Johannesburg - A black market in diamonds continued despite the existence of a certification programme that intended to stamp out a trade that fuelled civil wars, the head of diamond giant De Beers said on Thursday.
In a tough speech at the World Diamond Congress in Tel Aviv, De Beers chairman Nicky Oppenheimer said that some diamond traders were still buying uncertified rough diamonds in west Africa and many jewellery stores were not tracing the source of the gems.
Trade in these precious stones helped finance civil wars in Sierra Leone, Liberia and elsewhere, giving rise to the terms blood diamonds or conflict diamonds.
"We as an industry are failing to live up to our commitments. That is unacceptable," said Oppenheimer.
He said the Kimberley Process, launched in 2000 to certify rough diamonds, had been largely successful. However, he added that a review by the UN and the US government later this year would highlight shortcomings.
"These include some failure of intergovernmental systems, discrepancies in official import-export statistics and the illegal shipment of rough diamonds from non-participant countries," he said.
While these were mostly issues for governments, the diamond-cutting and retail sectors had also largely failed to trace the origins of diamonds, he said.
Under the Kimberley Process, participating governments provide certificates for exports of rough diamonds to show they were mined from legitimate operations.
Oppenheimer cited a non-governmental organisation (NGO) survey that showed that many shops in the US and Britain were not following a voluntary warranty system.
"Their survey showed an abysmal ignorance of the system of warranties by jewellers' store personnel and an appalling low level of compliance by many of the companies themselves," he said.
"Research carried out by the DTC demonstrated that the findings of the NGOs were very largely correct."
De Beers's marketing arm, the DTC, accounts for sales of around half of the world's diamonds. The Oppenheimer family owns 40 percent of De Beers, mining group Anglo American 45 percent and the government of Botswana 15 percent.
Oppenheimer warned of severe penalties for any DTC client caught buying uncertified diamonds, especially from troubled African nations such as Liberia and the Ivory Coast, which remain under UN sanctions.
"How can any decent members of the diamond industry allow themselves to gain from the misery of others, or turn a blind eye and pretend that they are unaware?" he asked.
The issue of conflict diamonds was likely to be highlighted in coming months by the high-profile war crimes trial of ex-Liberian president Charles Taylor and the Blood Diamond movie starring Leonardo DiCaprio, Oppenheimer added. - Reuters