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Diamond trade polishes image

Dec 11 2006 17:59

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San Francisco - Diamonds may be forever, but are they also forever tainted by bloodshed?

Four years after the diamond industry thought it had closed one of its darkest chapters, jewellers and mining giants are bracing for a crop of new films that will retell the tragic and violent story of how diamonds - commandeered by warring militias and smuggled to the West - were used to finance the guerilla warfare that tore apart Sierra Leone from 1992 to 2002.

And it's all happening at the height of the holiday shopping season.

The media glare starts with the action movie "Blood Diamond," released by Time Warner Inc's Warner Bros Pictures and starring Leonardo DiCaprio. Then come films from the History Channel (called "Blood Diamonds"), then a hip-hop documentary on Viacom Inc's VH1 channel. A British film studio is also planning to release a documentary, "Blood on the Stone".

A bloody trail

They'll all shine a spotlight on how the diamond trade helped fund wars that are known for their bands of abducted child soldiers, a trail of victims mutilated by machetes, and outside backing by Charles Taylor, the former president of neighbouring Liberia now awaiting trial for war crimes.

Not surprisingly, the celluloid onslaught about so-called conflict diamonds has left the $8.3bn gem industry polishing its image.

"We view this as an opportunity to continue to educate people about the Kimberley Process and the industry's participation," said Cecilia Gardner, the World Diamond Council's general counsel. She declined to discuss how much the group is spending on marketing over the issue except to say that it has dedicated a "substantial effort".

"We are concerned that the entire story is told," including the point that "the number of conflict diamonds have been reduced to next to nothing", Gardner said.

Self-regulation

One upcoming film even claims to have new footage on how the illicit diamond trade continues despite the Kimberley Process, the industry's self-regulatory system put in place in 2003 that aims to prevent ill-gotten diamonds from entering the roughly $62bn world retail market.

None of the movie producers are calling for a boycott of diamonds, the legitimate trade of which they acknowledge is crucial to the health of several war-torn African economies.

But growing attention to conflict diamonds' role in wars has all the makings of Hollywood's latest cause, from a request from "Blood Diamond" movie director Edward Zwick to "keep the blood off your hands", to issue-oriented fashion accessories worn by DiCaprio and others.

Any link between diamonds bought as a token of love and those that are sold for guns holds an unwanted risk for the diamond industry: That would-be buyers, under a barrage of ugly images about the diamond trade, will turn away from the jewellery counter altogether.

Get the message

The DiCaprio movie "will make conflict diamonds much more of a mainstream issue and a topic for public debate, and therein lies the threat to the industry," said Alex Gorbansky, a managing director at Cambridge, Massachusetts-based Frontier Strategy Group and a consultant to natural resources firms on risk issues.

He said there could be a short-term impact on diamond sales from the movie, as buyers raise questions and perhaps put off purchases.

"Whatever the intent is of the movie makers, the public will get its own message," Gorbansky said.

Indeed, Paul Lejuez, a Credit Suisse analyst, has pointed out the movie represents an "incremental risk" to holiday sales at stores such as high-end retailer Tiffany & Co.

Damage control

The diamond industry has taken notice.

Back in June, De Beers Group chairperson Nicky Oppenheimer reminded his fellow diamond business leaders that "we cannot be complacent or allow conflict-diamond fatigue to gain hold". "Blood Diamond" and other media attention "will focus once again on what we are all doing or, more importantly, not doing," he said, according to a transcript of remarks he made in Tel Aviv.

De Beers, which controls about 40% of the world's supply of rough diamonds, is 45% owned by Anglo American.

Ahead of the film run, the diamond industry turned up the volume on its own information campaign, which trumpets progress made by the Kimberley Process. It's done this under the umbrella of the World Diamond Council, an industry group formed in 2000 in response to public outrage about Africa's diamond-fueled wars.

The council's member list is a who's-who of industry giants from miners Rio Tinto and BHP Billiton, to distributor and polisher the Leviev Group, to retailers like Tiffany, Cartier and Zales Corp.

The World Diamond Council has been working with Sitrick & Co, a Hollywood crisis-communications specialist, to handle the expected wave of movie-triggered media interest.

