World Diamond Council Developing Control System and Legislation to Stamp Out Conflict Diamonds

NEW YORK – The World Diamond Council is making significant progress toward developing a system of controls to eliminate conflict diamonds by tracking stones from extraction through processing and creating model legislation to enforce the procedures, Eli Izhakoff, chairman of the WDC, said today.

“The World Diamond Council is committed to ending all trafficking in conflict diamonds,” Izhakoff said. “Even though these stones make up only a tiny percentage of the world trade, producers, processors, retailers and all others involved in our industry are committed and moving swiftly to achieve their complete elimination. The industry is already working with the international community to put such measures in place.

“This is a global problem that requires a global solution. At this stage, unilateral action, such as the legislation currently under consideration by the U.S. Congress, will have a dramatic negative effect on democracy in Southern Africa, particularly in countries such as South Africa, Namibia and Botswana. We are fully in agreement with the goals expressed by the members of

Congress who have introduced these measures, but we advocate a worldwide system that will be founded on validation of diamond origin in the mining countries,” Izhakoff said.

On another front, the WDC is calling on all governments to join it in taking immediate action to stop the transshipment of rough diamonds through exporting countries whose stones are of suspicious origin. These nations include Liberia, Togo, Zimbabwe, Ivory Coast and Burkina Faso. “Members of the World Diamond Council have ceased doing business with these countries,” Izhakoff said. “All importing countries must do the same to shut down these operations immediately.”

Formed in Antwerp in July, the Council was created to develop and implement quickly a plan to curtail trade in conflict diamonds, which are traded by rebel forces in some parts of Africa to fuel violent civil conflict. One tenet of the plan is to minimize the impact on stable African democracies, such as South Africa, Botswana and Namibia, whose economies rely on legitimate diamond exports.

The Council held its organizational meeting in Tel Aviv on Sept. 7 and is moving forward on a number of fronts in close cooperation with governments, financial institutions, and international and civil society organizations, such as the United Nations and ministerial meetings that have taken place in recent months.

Izhakoff said that among the Council’s highest priorities is development of a uniform international system for sealing, authenticating and tracking rough diamonds as they leave their countries of origin and as they enter processing centers around the world. Work on this effort is well underway and the Council’s recommendations will be presented to a meeting of government ministers from around the world in London at the end of October.

Under the plan, participating countries that import rough diamonds would bar entry to any stones without proper seals and certificates of origin bearing the weight, valuation, and shipment number unique to each shipment. Customs authorities in countries importing processed diamonds, such as the United States, would then grant entry only to stones from countries with these controls in place.

“This system will ensure that diamonds shipped in this manner are conflict free,” Izhakoff said. “We will make it impossible for smugglers and other illegitimate traders to find a market for their stones in the industry.”

To establish the legal framework to carry out this plan, the World Diamond Council also is working on model legislation for participating countries. The measure, which it plans to have ready in 90 days, will be designed to ensure compliance with treaties and international agreements, such as WTO regulations. It also will establish criminal penalties for violations of its provisions.

Members of the World Diamond Council come from 13 countries on five continents and represent all facets of the industry. A list of members is attached.


NEW YORK – The World Diamond Council has retained a leading international trade law firm to prepare workable and effective model legislation to stop the trade in conflict diamonds, Eli Izhakoff, chairman of the WDC, announced today.

“This is a crucial element in our campaign to eliminate conflict diamonds entirely,” Izhakoff said. “This is a complex global challenge. To meet it effectively, we must have an international framework allowing all nations involved to coordinate their efforts. That includes countries in which diamonds are extracted, those in which stones are processed and major polished diamond importing countries, starting with the largest importer, the United States.”

The firm assigned to develop the model legislation, Akin, Gump, Strauss, Hauer & Feld, LLP, is expected to complete its draft in 90 days. “We will then urge the governments most concerned to consider the proposal on a priority basis,” Izhakoff said. “There is broad agreement among all interested parties – including our industry and non-governmental organizations concerned with the

issue – on the principles to be followed. Now we have to agree on strong, workable measures and get the job done quickly.”

