Some 30 years ago, as a young diamond-trade journalist, I wrote an obituary for a diamond bourse president from the Far East, who had gone to meet his maker, Chaim Even-Zohar writes in his article posted on www.israelidiamond.co.il. by courtesy of Tacy Ltd., Diamond Intelligence Briefs, which is given below, abridged. It turned out, however, that I had written about the wrong man, the author goes on. Worried about the legal consequences, my publisher sought legal advice. To our great relief, we found out that writing about someone's death, when he was actually still alive, was neither defamatory nor libelous.
Apparently, there is a legal precedent where a court had found "erroneously reporting that someone is dead is neither defamation or libel but actually a premature announcement of an event that is going to take place in any event at some point in time."
Enabling the KP's Survival
I have to think about this anecdote while arguing with myself whether the time has come to write a formal obituary for the Kimberley Process Certification Scheme (KPCS). For all practical purposes, the KPCS is clinically dead. However, it seems to still be clinging to life on a life-support system. The scheme has found a way to keep going because turning off the support system would stop the bi-annual travel of KP bureaucrats from some 75 countries and of NGO activists and industry representatives. For their sakes, the show must go on. Like in any family, the heirs of the KPCS want to keep enjoying the fruits of its labor, so it's in their best interests to keep the life-support system going even while the scheme is no longer clinically alive and functioning.
Of course, from an industry perspective, we are a united front. We strongly support the WDC, which is the industry representative in the KPCS. The WDC is an observer in the system and not a member, but its voice counts. The WDC also represents the world's diamond bourses, which are members of the World Federation of Diamond Bourses (WFDB).
The WFDB Stance
The president of the WFDB, Avi Paz, has now publicly broken ranks with the WDC. At the eve of the Las Vegas trade show, the WFDB called on KP Participants to "take the essential and courageous decision to allow Zimbabwe to export rough diamonds from all diamond mining areas in the country, including Marange."
"The KP, due to the deadlock in its decision-making process and its experts' ensuing indecision to allow rough diamond exports from Zimbabwe to resume, is about to cause irreparable damage throughout the entire to supply pipeline of our industry and trade, and threatens the livelihood of literally millions of people throughout the international diamond and jewellery sector " said Paz.
The WFDB president emphasized in the statement that by perpetuating the current impasse in its decision making, the KP bears direct responsibility, not only for the reputational damage done to the diamond and jewelry sector, but also for a significant part of the economic hardship that continues to befall the people of Zimbabwe.
The only way the deadlock can be solved is by simply de-coupling the export mechanism from human rights issues or progress on the Zimbabwe Joint Work Plan. Though the WFDB didn't say so, this was the immediate interpretation given by virtually all commentators.
The WFDB statement followed the organization's warm invitation for Zimbabwe to become its first Producer Member.
Zimbabwe Stance
The strongest support for the WFDB statement came from the legal advisor of the Zimbabwe Ministry of Mines and Mining Development Farai Mutamangira, who is the close confidant of Mines Minister Obert Mpofu. Mutamangira "welcomes the position of the WFDB, and calls on ADPA, the WDC and all other progressive institutions associated with the Kimberley Process to follow suit. We must accept that within the framework of the Kimberley Process Memorandums and Rules of Procedure, there is simply no basis upon which restrictions can be imposed on KP compliant exports."
KP Balance Sheet
So what do we have now? It seems we have a KP chairman who is seen as a courageous leader by some KP Participants and as an irresponsible misfit by others. For the last few months, KP bureaucracy has tried to convince the chairman that his decision to allow unhindered exports from Marange is illegal. These efforts have totally failed and, to the contrary, have led the chairman to reconfirm his position.
The WDC is now clearly at odds with the WFDB, which seems to need a Zimbabwe spokesman to urge the WDC to adopt the position of the bourses. To make it all weirder, there is no KP vice chairman in place, and at the end of the year, there seems no one ready to take over the reigns of the dying system.
Considering all of this, it seems timely to eulogize the KPCS… and to look beyond it.
No Mourners
The first observation should be that there does not seem to be anyone who will mourn the passing of the KPCS, except of course for all the aforementioned frequent flyer KP Participants. Also, the WDC only exists to play a role in the scheme; without the KPCS, that organization would probably disappear into oblivion.
Another observation is that perhaps the KPCS was always meant to fail. Back in 2001, the industry wanted a worldwide regulatory body that would give legitimacy to the diamond industry without actually regulating it. Governments responded by creating a system with the least possible scope by allowing its weakest link a veto power on even the most mundane and insignificant decisions.
The KPCS was basically a regulatory body without regulators. It was never sustainable, and it was probably never meant to be sustainable.
A Self-Congratulatory Culture
Where do we go from here? I wouldn't know. At the end day, the proof is in the pudding. Millions of carats enter into the diamond industry every year without necessarily following the KPCS. It doesn't make most of those diamonds evil or conflict, etc. We had smuggled diamonds for all kinds of reasons before the advent of the KPCS and will also have them afterwards.
While we have created a self-congratulatory culture espousing the enormous contributions and virtual achievements of the KPCS, we never talk about the other side of the coin: the corruption the system has created by giving discretionary "money collection" power to officials in environments that lack good governance, in environments in which one can reduce or dictate export figures through bribes, and in environments in which empty KP certificates are for sale for no more than 1.5 percent of the cover price.
If you think about it, the death of the KP may be regretted by some of those who have found nice niches through which to enrich themselves.
Longing for the KP?
The WFDB believes that the current impasse among the KP Participants (i.e., governments) is creating incredible and lasting damage to the diamond market. The heeded pleas to solve the impasse in the suggested WFDB way are less than zero. Elsewhere in this issue, there are some reports on NGO reactions to the WFDB statement underscoring the growing schism between the two Observers in the KPCS.
Accepting that the KP's life-support system will, at some point, have to be disconnected and that the KPCS will be formally buried may well be the industry's best chance to restore trading normalcy. There is only one tiny problem with this view: some other system may take the place of the KPCS. If so, one day we might find ourselves longing for the dead KPCS to come back to life. Isn't that a nice way to end a premature eulogy?
