Submitted to:
Dr. M R Suresh
Table of Contents
1. Case Summary....................................................................................................... 1
2. Major Issues.......................................................................................................... 1
3. Alternative Solutions and Issues with those Solutions.....................................................1
I. The People, Planet and Profit approach.......................................................................2
II. ABCD Framework................................................................................................. 3
III. SLEPT Framework.............................................................................................. 4
IV. AAAA Framework................................................................................................ 4
V. IDEA FRAMEWORK............................................................................................. 5
5. To buy or not to but considering the conflict diamond issues?..........................................6
6. Ethical responsibility of Diamond Industry to combat illicit trade in diamonds?.................7
7. Action by International community towards nation and corporation found in trading of
conflict diamonds?..................................................................................................... 7
1. Case Summary
Diamonds have long been treasured as indicators of wealth. The trade in diamonds has
ancient roots dating back to the 4th century BC, when diamonds were mined in India and
traded throughout the world. Today, South Africa has become the worlds biggest diamond
producer, while the city of Surat in India has become the industrial center for the cutting and
polishing of these precious gemstones. In addition, the city of Antwerp in Belgium serves as a
trading hub for rough-cut and industrial diamonds.
The increase in demand for diamonds as commodities (partly due to DeBeers exceedingly
successful engagement ring campaign starting in the 1930s) has had numerous social and
economic implications. Most importantly, the problem of blood diamonds (mined in
conflict-prone areas) has resulted in the implementation of the Kimberly Process a
production protocol aimed at alleviating human rights abuses in countries producing
diamonds.
The case deals with diamond trade and how their mining and export contributes to various
conflict. Trade in diamond is highly profitable but are plagued by issues such as the
exploitation of population for diamond extraction and the use of diamond profits to fund
terrorist activity and rebel groups. Diamond trade has often lead to war and violence in many
African countries. The case seeks to discuss various alternative that can solve the problem of
conflict diamond and make the diamond trade business more sustainable.
2. Major Issues
Human Right Violations
Displacement of Population
Terrorism funding
Smuggling
Use of diamond profit to finance deadly conflicts
Issue of Blood diamond
The Indian industry, which employs 1.3 million and exported $23.3 billion of cut and
polished diamonds in 2011-12, is caught between two antagonistic forces: the
producing countries from where it sources much of the rough diamonds (Africa) and
the consuming countries to which it sells finished diamonds (the US and Europe).
3. Alternative Solutions and Issues with those Solutions
Kimberley Process: The Kimberley Process is a certification scheme established in 2003 by
a United Nations resolution, following a series of reports which first exposed the link
between the diamond trade and the financing of conflict.
The process has two main flaws. First, its narrow terms of certification focus solely on the
mining and distribution of conflict diamonds, meaning that broader issues around worker
exploitation - the health and safety of working conditions, the use of child labour and fair pay
are not addressed. It also fails to deal with entire populations being evicted from their
ancestral homes to make way for mining.
Synthetic Diamonds: Industrial and gem-grade diamonds made artificially through
machines. In terms of industrial-grade diamonds, which comprise at least 40 percent
of all annual diamond production, this could mean tremendous cost savings for
industries using industrial diamonds and the elimination of conflict diamonds from
industrial uses. For gem-grade diamonds the viability of synthetic diamonds is
questionable. This is largely due to the success of past diamond marketing campaignsmost consumers see synthetic diamonds as inferior to natural ones.
Laser Engraving: Lasers make it possible to mark diamonds--either in their rough or
cut stage-with a symbol, number, or bar code that can help to permanently identify
that diamond.
Invisible Finger Print: The technology works by electronically placing an invisible
information package on each stone. The fingerprint can include any information that
the producer desires such as the mine source and production date. Unfortunately, if
the diamond is re-cut, the fingerprint will be lost, although it can be reapplied at any
time.
4. Various Frameworks
I. The People, Planet and Profit approach
A fragile economy and a climate out of control, poverty across half the planet and scarcity of
natural resources, the extinction of species a explosion in population, ethical dilemmas on
every corner, and low confidence and trust in business. Growing awareness of corporate
malpractice in these areas forced several companies, including Nike and Tesco, to re-examine
their sourcing policies and to keep a closer eye on the ethical standards of their suppliers in
places as far apart as Mexico and Bangladesh, where labour markets are unregulated and
manufacturers are able to ride roughshod over social and environmental standards.
People- Ensuring health and safety of mine workers, making sure displaced people get fair
share of profit earned from diamond trade, ensuring profit is not used to fund illegal
activities, job creation and community development.
Planet- Ensuring natural habitat of the surrounding area is not disturbed due to mining
activities, soil erosion, deforestation all these issues are taken care off while conducting
diamond trade.
Profit- Ensuring sourcing of rough diamond is from legitimate source.