Conflict diamonds are those that originate in areas under rebel control in troubled parts of Africa, such as Sierra Leone. Though these stones represent only a tiny percentage of the world supply, profits from their illicit sale have fueled violence and upheaval. Typically, contraband is funneled through neighboring countries with the connivance of corrupt officials, and then sneaked into normal channels.

Izhakoff said: “All sectors of our industry – producers, processors, distributors and retailers – are appalled by this practice. We are committed to ending it once and for all.”

In consultation with humanitarian organizations, government officials, and the United Nations, industry representatives last July created the World Diamond Council. The WDC has been working to choke off transshipment of suspect stones. But a permanent solution requires a comprehensive system that will track stones from their point of extraction to the major diamond processing centers. Violators will be subject to criminal prosecution.

With that system in place, importing countries such as the United States would be equipped to bar entry to any shipment of suspicious origin. The model legislation now being written will provide the legal basis for these controls. Akin, Gump, which is based in Washington, was chosen because of its expertise. Its co-founder, Robert Strauss, served as U.S. Trade Representative in the Carter Administration.

The two attorneys in charge of the WDC project, Warren Connelly and S. Bruce Wilson, have extensive experience in areas relevant to the conflict diamond issue. Connelly heads the firm’s international trade practice group. Wilson served as a negotiator in the U.S. Trade Representative’s office and as staff director of the Subcommittee on Trade of the House Ways & Means Committee.

An Effective Plan to Eliminate Conflict Diamonds

As the United Nations General Assembly debated a resolution concerning the tragic role of “conflict diamonds” in fueling turmoil in some parts of Africa, U.S. Ambassador Richard Holbrooke observed that the problem involved not just one region. Rather, he said, it is a global challenge demanding a global solution.

Just so. The fact that innocent civilians have been victimized in Sierra Leone, for instance, as outlaws profit from diamonds smuggled out of territory they control has received considerable attention. The encouraging news that a broad coalition is making rapid progress towards a global system to end this appalling practice is often overlooked.

On December 1, when Ambassador Holbrooke spoke, the General Assembly gave its unanimous blessing to a comprehensive, pragmatic plan that will lead to the necessary global solution. Adoption of the resolution introduced by South Africa – and co-sponsored by nine nations involved in different aspects of the diamond trade – was a genuine milestone in the campaign against conflict diamonds.

It demonstrated not merely a global commitment to cleanse the world’s gem inventory of the small percentage of polluted stones. The U.N. resolution also underscored the high degree of cooperation that has been achieved between the governments involved and all segments of the diamond industry. Finally, the methods sanctioned by the U.N. action showed appropriate concern for the interests of countries such as South Africa, Botswana and Namibia.

These three nations export most of the precious stones mined in Africa, and their produce is entirely legitimate. These societies are struggling to achieve decent living standards. It would be a terrible irony if the world community curbed the trade in conflict diamonds in ways that punished peaceful African societies, thereby increasing the risk of new instability.

Since last spring, leaders of the industry in which I have made my career and governmental representatives have worked on four continents to create the appropriate control system. Part of the challenge, in technical terms, are facts that often escape notice when simplistic remedies are advanced. One of them is that there is no scientific means to identify the original source of a diamond once it is cut and polished. Rough diamonds, particularly in small quantities, are difficult to identify as to source. And, obviously, it is impossible to judge when a stone was extracted, so that one could say that extraction and export occurred during war or peace.

These inconvenient realities mean that it is impossible for a consuming country such as the United States simply to ban conflict diamonds. Contraband will never come to the border wearing a name tag. It is also impossible to identify, in a credible way, the original source of every diamond. An effective solution, therefore, can be found only in a system that prevents the insinuation of illicit rough stones into the early phase of the supply chain.

That is exactly what we – the interested governments, the U.N. and the diamond industry – are doing. We have crafted a system employing tamper-proof containers, counterfeit-proof documentation and electronic record keeping to track shipments of stones from the time they are extracted through the processing phase. This system is now being tested on a small scale, using exports from government-controlled parts of Sierra Leone to processing centers in Antwerp, Belgium.

So the case of conflict diamonds is closed? Not quite yet. The U.N. resolution wisely noted “the need for diamond exporting, processing and importing States to act in concert.” That means that all countries exporting and importing diamonds need to adopt common nitty-gritty practices concerning documentation, customs procedures and the like. That is why the industry-created organization charged with implementing the system, the World Diamond Council, has commissioned the drafting of model legislation to govern these matters. It will include criminal sanctions for corrupt middle men who abet outlaws.