A few months ago, they launched a new website called diamondfacts.org. And in September the group took out full-page newspaper ads to draw attention to their site.

In its defense, the group says its members' actions over the past four years have shut down traffic in all but less than 1% of these conflict diamonds. That's down from as much as 15% of all diamonds sold in the mid-1990s, according to some sources.

The group has also purchased advertising on the search engines of Yahoo Inc and Google Inc, a World Diamond Council spokesperson said. When a web surfer enters the term 'blood diamonds' on Google's site, for instance, a banner ad for diamondfacts.org may appear.

Oversight

That there are any conflict diamonds at all, however, has prompted a campaign by Amnesty International and London-based pressure group Global Witness for a beefed-up Kimberley Process - perhaps with a third arm that oversees the industry itself.

The Kimberley Process "has enormous loopholes," said Larry Cox, executive director of Amnesty International USA. The human-rights campaigner collaborated with the creators of "Blood Diamond", whose homepage links to Amnesty and two other non-profit political action groups.

"The system doesn't mean anything if no one's auditing it," Cox said.

The group says over $23m worth of diamonds a year are still being smuggled into the US and international markets from West Africa.

That's the upper estimate of a United Nations report that in October detailed how much Côte d'Ivoire diamond mine production is being smuggled through Ghana. In response, the Ghana's government in November agreed that it would not export any diamonds without outside oversight.

A Kimberley Process review mission will visit the country in February to determine whether Ghana has tightened its export controls.

These are the kinds of measures, steeped in memoranda and garnering little attention outside the plenary conference room, that some participants in the Kimberley Process say prove the system is working.

Resurgence

That's not the message movie watchers will likely get. At least two of the films warn that the Kimberley Process isn't strong enough, and as it stands now, allows smuggling that could lead to a resurgence of diamond-backed violence seen in Sierra Leone, Angola and the Democratic Republic of the Congo.

"The diamond industry's participation is not open to outside review, and government controls have been unreliable," read the end-notes for "Blood Diamond". "So it is the consumer who must insist that a diamond has not come from a conflict zone."

Then there's the British documentary "Blood on the Stone," which features Sorious Samura, the Sierra Leonese journalist who filmed the height of his country's violence.

The film is a record present-day instances of smuggling and selling illicit diamonds, says Ron McCullagh, a managing editor at London-based Insight News Television Ltd, which has produced the film.

The diamond industry, for its part, is quick to say it welcomes a stronger Kimberley Process. But it questions what those changes would actually entail.

"Right now, [the process] is closely monitored by governments," said the World Diamond Council's Gardner. "We're open to suggestions, but I've yet to be convinced that there's anything stronger than civil fines and jail fines.

What everyone seems to agree upon is that an out-and-out boycott of diamonds is a bad idea - especially those from former battlegrounds like Sierra Leone.

Just under two-thirds of the world's rough diamonds are produced in African countries.

The intent "is definitely not to boycott diamonds," said Raquel Cepeda, director of the upcoming VH1 documentary, "Bling! A Planet Rock".

Rather, she said she hopes that "if young people who wear diamonds" become aware of the issue, they might start asking where the diamond comes from, "and the diamond industry will start changing".

Trust

For diamond sellers, assuring prospective buyers that a gemstone has a clean origin is an important goal.

"As long as consumers are able to be assured of the provenance of the diamonds ... when that happens, we don't think it will impact sales," Rosalind Kainyah, a spokesperson for De Beers Group, the holding company for De Beers' mining and distribution arm.

Tiffany & Co's stores keep documents about how the retailer avoids conflict diamonds, such as buying rough diamonds only from known cutters.

"We are hoping that people will still ask questions and that they will be comfortable buying diamonds at Tiffany when they see all the steps Tiffany has taken," said spokesperson Linda Buckley.

But at the end of the day, the customer has to impart a little bit of trust - in the long paper trail of invoices that lead from mine to storefront. These start when rough diamonds move from the mines into the export market via a numbered, sealed container that the miner's government verifies comes from a reputable source.

 
 
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