Kimberley Process Certification Scheme
The Kimberley Process Certification Scheme (KPCS) is the process established in 2003 to prevent "conflict diamonds" from entering the mainstream rough diamond market by United Nations General Assembly Resolution 55/56 following recommendations in the Fowler Report. The process was set up "to ensure that diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments."
The effectiveness of the process has been brought into question by organizations such as Global Witness, which pulled out of the scheme on 5 December 2011, claiming it has failed in its purpose and does not provide markets with assurance that the diamonds are not conflict diamonds.
- 1 History
- 2 Compliance
- 3 Working procedure
- 4 Current membership
- 5 Chairs
- 6 Statistics
- 7 Peer review
- 8 Expulsion
- 9 Global Witness
- 10 Criticism
- 11 Progressive Global Moves To End Diamond Fraud
- 12 See also
- 13 References
- 14 External links
The United Nations imposed sanctions against UNITA in 1998 through United Nations Security Council Resolution 1173, however investigators led by Robert Fowler presented the Fowler Report to the UN in March 2000, which detailed how the movement was able to continue financing its war efforts through the sale of diamonds on the international market. The UN wished to clamp down on this sanctions-breaking trade, but had limited powers of enforcement; the Fowler report therefore set out to name the countries, companies, government and individuals involved. This led to a meeting of Southern African diamond-producing states in Kimberley, Northern Cape in May 2000. A culminating ministerial meeting followed during September in Pretoria, from which the KPCS originated.
In December 2000, the United Nations General Assembly adopted Resolution A/RES/55/56, supporting the creation of an international certification scheme for rough diamonds, and this was followed by support from the United Nations Security Council in its Resolution 1459 passed in January 2003. Every year since, the General Assembly has renewed its support for the KP - most recently in December 2009.
In order for a country to be a participant, it must ensure that any diamond originating from the country does not finance a rebel group or other entity seeking to overthrow a UN-recognized government, that every diamond export be accompanied by a Kimberley Process certificate and that no diamond is imported from, or exported to, a non-member of the scheme. This three-step plan is a simple description of the steps taken to ensure a chain of countries that deal exclusively with non-conflict diamonds. By restricting diamond revenues to government-approved sources, the Kimberley Process is neutral towards different governments.
- 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.
Failure to comply with these procedures may lead to the removal of the non-complying member country. If any concerns arise regarding a country's adherence to the scheme, they must be investigated and dealt with by the World Trade Organization.
System of warranties
The World Diamond Council created a System of Warranties for diamonds that has been endorsed by all KPCS participants. Under this system, all buyers and sellers of both rough and polished diamonds must make the following affirmative statement on all invoices:
- “The diamonds herein invoiced have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations resolutions. The seller hereby guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds.”
It is considered a violation of the KPCS to issue a warranty declaration on a sales invoice unless it can be corroborated by warranty invoices received for purchases. Each company trading in diamonds must also keep records of the warranty invoices received and the warranty invoices issued when buying or selling diamonds. This flow of warranties in and out must be audited and reconciled on an annual basis by the company’s auditors.
In addition, the diamond industry organizations and their members have adopted the following principles of self-regulation:
- to trade only with companies that include warranty declarations on their invoices;
- to not buy diamonds from suspect sources or unknown suppliers, or which originate in countries that have not implemented the Kimberley Process Certification Scheme;
- to not buy diamonds from any sources that, after a legally binding due process system, have been found to have violated government regulations restricting the trade in conflict diamonds;
- to not buy diamonds in or from any region that is subject to an advisory by a governmental authority indicating that conflict diamonds are emanating from or available for sale in such region, unless diamonds have been exported from such region in compliance with the Kimberley Process Certification Scheme;
- to not knowingly buy or sell or assist others to buy or sell conflict diamonds;
- to ensure that all company employees that buy or sell diamonds within the diamond trade are well informed regarding trade resolutions and government regulations restricting the trade in conflict diamonds.
Failure to abide by these principles exposes the member to expulsion from industry organizations.