The model legislation will be finished around the first of the year. Later in January, a working group will meet in Namibia to address technical issues. Then it will be up to individual nations to fulfill the mandate laid down with great clarity by the United Nations.

Eli Izhakoff, is chairman of the World Diamond Council, which includes representatives of all segments of the industry, in the U.S. and abroad, as well as officials of some interested governments.



NEW YORK – The World Diamond Council today welcomed action by the U.N. General Assembly to eliminate conflict diamonds as a major milestone on the road to solving a serious humanitarian problem.

Eli Izhakoff, chairman of the WDC, said of the General Assembly decision: “This move, taken December 1 without dissent of a single member country, heartens us tremendously. It demonstrates the broad consensus to take comprehensive, effective action in a spirit of cooperation among all interested nations: those in which diamonds are mined, processed and sold. The agreement to move forward also underscores that a united front has been established between the nations and all segments of our industry.”

The resolution, introduced by South Africa and co-sponsored by several nations, including the United States, is far more than a statement of intent. Rather it endorses the kind of “certificate of origin regime” needed to track legitimate diamonds from the time they are extracted in rough form through processing and distribution stages.

Industry leaders, together with several African governments, have been working since last spring to perfect a system that employs tamper-proof containers, counterfeit-proof warranties and electronic record keeping to secure the integrity of

legitimate diamond shipments. With all the relevant countries observing the same practices and rules, it will be possible to cleanse the worldwide supply of the very small percentage of conflict diamonds.

These are stones smuggled out of rebel-controlled territory in Sierra Leone, Angola and the Democratic Republic of the Congo. Profits from this illicit traffic underwrite continued fighting, often with terrible consequences for innocent civilians.

“While all parties of goodwill can be proud of the progress made,” said Izhakoff, “we realize that there is more to be done.” The WDC has commissioned a major Washington-based law firm to draft model legislation for c2onsideration by all interested countries. That draft is expected to be completed around January 1. Meanwhile, representatives of involved countries will meet in Namibia later in January to consider several technical issues concerning implementation of the tracking system.

“This complex international problem that can be addressed only by coordinated international action,” said Izhakoff. “We will not rest until this is accomplished.”

Eli Izhakoff Letter to Esquire Magazine

Mr. David Granger, Editor-In-Chief

Dear Mr. Granger,

I am writing to respond to an article that appears in the January issue of your magazine entitled, “The Opportunist,” by John Richardson. As a member of the diamond industry for over 30 years, I feel your piece warrants a response for in no way is it a fair representation of the diamond industry at large. In my other role as Chairman of the World Diamond Council, I also felt it was important to clarify the truth about the exportation of Sierra Leone diamonds, and to further explain all of the positive initiatives the diamond industry has put into place since this article was compiled back in July.

The cavalier descriptions of diamonds leaving Sierra Leone in Richardson’s piece are misleading. Back in mid October, Sierra Leone instituted a diamond certification program whereby all diamond exports are accompanied by a certificate stating the diamond’s origin, thereby allowing the Sierra Leone government to monitor the sale of conflict diamonds. Though no system is perfect, this certification scheme has been recognized by the United Nations, and is certainly helping to dramatically curb the trade in diamonds being sold into the international market from areas of conflict.

On a global front, the World Diamond Council — a united group of diamond industry leaders formed with the specific purpose of ending the trafficking in conflict diamonds — has been working diligently since July towards developing a system of international controls to eliminate the trade in conflict diamonds. Although so-called conflict diamonds represent less than 4% of total worldwide diamond production (therefore even less if you separate out Sierra Leone), all of those involved in the diamond industry are wholly committed to achieve their complete elimination without damaging stable African democracies that rely on diamonds. As a matter of fact, we (the WDC) are currently drafting legislation that would require countries that import rough diamonds to bar entry to any stones without proper seals and certificates of origin unique to each shipment. The system we are proposing will make it impossible for illegitimate diamond traders to find a market for their stones in our industry.

