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Magazine > Industry News > News Content
GAO report: Conflict diamonds still entering U.S.
 
Author: Washington, D.C       9/30/2006 3:29:04 AM
A newly released report from the Government Accountability Office (GAO) charges that more must be done to stop "conflict diamonds" from entering the United States.

While noting that the legitimate trade of rough diamonds can make a major contribution to economies of producing, exporting and importing countries, the report, released Wednesday, states that rough diamonds fueled severe conflicts in countries such as Liberia, Sierra Leone, the Democratic Republic of Congo and Angola during the 1990s and remain a cause for concern.

"Although many of these conflicts have now ended and the international community has taken steps to gain control of the rough diamond trade, the United Nations (UN) and other sources report that illicit trading of rough diamonds still exists and could potentially finance civil conflicts as well as criminal and terrorist activities," the GAO report states.

Despite the implementation of the Kimberley Process (KP) and the 2003 Clean Diamond Trade Act (CDTA), the law designed to implement it, kinks remain in the system, the report says.

"Domestically, the U.S. systems for reporting rough diamond statistics and for controlling imports and exports of these diamonds are vulnerable to illicit trade," the GAO report says.

The report claims that the United States still does not periodically inspect rough diamond imports or exports to ensure that contents of parcels match the Kimberley Process (KP) certificates. Additionally, the GAO report contends that the United States lacks an effective system for confirming receipt of imports, which is required by the KP in order to avoid possible diversions of rough diamond imports. Finally, the report says, the United States doesn't have a plan in place to monitor the U.S. Kimberley Process Authority (USKPA), though it is developing and testing one.

The report was conducted in order to examine the implementation of the CDTA, which was established to provide a framework for the U.S. implementation of the KP. The report also examined how the U.S. has helped strengthen the Kimberley Process Certification Scheme.

The report made recommendations such as improvements to the accuracy of U.S. rough diamond trade data, periodic physical inspections, and oversight of the activities of the USKPA.

"To succeed, KPCS depends on all participants having strong control systems and procedures for collecting and sharing trade data on rough diamonds, for inspecting imports and exports of these diamonds, and for tracking confirmations of import and export receipts," the report concludes.

Non-governmental organizations Global Witness and Partnership Africa Canada issued a joint press release in response to the GAO's report, calling on the U.S. government to take swift action on the recommendations.

"This report shows that the U.S. government has inadequately enforced the Clean Diamond Trade Act, undermining global efforts to keep conflict diamonds out of the legitimate diamond trade," Corinna Gilfillan of Global Witness said in the release . "This is alarming given that proceeds from the diamond trade have been used by warlords and rebel groups in Africa to finance devastating wars, while terrorists and organized crime groups have used diamonds for money-laundering and other illicit purposes."

Despite an embargo on diamonds from the Ivory Coast, investigations by Global Witness and the U.N. contend that conflict diamonds are being smuggled out of the country and into the legitimate trade.

"Given that the U.S. is the world's largest consumer of diamond jewelry, the U.S. government must take a leadership role by making sure that its own laws are robust in keeping out conflict diamonds, supporting the Kimberley Process and protecting the legitimate diamond trade," said Ian Smillie, of Partnership Africa Canada.

The World Diamond Council (WDC), which has been heading up industry efforts to promote the positive impact of diamonds and educate the industry on steps taken to curb conflict diamonds, was expected to issue a response to the GAO report. The statement was not yet available at press time.

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