The working procedure of the KPCS is done by the Chair, elected on an annual basis at a plenary meeting. A Working Group on Monitoring, monitors each participant to ensure that it is implementing the scheme correctly. The Working Group reports to the Chair. Other working groups include the Technical Working Group (or Working Group of Diamond Experts) which reports on difficulties in implementation and proposed solutions, and the Statistics Working Group, which reports diamond trading data. The Participation Committee reports to the Chair on its recommendations on proposed members hoping to join the KPCS. The Selection Committee reports on its recommendations on who should be the next Vice-Chair. After a year of being Vice-Chair, the successful candidate becomes the Chair.
While the Process has been broadly welcomed by groups aiming to improve human rights in countries previously affected by conflict diamonds, such as Angola, some say it does not go far enough. For instance, Amnesty International says "[We] welcome the Kimberley Process as an important step to dealing with the problem of conflict diamonds. But until the diamond trade is subject to mandatory, impartial monitoring, there is still no effective guarantee that all conflict diamonds will be identified and removed from the market." Canadian aid group One Sky (funded in part by the Canadian government) concurs with Amnesty's view saying "If effectively implemented, the Kimberley Process will ensure that diamonds cannot be used to finance war and atrocities... However, without a system of expert, independent and periodic reviews of all countries, the overall process remains open to abuse." The German group Medico International started together with other European NGOs the campaign Fatal Transactions on the financing of African conflicts through diamonds.
Another form of criticism by the African Diamond Council (ADC) is whether the Kimberley process is realistically enforceable. There are many factors that can jeopardize the "Officialdom of certificates and paperwork" from lack of enforcement on the ground to the secrecy in the diamond trading centers such as Antwerp.
KPCS has established a number of working groups for carrying out its programs. These are: Working Group of Diamond Experts (WGDE), Working Group on Monitoring (WGM), Working Group on Statistics (WGS), Working Group on Artisanal & Alluvial Production (WGAAP).
As of 1 July 2013, there were 54 participants in the KPCS representing 81 countries, with the European Union counting as a single participant. The participants include all major rough diamond producing, exporting and importing countries. Most recently, Cameroon was admitted as a participant in August 2012 with Kazakhstan, Panama, and Cambodia admitted in November 2012. The following is a list of participant countries with their year of entry (and re-entry, as appropriate) in brackets.
- Angola (2003)
- Armenia (2003)
- Australia (2003)
- Bangladesh (2006)
- Belarus (2003)
- Botswana (2003)
- Brazil (2003)
- Cambodia (2012)
- Cameroon (2012)
- Canada (2003)
- Central African Republic (2003)
- China (2003)
- Democratic Republic of the Congo (2003)
- Côte d'Ivoire (2003)
- European Union (2003)
- Ghana (2003)
- Guinea (2003)
- Guyana (2003)
- India (2003)
- Indonesia (2005)
- Israel (2003)
- Japan (2003)
- Kazakhstan (2012)
- Laos (2003)
- Lebanon (2003/2005)
- Lesotho (2003)
- Liberia (2007)
- Malaysia (2003)
- Mauritius (2003)
- Mexico (2008)
- Namibia (2003)
- New Zealand (2006)
- Norway (2003)
- Panama (2012)
- Republic of the Congo (2003/2007)
- Russia (2003)
- Sierra Leone (2003)
- Singapore (2004)
- South Africa (2003)
- South Korea (2003)
- Sri Lanka (2003)
- Swaziland (2011)
- Switzerland (2003)
- Tanzania (2003)
- Thailand (2003)
- Togo (2003)
- Turkey (2007)
- Ukraine (2003)
- United Arab Emirates (2003)
- United States (2003)
- Venezuela (2003)
- Vietnam (2003)
- Zimbabwe (2003)
The following countries have expressed interest in joining the KPCS, but have yet to satisfy the minimum requirements:
The World Trade Organization (WTO) in December 2006 approved a waiver for the KPCS while recognizing the importance and effectiveness of the KPCS.
The following is a list of the Kimberly Process Certification Scheme's chairs and vice chairs. The Chair oversees the implementation of the program, the operations of the working groups and committees, and general administration. The Chair rotates annually. The current chair of KPCS is the nation that held the position of vice chair the previous year.