In closing, Nick Karras, the diamond dealer portrayed in your piece, is not typical of the diamond industry I have described above. I hope I have made that point clear.

Thoughts From the President of GIA

Thoughts from the President

London Meeting of World Diamond Council Unveils Legislative Proposals

William E. Boyajian, President, Gemological Institute of America

In my last [GIA] Insider message, I briefed you on events surrounding a recent White House Conference which explored current scientific technologies that might be used to identify the country of origin of diamonds. This Conference confirmed what GIA’s technical experts have stated for some time: that no scientific means exists today to identify a diamond’s origin. Thus, we believe that a multilateral certification protocol to control the export and import of rough diamonds would be the most practical and effective method to prevent the potential flow of conflict diamond rough through the industry pipeline.

Last week, the World Diamond Council (WDC) met in London to further the process of forging an international coalition in the fight against conflict diamonds. Most importantly, the WDC unveiled proposed legislation to (1) ban the importation of conflict diamonds into the United States, and (2) create an international system to eliminate trade in conflict diamonds worldwide. Specific provisions of the proposed legislation are based on principles already approved by the United Nations and by interested parties in key countries where diamonds are mined, processed, or imported. An important goal is to avoid harming the economies of African countries that depend on diamond exports and that are already properly regulated. The proposed measure also envisions the negotiation of an international agreement under which all countries with significant involvement in the diamond trade would make specific commitments to prevent conflict diamonds from entering the supply chain.

At each stage of the process over these many months, I have been extremely impressed with the cooperation and coordination of industry leaders, human rights groups, and government officials. At the London meetings WDC members were unwavering in their determination to stem the flow of conflict diamonds that threaten the international integrity of our industry. The stakes have never been higher. And the commitment of all parties – including GIA – has never been greater.

Reprinted with permission from the Gemological Institute of America. Copyright 2000 GIA. This article was originally published in the GIA Insider, January 26, 2001, Vol 3, Issue 2. The GIA Insider can be found at

Chairman’s Letter to USA Today

USA TODAY – Copyright 2001 Gannett Company, Inc.

January 31, 2001

A USA TODAY article accurately described problems to be overcome in the international effort to halt the pernicious trade in “conflict diamonds” (“Dealing with rogue diamonds: Nations seek ways to identify legal stones,” Life, Thursday). Profits from this illicit practice finance violence and rebellion in some African countries. Many interested parties – including the diamond industry — oppose this criminal commerce.

I suggest USA TODAY’s readers also learn of the initiatives being taken by the diamond industry, information the articles failed to convey.

The World Diamond Council (WDC) was formed by the industry in mid-2000. In that short period, we have helped construct a pilot program to monitor exports of rough diamonds from Sierra Leone to Belgium. This “certificate of origin” program seeks to ensure that only rough diamonds extracted in government-controlled areas and properly recorded are exported.

In London, on Jan. 17, WDC members approved a more ambitious effort. We drafted model legislation, now being proposed to the U.S. Congress, that would have two effects. First, it would ban the importation of diamonds from countries that fail to subscribe to a workable monitoring program. Second, it would authorize the president to initiate negotiations with relevant countries — in which diamonds are extracted, processed or imported — to establish global-monitoring standards.

Since the United States imports about half the diamonds currently produced, the U.S. government has the opportunity and the obligation to lead in this effort. And while it is very unusual for any industry to seek government regulation, we believe eliminating the blight of conflict diamonds demands unusual action.

Eli Izhakoff, Chairman

The Trade In Conflict Diamonds Need Not Be Forever

An insidious sliver of the diamond trade that helps to finance violence in parts of Africa is the subject of mounting concern–and rightly so. A WomanNews story (“Price is too high for some gems, groups say,” Feb. 7) reflected that concern. Jewelry retailers, like other interested parties, are appalled that rebels use profits from smuggled “conflict diamonds” to buy the weapons used to terrorize fragile societies like Sierra Leone and Angola.

The global community, while starting slower than it might have, is now mobilized to squelch this practice. In this context, the community includes the countries in which diamonds are mined, processed and imported; international organizations starting with the United Nations; and all sectors of the diamond industry. Solid progress toward an effective international regulatory system is being made. With cooperation from the U.S. government, it can begin operating this year.

