peer monitoring to ensure compliance. Furthermore, all rough diamond sales are independently audited, and are also subject to separate governmental regulations. Any country that is found not to be in compliance can be sanctioned by the Kimberley Process.

System of warranties

The World Diamond Council created a System of Warranties for diamonds that has been endorsed by all KPCS participants. Under this system, all buyers and sellers of both rough and polished diamonds must make the following affirmative statement on all invoices:

“The diamonds herein invoiced have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations resolutions. The seller hereby guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds.”

It is considered a violation of the KPCS to issue a warranty declaration on a sales invoice unless it can be corroborated by warranty invoices received for purchases. Each company trading in diamonds must also keep records of the warranty invoices received and the warranty invoices issued when buying or selling diamonds. This flow of warranties in and out must be audited and reconciled on an annual basis by the company’s auditors.

In addition, the diamond industry organizations and their members have adopted the following principles of self-regulation:

to trade only with companies that include warranty declarations on their invoices;
to not buy diamonds from suspect sources or unknown suppliers, or which originate in countries that have not implemented the Kimberley Process Certification Scheme;
to not buy diamonds from any sources that, after a legally binding due process system, have been found to have violated government regulations restricting the trade in conflict diamonds;
to not buy diamonds in or from any region that is subject to an advisory by a governmental authority indicating that conflict diamonds are emanating from or available for sale in such region, unless diamonds have been exported from such region in compliance with the Kimberley Process Certification Scheme;
to not knowingly buy or sell or assist others to buy or sell conflict diamonds;
to ensure that all company employees that buy or sell diamonds within the diamond trade are well informed regarding trade resolutions and government regulations restricting the trade in conflict diamonds.

Failure to abide by these principles exposes the member to expulsion from industry organizations.