KPCS upgrade needed on conflict definition

The blatancy of rent seeking behaviour surrounding Zimbabwe’s diamonds makes the flaws of the Kimberley Process Certification Scheme (KPCS) difficult to conceal, bringing into question the effectiveness of the scheme at ensuring diamonds are conflict free.

The KPCS is aimed at preventing the trade of diamonds sourced from conflict areas through a certification process but it is criticised for defining conflict too narrowly, confined to areas under rebel control. It is also criticised for denying acknowledgment of communities subjected to violence and other human rights abuses under autocratic governments and exploitive mining companies. A further layer of complexity is added when the actions of African states and foreign corporations, often colluding to enable illicit flows of diamond revenues, avoid taxes  and deny communities the right to development, is considered.

The shortcoming of these exclusions are difficult to hide in Zimbabwe where the brutality imposed on communities in the diamond rich Marange district is well documented as is the use of diamond revenue for off book spending on security forces to further the power and wealth ambitions of Mugabe and his cronies.

Civil society groups with the support of some governments at the meeting want a 2013 report by World Policy Institute  to be tabled for discussion. The report reveals money laundering, under invoicing, and tax avoidance illicitly taking place under the Kimberley Process and names Angola, DRC and Zimbabwe.

The report alleges that diamonds are being laundered via the United Arab Emirates under the legitimacy of the KPCS.  “One of the most effective tactics enabling the continued looting of Africa’s mineral resources is the practice of under-invoicing the value of diamonds through subsidiary companies, based in jurisdictions providing legal and financial secrecy, like Dubai. This manoeuvre alone has managed to subvert and cleanse several billion dollars worth of African diamonds of questionable origin. This is facilitated by these tax haven jurisdictions being certified under the Kimberley Process and thus able to clean diamonds under ‘mixed origin’ certificates.”

In an update Khadija Sharife,  co author of the report the argues “The Kimberley Process definition 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.”

Sharife concludes; “In the end, if the Kimberley definition remains limited to rebels, rather than the far broader array of often unsavoury players who have forced their way into the industry, violating the letter and spirit of the system, there may be no fundamental way to save the diamond industry. The Kimberley Process as it is currently defined is a system that produces the wrong kind of results.”

Reacting to this report, Zimbabwe government officials reportedly complained of undue victimisation at the KPCS Intersessional meeting held in Luanda from 22 June 2015.  

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