The question today is whether momentum can be maintained, or whether confusion about what needs to be done will impede the effort. Some well-meaning groups apparently believe that conducting street theater and promoting laws that cannot be enforced will produce better results than a program that addresses the problem’s core. Waving a placard in front of a jewelry store helps not a single victim of violence in Sierra Leone.

A few facts will help consumers understand what can work. It would be wonderful if we could identify the place of origin of each diamond in a showcase. But science does not yet provide that capability where cut and polished stones are concerned. It is also difficult to identify the origin of rough diamonds, particularly in small quantities.

American retailers typically import diamonds that have been cut in processing centers abroad. Starting in 1999, Tiffany instructed its suppliers overseas that we would not do business with anyone trafficking in conflict diamonds.

The most reputable supplier, however, could have tainted stones without knowing it. The fact is that conflict diamonds pollute the supply chain at an early stage–after they are extracted from the earth and before they are sent to processing centers, where shipments from different sources are mixed.

As the UN, individual governments and the industry focused on the problem, two realities became clear. First, no solution would work unless it had the cooperation of all the major actors in the public and private sectors. Second, an effective program would require strong measures to bar tainted rough diamonds from entering the early phase of the supply chain. Melding these essential elements will make it possible to tell during later stages of distribution where a stone did not originate. Then a consumer can be assured that he or she is not buying a conflict diamond.

Last year these realities guided forward-looking activities in a variety of forums. A coalition of African nations started what became known as the Kimberley Process, seeking cooperative measures to eliminate conflict diamonds.

Both the UN Security Council and the General Assembly took similar steps. And the diamond industry, meeting in Antwerp, Belgium, adopted a set of strong principles that would underpin an international regulatory system. To implement those principles, participants at the Antwerp conference created the World Diamond Council, in which Tiffany is playing a prominent role.

The regulatory system we envision focuses on a “certificate of origin” program in which exporting and importing nations cooperate. It aims at protecting the security of rough diamonds as they move from the point of extraction to processing centers. It includes the use of tamper-proof containers, counterfeit-proof documents accompanying each parcel and electronic databases in which each shipment’s number and carat weight is recorded.

Refusal to participate would be costly to any country involved in the diamond trade. It would be illegal to import diamonds into the U.S., for instance, from a country that fails to employ adequate regulations on rough diamonds.

As a pilot project, the system is now used to monitor diamonds obtained in government-controlled areas of Sierra Leone and sent to Belgium.

What must happen now is adoption of uniform standards by the many nations involved. To accelerate this process, the World Diamond Council commissioned the drafting of model legislation. Our proposed bill has two major provisions:

It would prohibit importation into the U.S. of diamonds from countries that fail to observe the certificate of origin rules and make violators subject to stiff penalties.

It would authorize the U.S. president to negotiate agreements with other nations to formalize the international standards.

Because the U.S. is the world’s largest importer of diamonds, firm action by Washington will greatly influence others. And because of its impact on the market, the U.S. has both the obligation and the opportunity to lead. In taking the unusual step of requesting government regulation, the diamond industry has shown its commitment to eliminating conflict diamonds. Now government must do its part.

Michael J. Kowalski is the president and CEO of Tiffany & Co. and a member of the World Diamond Council

Diamond Industry Committed to Eliminating Conflict Stones

The World Diamond Council (WDC), representing all segments of the diamond industry in the U.S. and abroad, today reaffirmed its commitment to eliminating the destructive trade in conflict diamonds and supporting legislation to do that. Matthew Runci, executive director of the WDC, said the organization is working to encourage prompt consideration by Congress of a draft bill, approved by industry representatives from 13 countries who met in London last month, that would create an enforceable solution to this problem.

Runci noted that the WDC fully shares the goal of legislation being prepared by Representatives Tony Hall, D-OH, Frank Wolf, R-VA, and Cynthia McKinney, D-GA. While Runci said he was still studying the bill, he noted that, judging by the measure sponsored by Rep. Hall last fall, this new proposal and the WDC measure coincide in some important respects. “We will study the details of the new bill to determine where the two proposals agree and where they differ,” Runci said. “The prospects of enacting effective legislation will improve greatly if the industry and other interested parties can unite in support of one sound bill. We have been striving to find common ground and will continue to do so.”

