THE world’s largest diamond trader will join human rights organisations today in calling for a government crackdown on trade in “conflict” diamonds after reports of widespread fraud and systematic smuggling of gems from war-torn countries in Africa.

De Beers is joining pressure groups in seeking government action to rescue the Kimberley Process, a certification scheme set up three years ago to cleanse the industry of so-called “blood diamonds” — gems traded for the benefit of rebel groups, criminal gangs and money-launderers.

Delegates at the Kimberley Process review, which begins today in Gaberone, Botswana, will be given warning that massive fraud, smuggling and bureaucratic inertia are threatening the landmark initiative, which was launched in 2003 to worldwide acclaim.

Alarm bells have been ringing at De Beers in response to reports of smuggling in conflict diamonds from Ivory Coast, the West African nation in the grip of a civil war, and the company wants governments to commit to a clampdown on lax import and export controls.

Action at this week’s Kimberley review is critical if the diamond industry is to demonstrate its legitimacy and deliver a credible response to Blood Diamond, a Hollywood film starring Leonardo DiCaprio that has its debut next month. The film, which is based on diamond-smuggling from Sierra Leone during its bloody civil conflict in the late 1990s, will be shown in the wake of new evidence that diamonds of dubious provenance are leaking into the world market again and finding their way into high street jewellers. A public relations disaster for the diamond industry is brewing as it gears up for Christmas sales.

Nicky Oppenheimer, the chairman of De Beers, is urging governments to conduct proper oversight of the trade in gems, but it was not only governments that must act. “The international diamond industry has a primary responsibility to ensure that not even one diamond of suspect origin enters the legitimate supply chain. There must be zero tolerance of conflict diamonds,” he said.

Investigations by Partnership Africa Canada (PAC) and Global Witness found massive fraud in Brazil and Guyana and extensive smuggling of diamonds from Venezuela.

A United Nations report revealed wholesale laundering of conflict diamonds from Ivory Coast. PAC conducted several investigations in Brazil and Guyana and found evidence of massive certification fraud, which drew no response from Kimberley.

In its damning report Killing Kimberley, PAC concluded: “The Kimberley Process behaved like a disinterested bystander, its response tepid, late or non-existent.” An internal review of the process carried out this year ignored the growing problems, PAC says.

More worryingly, the organisation suggests that governments have actively opposed efforts to tighten up controls. “Government members of the review committee vetoed almost every recommendation that might have tightened or professionalised the system. A draft report was watered down, sanitised and parts were even censored,” PAC says.

Kimberley’s critics are calling for strengthened controls of certification, a permanent peer review system, more transparent diamond statistics subject to exteral audit and better funding of the process.

PAC points the finger at Western governments for their unwillingness to support the burden of better regulation. The United States, Israel and the European Commission refuse to support measures that could result in an appeal for funds. “It might be asked of those participants what it is worth to protect a $60 billion [£31.6 billion] industry . . . the answer, it appears, is zero,” it says.

VENEZUELAN FAILURE

Venezuela should be expelled from the Kimberley Process for its failure to regulate its diamond production and trade, Partnership Africa Canada (PAC) says. Venezuela annually produces about 150,000 carats of diamonds in Bolivar state, south of the Orinoco River, an industry carried out by small prospectors — mineros — but officially has exported none since January last year.

Despite being a member of the Kimberley Process, not a single export certificate has been issued in well over a year. PAC says that it has found direct evidence of diamond-smuggling from Venezuela to Georgetown in Guyana, via Brazil.

Efforts by President Chávez’s Government to control illegal mining have been brutal, PAC’s report says, involving an attack in September by helicopters on a remote mining site, which left six miners dead. PAC believes that further intimidation by the army will scare off law-abiding businesses and radicalise operators working outside the law.

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