II. ABCD Framework
Access
Majority of diamond mines are in politically unstable African countries
Cartels control production and hence are able to create barriers to entry
New technologies used to create diamond can only provide diamond for industrial
purposes
Buying Behaviour
Consumer consider synthetic diamond as inferior to natural diamond
There is more awareness now among consumers regarding diamonds and certificates
that prove that they are not from the conflict regions
Considered as symbol of social status
Consumption Characteristics
Gem grade used for collection, exhibits and decorative art objects
Industrial grade used for medical field, space programs and diamond tools
Disposal
Re cutting of diamond expensive and reduces its size and value
Considerable loss in resale value
III. SLEPT Framework
Social Factors
Exploitation of local population
Reason for many civil war in Africa
Displacement of local population
Terrorism Funding
Presence of diamond fields in under developed African countries
Legal Factors
Kimberley Process Certification Scheme
Diamond Development Initiative International
Community and Small Scale Mining Initiative
Network Movement for Justice and Development
World Diamond Council
Economic
Dependence on African countries for sourcing of rough diamond
Political
Not so favorable governments in diamond producing countries such as Zimbabwe
Technology
Synthetic diamond to significantly reduce dependence on natural diamond and hence
reduce cost
Use of technology for certification and tracking the source
Database creation
IV. AAAA Framework
Alter
Kimberley Process rules can be altered to make it more broad and effective
Avoid
Avoid sourcing from politically unstable countries
Accede
Comply with all the rules governing diamond trade
Ally
Collaboration with countries producing diamond
V. IDEA FRAMEWORK
Identify the facts
It is believed 20 percent of all diamonds on the market could be conflict diamond.
Profit from diamond is being used to fund terrorist and rebel
Communities displaced not being dealt adequately
Determine
Whether to source from blood diamond
As a consumer whether to buy diamond
How to identify diamond is not sourced from conflict countries
Whether not buying diamond is a feasible solution
Explore
Technological substitutes
Use of technology for tracking and certification
Strengthening of rules governing diamond trade
Act
5. To buy or not to but considering the conflict diamond issues?
It is very critical question to answer but for sure we should not buy diamonds which involved
is involved in conflict. If by knowing we are buying diamonds then in a way we are also
involved in someway to those illicit trade and the criminal activities being financed by that
trade. So any stakeholder from seller to buyer should pay careful attention in the whole
process and should take responsibility as an agent of human rights.
Ask Before You Buy. Recognize that you are responsible for what you buy and that
someones life may be at stake. Make sure you know who your suppliers are if your are a
seller or any intermediary and ask them serious questions to ensure that the diamonds you
buy are not from conflict zone of the market nor involved in other serious human rights
abuses. Err on the side of caution. Tell your supplier you really care about where your
diamonds come from. If they know you care, they also will care. Make it a point to personally
talk to every diamond supplier about human rights issues and how important they are to
you. And if your are the ultimate consumer you should purchase diamonds if your are
ethically satisfied with its source and that it is not a conflict or blood diamond.
6. Ethical responsibility of Diamond Industry to combat illicit
trade in diamonds?
Severe human rights violations, including murder, rape and forced labour, have taken place in
the diamond fields of various African countries. Recent reports from Human Rights Watch
(HRW) indicate that these horrific conditions continue to take place. The jewellery trades
purchase and distribution of blood diamonds is funding a continuing cycle of horrific human
rights violations. So in a way diamond industry is providing money and distribution to those
who murder, rape and enslave. Every time we buy or sell a blood diamond, we are sending a
message of encouragement to the perpetrators of these inhuman crimes. We are legitimizing
their dirty business. We become their partners in crime.
7
Thus diamond industry should take its responsibility to stop this illicit trade and ultimately
stop its contribution by indirectly financing those illicit activities because diamond industry
as a whole cannot surpass the entire humanity and it do have ethical and moral responsibility
to stop this.
7. Action by International community towards nation and
corporation found in trading of conflict diamonds?
It is clear that the Kimberley Process has still a long way to go before it achieves the lofty
goals set out by its creators. Given its failings and flaws, what needs to be done in order for
the process to be an effective means by which trade in conflict diamonds is halted? The
following is a list of recommendations:
First, the Kimberley Process certification scheme for rough diamonds must make provision
for regular, independent monitoring of all national diamond control systems. Without this, it
will create false consumer confidence and the appearance of integrity where none can be
assured. Such false confidence will do nothing to stop conflict diamonds where they still
exist, and it will do nothing to prevent their return where controls are weak and predators are
strong.
Second, the United Nations Security Council must, as a matter of priority, address the issue of
conflict diamonds in the DRC. It should embargo all unofficial diamond exports from the
DRC, and insist that the Kimberley Process develop a more rigorous approach to statistics
and monitoring.
Third, civil society organizations should take an active role in promoting the Publish What
You Pay campaign. This, initiative, founded by NGOs such as Global Witness and Oxfam, is
aimed at helping citizens of resource-rich developing countries hold their governments
accountable for how revenues from the oil, gas and mining industries are managed and
distributed. Together with Kimberleys certification scheme, consensus on basic corporate
transparency in developing countries can be reached, and corruption can be diminished.
Fourth, mining contracts that were acquired through bribery or military action prior to
implementation of the Kimberley Process should be nullified and considered void, while
contracts entered into during the implementation of the process should be monitored and
regulated.
Finally, the diamond industry can and should endorse all of these recommendations.
Endorsements can begin with apex bodies such as the World Diamond Council, the
International Diamond Manufacturers Association, the World Federation of Diamond
Bourses, national diamond manufacturers associations, national diamond exchanges, national
and international diamond mining associations etc. Much has been done already. With
greater commitment to an effective Kimberley Process and greater overall transparency, the
diamond industry could become a world leader in corporate social responsibility.