Runci said that to be effective, legislation must meet the following criteria:

*    It must create a “certificate of origin” regime that is consistent with the realities of the diamond production, processing and distribution systems.

*     It must adhere to principles already agreed to by the United Nations and the several interested governments that are determined to eliminate conflict diamonds. This international problem can be solved only with strong international cooperation.

*      It must not damage the interests of African countries such as Botswana, South Africa and Namibia, which depend heavily on diamond exports and which are not involved in illicit traffic.

“The industry is committed to stamping out conflict diamonds, and we will work with all interested parties to accomplish this goal,” Runci said.


Diamonds are dug from mines or culled from riverbed gravel in 20 countries. In Africa, significant producers – in descending order by quantity – are Botswana, South Africa, Angola, Namibia, Democratic Republic of Congo, and Sierra Leone.

The vast majority of rough diamonds extracted in Africa are monitored in legitimate fashion by government agencies. The trade contributes significantly to the private sector economies of these nations and is a source of needed tax revenue. This is particularly relevant in Botswana, South Africa and Namibia. As a new control mechanism takes hold in Sierra Leone, that society is also beginning to benefit from legitimate diamond exports.

However, some rough diamonds – a very small percentage of the total supply – originate in areas controlled by rebels and evade proper monitoring. These are the “conflict diamonds” that help finance violent activities of outlaws. They enter the legitimate supply chain in clandestine ways at an early stage – between the time of extraction and the point at which they are processed.

A $50 Billion-plus Market

The international market is large. After cutting, polishing, and being set as jewelry, gem-quality diamonds worldwide had a retail value last year of more than $50 billion. American consumers accounted for about half of that retail market.

There are two sources of gem-quality stones. “Primary” source diamonds are mined from hard rock (kimberlite), often found deep below the earth’s surface. Because of the effort required to extract them, “primary” stones are more easily counted, tracked, and controlled by authorities. “Secondary” source stones, found along river beds, have been thrust to the surface by geological events, loosened from kimberlite, and distributed over wide areas by river systems.

Laundering Is a Threat

These alluvial stones are often of the highest quality. They are commonly found in three of the countries that have seen violent competition for control of minerals: Sierra Leone, Angola, and Congo. Because obtaining them does not require expensive equipment or supervised work forces, alluvial

stones are more difficult to track. They can be smuggled into neighboring countries, their origin “laundered,” and exported with spurious documentation to mask their illicit status.

Regardless of the source, rough, uncut diamonds begin their transformation to jewelry when acquired by trading companies and sent to processing centers. The biggest of these are in Belgium, Israel, Thailand, the U.S., India, and South Africa. There the rough stones typically are refined and sorted according to their type and quality. During this stage, diamonds from several sources are mixed and prepared for distribution to wholesalers and retailers around the world.

Diamonds arriving in the U.S. typically come in shipments that have already been cut and mixed. Therefore, it is impossible to determine by any means – scientific or documentary – the place and time that a specific diamond was extracted. That fact explains why proposals to certify the origin of each individual diamond are unfeasible. In the foreseeable future, the only practical way to eliminate conflict diamonds from the legitimate supply chain is to impose a “certificate of origin” regime that takes effect soon after diamonds are extracted.

Regulatory System Being Tested

The World Diamond Council has cooperated with several African countries, Belgian authorities, and United Nations officials in devising such a system. It requires that authorities in the producing countries closely monitor legitimate output. Rough diamonds are to be sealed in tamper-proof containers, with each parcel assigned a counterfeit-proof document and a unique registration number. The carat weight of each shipment is recorded, and each shipment is registered in an electronic database.

The several countries that are host to processing centers would admit only sealed parcels with appropriate documentation. Processing enterprises would be bound to observe the same rules. Consuming countries, in turn, would accept imports only from countries that have met the certificate-of-origin standards. Shipments from countries that decline to cooperate with the system would be denied entry.

This is the system now being tested on a pilot basis for exports of rough diamonds extracted in government-controlled areas of Sierra Leone to Belgium. It is also the system envisioned in the Conflict Diamonds Act of 2001 being offered by the World Diamond Council.