2003: South Africa; vice chair Canada
2004: Canada; vice chair Russian Federation
2005: Russian Federation; vice chair Botswana
2006: Botswana; vice chair European Commission
2007: European Commission; vice chair India
2008: India; vice chair Namibia
2009: Namibia; vice chair Israel
2010: Israel, Mr. Boaz Hirsch; vice chair DRC
2011: DRC, Mr. Mathieu Yamba; vice chair United States
2012: United States, Ambassador Gillian Milovanovic ; vice chair South Africa
2013: South Africa, vice chair China
2014: China, vice chair Angola
The DRC's position as the 2011 KPCS Chair is notable, in that it had been a known source of conflict diamonds and other minerals in recent years.
KPCS emphasizes collecting and publishing data relating to actual mining and international trade in diamonds. Member countries are required to officially submit statistics that can be verified through audit. Also, all member countries are required to produce and submit an Annual Report on the trade in diamonds. According to the Working Group on Statistics (WGS) of KPCS, in 2006, the KPCS monitored $35.7 billion in rough diamond exports representing more than 480 million carats. The number of Certificates issued by KPCS members was 55,000.
In 2014, 100 Reporters published an article showing how the use of KP certificates had allowed for the publication to identify transfer pricing manipulation in South Africa's trade of rough diamond exports, detailing "Most imported diamonds appear to be re-exported uncut and unpolished. While imports make up relatively small volume, or carats, they drastically increase the value of rough diamond exports. Subtracting the values and volume of imported diamonds shown on South Africa’s K.P. certificates from corresponding exports, the actual price per carat of rough diamonds being exported for the first time falls dramatically."
The article revealed that when, "asked about the anomalies in reported trade figures for diamonds under the Kimberley Process (K.P.) in South Africa, where De Beers is a dominant player, Gould responded, “The primary purpose of the K.P. process (or the issuing of the certificates at least) is for Governments to certify the origin of diamonds, not to keep track of the volume and value of diamonds imported or exported."
In 2003 KPCS initiated a process of peer review of implementation of KPCS in different countries. Nominated by the governments, experts form a team to visit KPCS countries and inspect implementation of the scheme. According to the Working Group on Monitoring (WGM) of KPCS the Kimberley Process has completed the first round of peer review visits in 2007 with more than 50 on the ground inspection visits conducted to Participants and applicants since 2003.
|This section requires expansion. (August 2010)|
Annual report by all KPCS members is a component of peer review mechanism established by KPCS. In the United States, for example, all companies that buy, sell, and ship rough diamonds must submit an annual report via email to the State Department,deadline April 1. The report must include the company's contact information and a detailed breakdown of the total carat weight and value in U.S. dollars of rough diamonds imported, exported, and stockpiled (still in inventory) for the previous calendar year. These are also sorted by HTS codes for unsorted (gem and industrial) rough diamonds, sorted rough industrial diamonds, and sorted rough gem diamonds—the latter of which is most likely to be polished into finished stones and jewelry for retail sale, while industrial diamonds are most likely to be used in cutting and drilling tools. Failure to submit this annual report in a timely fashion could result in a fine up to $10,000. If found to be in willful violation, the convicted offender could be fined up to $50,000 and sentenced to jail time up to ten years.
In 2004, Republic of the Congo was removed from the scheme because it was found unable to prove the origin of its gems, most of which were believed to have come from the neighboring Democratic Republic of the Congo. For countries economically dependent on diamond exports, this can be a substantial punishment, as it disallows trade with much of the rest of the world. Republic of the Congo's membership in the KPCS was reinstated in the Plenary of 2007
In 2008, Venezuela voluntarily removed itself from the KPCS, after it had been in non-compliance for several years. The nation ignored several correspondences from Kimberley working groups, finally responding to an ambassador from Angola in 2007. Venezuela invited Kimberley officials to visit the nation, but this required authorization, and the deadline came and went without further correspondence. Finally Venezuela agreed it would remove itself from the KPCS and work toward strengthening its infrastructure.
Côte d'Ivoire and Venezuela are still considered Kimberley Process members, but not Kimberley Process participants. As explained in the FAQ section of the Kimberley Process website, "Participants in the Kimberley Process (KP) are states or regional economic integration organisations (currently the European Community) that have met the minimum requirements of the Kimberley Process Certification Scheme (KPCS) and are, therefore, eligible to trade in rough diamonds with one another. The KPCS prohibits participants from trading with non-participants. Therefore, while the aforementioned countries still retain membership in the KPCS, they do not fulfill the requirements for participation, and thus cannot be called "participants."
