Kimberley Process Undermined By Allowing Zimbabwe Diamonds, Rapaport Says

The Kimberley Process, which aims to curb the sale of diamonds used to fund wars, is being undermined by gems from Zimbabwe, accused by human rights groups of committing abuses against its residents, Martin Rapaport, chairman of Rapaport Group.

The Kimberley Process has recently certified more than $200 million worth of diamonds from Zimbabwe’s Marange fields, opening up a “Pandora’s box of complex ethical, legal and financial issues” for the industry, Rapaport, which runs a diamond-pricing service, said in a report on its website today.

Zimbabwe, the world’s seventh-largest diamond producer in 2010, will probably earn about $334 million from the export of the gems this year, according to state-owned Zimbabwe Mining and Development Corp., the main producer in the country. Human Rights Watch, based in New York, said in a 2009 report that diggers at the Marange field were killed and tortured by security forces.

“The diamond trade can no longer get away with telling consumers and each other that having a Kimberley Process certificate ensures that diamonds are legitimate,” Rapaport said. “Even a child can see the KP’s emperor has no clothes.”

The Kimberley Process, which is currently based in Kinshasa, the capital of Democratic Republic of Congo, didn’t answer calls to their offices today. The organization consists of government and industry representatives from 75 nations.

Stockpile

Zimbabwe was given permission by the Kimberley Process to hold its first monitored sale of a $1.7 billion stockpile of gems a year ago. The KP has said it won’t allow unmonitored sales of Marange diamonds and asked Zimbabwe to tighten controls on smuggling in the area. Marange is located in eastern Zimbabwe, near the border with Mozambique.

Diamond buyers should establish their own ethical certification scheme to ensure gem entering the U.S. are conflict-free. Sanctions on Zimbabwe Mining and Development Corp. make it illegal to trade in stones mined by that company.

The ZMDC mines in two joint-ventures in Marange with closely held Mbada Mining (Private) Ltd. and Canadile Mines (Private) Ltd. Under U.S. law it’s illegal to do business with several Zimbabwean companies linked to President Robert Mugabe’s Zimbabwe African National Union-Patriotic Front party.

To contact the reporter on this story: Brian Latham in Johannesburg at blatham@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net.

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