DIAMOND

CONFLICT
IR FAN ABBAN

1 5 11 6
IN ST IT U T E O F BU SIN ESS M AN AG EM ENT

Introduction
First used and mined 2500
years ago
Was a symbol of wealth
and nobility
Originally a rare
engagement present

Mary of Burgundy - first known

recipient of a diamond
engagement ring in 1477.

Introduction
Diamonds symbolize
wealth, love, and grace

around the world

In several African nations they have been a means to
power
a reason to terrorize millions of innocent civilians

Introduction
Conflict diamonds are diamonds illegally traded to fund conflict in war-torn areas, particularly in
central and western Africa.
The United Nations (UN) defines conflict diamonds as "diamonds that originate from areas
controlled by forces or factions opposed to legitimate and internationally recognized
governments, and are used to fund military action in opposition to those government

Source : DIAMONDFACTS.ORG

Background
Captured attention for the first time due to brutal conflicts in different region of Africa
Angola, Ivory Cost and Sierra Leone are the few notable countries in Africa facing conflict
diamond issue
Two main resources available Oil and Diamond

Source : DIAMONDFACTS.ORG

Background

Blood Diamonds
Africans who oppose
the rebel groups are
often slaughtered.
Those who most
need protection are
often those who are
most often abused
under this immoral
trade.

Blood Diamonds
Why the diamond is such an easily traded commodity?

Large Amount of
Wealth in Small Size

Form of Currency

History
Angola became an independent country in November 1975
After independence civil war started in Angola, Ivory coast, Sierra Leone and other African
countries

Source : http://www.brilliantearth.com/Blood-Diamonds-Fact-Sheet-2010/

History
Two major civil war activist parties in Angola
1.

MPLA

2.

UNITA

3.

RUF in Sierra Leone

Elections were held in 1992 with major vote for MPLA, however UNITA refused to accept the
result and civil war continued

Source : http://www.globalwitness.org/library/rough-trade

Map
Total

1,246,700 km (23rd)
481,354 sq mi

rd

World 23 largest country area

wise (Source : Wikipedia)

History
Roughly more than 150,000 people were killed by Unita in civil war in 1991
But instead of going to pay for reconstruction efforts after 23 years of civil war, the oil
revenues are being used by the MPLA government to fuel its side of the conflict with the rebel
Unita movement. BBC News, Online Network 4th November 1983

Conflict
Leading companies should accept that the rationales used to justify the buying of outside
goods (unofficial diamonds) in countries such as Angola and Sierra Leone must be weighed in
the balance with the possible and severe implications that such a purchase can have, including
the destruction wreaked by conflict, the suffering of millions of people, the deaths of hundreds
of thousands, the billions of dollars of lost development and the high cost of conflict resolution.

Source : A Rough Trade (Global Witness)

Conflict
Since 1992, UNITA have consistently controlled 60-70% of Angolas diamond production,
generating US$ 3.7 billion in revenue, enabling them to maintain their war effort.

Source : A Rough Trade (Global Witness)

Conflict
The countrys revenues are meant for resolving the countrys problems, said Fernando Dos
Santos,Angolas Internal Security Cheif. It would be ideal to spend them in the social sector.
But what use are social projects when Unita are blowing up power lines and bridges. Quoted
from BBC News Online 4th November 1983

De Beers, the Central Selling

Organization and the Diamond
Industry
Responsible for valuing and selling 80% of world diamond
Heavy involvement in buying Angolian diamonds
De Beers have stated to Global Witness that ...if you are sitting in Tel Aviv or Moscow or New York whatever the
potential for positive identification you have not a clue where they came from. Just to be clear if he [diamond seller]
says they are Scottish diamonds [there are no mines in Scotland], you take his word for it......they could be diamonds
from the moon.

Source : A Rough Trade (Global Witness)

Major Sales Market

Mostly sold in open diamond market of Antwerp and other Belgian countries
Belgium is largest diamond market in world

Source : A Rough Trade (Global Witness)

Sales Revenue
In 1995 Angolas total diamond output raised about US$700 m, according to industry sources,
of which only US$147m was accounted for by legal sales by minor producers and the
parastatal company Endiama, most of the rest was mined by UNITA and smuggled out
unofficially. ECONOMIST INTELLIGENCE UNIT (EIU) COUNTRY REPORT, 4TH

QUARTER 1996

CSO Sales Figure

The CSOs sales of rough diamonds for the last ten years are shown below
1987 US$3,075 million
1988 US$4,172 million
1989 US$4,086 million
1990 US$4,167 million
1991 US$3,927 million
1992 US$3,417 million
1993 US$4,366 million
1994 US$4,250 million
1995 US$4,351 million
1996 US$4,834 million
1997 US$4,640 million
Source : A Rough Trade (Global Witness)

Involvement of UN Security Council

The UN Security Council passed Resolution 1173 and 1176, which prohibit the direct, or indirect
export of unofficial Angolan diamonds those defined as not accompanied by a Certificate of
Origin (CO) issued by the Government of Unity and National Reconciliation (GURN) in Luanda.

Source : A Rough Trade (Global Witness)

Reasons for Failure to control

Number of middlemen involved in trade making the process opaque
Lack of transparency and accountability

Difficult to identify the area of origin

Reasons for Failure to control

There are further problems caused by the Angolan governments failure to operate a rigorous
system of controls because:
The Angolan Certificates of Origin (COs) do not include a printed name nor title under the
signature;
The COs are signed by a number of different people who cannot be readily identified;
The Angolan government has not responded to requests from the Belgian Government for a list
of approved signatories to the COs;
The Angolan government has not defined what constitutes an official stamp, and COs have
different types of
stamps;

The name of the exporting company is on the CO but not on the Import License which allows for
confusion over who is actually receiving the goods
Source : A Rough Trade (Global Witness)

Conclusion (1999)
Angola, as a mineral rich country, is a very valuable prize for its own leading political (and
warring) factions, numerous multinational corporations and the governments of their home
countries. Clearly, the welfare of the Angolan people has taken second place in the concerns of
all these players who are prepared to tolerate or ignore the ravages of corruption and a resource
funded war in order to obtain a share of Angolas wealth.

Source : A Rough Trade (Global Witness)

Current Condition
2002, after death of UNITA leader Jonas Savimbi in fight with government forces, democracy
has been introduced and rebuilding of infrastructure has started
( Source : http://www.bbc.com/news/world-africa-13036732)

Kimberly Process Certification

In 2003, UN devised KPCS to control blood diamond flow into international markets
Requirements

Each shipment of rough diamonds crossing an international border should be:

Transported in a tamper-resistant container
Accompanied by a government-validated Kimberley Process Certificate
Each certificate must be resistant to forgery, uniquely numbered and describe the shipment's
contents
The shipments are only supposed to be exported to other KPCS participant countries
Source : http://en.wikipedia.org/wiki/Kimberley_Process_Certification_Scheme

Current condition
However, still large quantities of blood diamond are still being exported from African countries
Liberia, Democratic Republic of Congo (DRC), and Sierra Leone sold "blood diamonds" to fund
their wars. In those three countries alone, an estimated 3.7 million people died in conflicts
fuelled by the clear and colorless crystalline form of pure carbon,
Source : Amnesty International report (2007)
UN and African government have not been able to eradicate blood diamond conflict till today,
KPCS is under extreme pressure and a foolproof system needs to be established for verification
of origin of diamond