Global Witness is a London-based NGO, a key member of the KPCS and was one of the first organizations to bring the issue of 'conflict diamonds' to international attention. They state that a report they wrote, "A Rough Trade," was partial inspiration for the film Blood Diamond.
According to Global Witness, the Kimberley Process has ultimately failed to stem the flow of conflict diamonds, leading them to abandon the scheme in 2011.
In December 2013, the World Policy Journal published an investigative report by journalists Khadija Sharife and John Grobler, disclosing how $3.5 billion minimum in KP-certified diamonds from Angola and Democratic Republic of Congo (DRC) had been looted through KP-certified tax havens such as Dubai and Switzerland in collaboration with self-regulating 'KP-approved' governments including Angola, arms dealer Arkadi Gaydamak, diamond magnate Lev Leviev and international banks. The authors concluded that tax havens should not be allowed to handle resource revenues for they provide, "the legal and financial-secrecy infrastructure enabling illicit activities, while the former struggle to generate revenue for citizens’ needs," and that as under-invoicing and other illicit activities had been excluded from the definition of 'conflict diamond' the KP, "has enabled a 99 percent clean diamond industry to exist largely because the real violence of the industry is whitewashed, ignored, or excluded entirely from the framework—the criminal portion of which continues to exist entirely on the periphery." In 2013, US investigative platform 100 Reporters exposed, through Central Intelligence Organization (CIO) documents, $3 billion in diamond revenues used to rig the elections. By then, the diamonds were certified by the Kimberley Process.
In June 2009, Ian Smillie of Canadian-based NGO, Partnership Africa Canada (PAC), and one of the founder members of the Kimberley Process resigned his position accusing the regulator of failing to regulate and saying he could no longer contribute to the "pretense that failure is success". At the same time, another founder member of the process, UK-based NGO Global Witness said, "Despite having all tools in place, the Scheme was failing effectively to address issues of non-compliance, smuggling, money laundering and human rights abuses in the world's... diamond fields". The Scheme came under further criticism from Global Witness and Partnership Africa Canada in June 2010 after the Kimberley Monitor appointed to review diamond mining conditions in Zimbabwe recommended that the country be allowed to sell diamonds as conflict-free from its contested Marange diamond fields in Chiadzwa. For the first time the two NGOs jointly called for the classification of conflict diamonds to be redefined.
In August 2010, another key draftsman of the KP and Africa’s highest-ranking diamond official, African Diamond Council (ADC) and ADPA chairman Dr. André A. Jackson demoralized KP supporters after persuading African diamond producing nations to renounce their support for scheme. Jackson brazenly blasted the KP for its ongoing ineffectiveness, stating that “the System has failed to thwart trading of diamonds mined as a result of human suffering.”
Ahead of this denunciation, the ADC unleashed a distressing TV infomercial that exposed internal problems at the front end of the African diamond industry. The broadcast was not only a huge boost for the ADC, it proved to be an enormous setback for the Kimberley Process and ultimately led to a cessation of DeBeers’s ascendancy on the African continent.
In December 2010 Time Magazine published a piece discussing the newly founded rough diamond trade in Zimbabwe. The article questioned the legitimacy of the Kimberley Process, stating that it was unable to prevent Zimbabwean conflict diamonds from entering the market.
On 11 August 2011, the BBC radio documentary titled "Zimbabwe's Diamond Fields" repeated an interview with representatives of the Kimberly Process claiming officials were unaware of the killings and tourtures exposed in the documentary. The official stated they were only aware of incidents uncovered by their brief visits to the field implying that they were not staffed to do in-depth investigations.
The certification scheme lost a large amount of its integrity following Global Witness’ announcement to walk out on KP in December 2011. The human rights watchdog group stated that in recent times, the governments of Zimbabwe, Côte d'Ivoire and Venezuela have all dishonored, breached and exploited the system without bearing any consequential penalties for their infringements.
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- The BlockChain
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