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| OUT OF AFRICA: Leonardo
DiCaprio in the film Blood Diamond and (below) checking
out diamonds at the Indian Diamond Institute in Surat |
Solomon Vandy went to Kimberley. Those who saw the 2006 Oscar-nominated film Blood Diamond would remember him walking past shop windows in the South African city, ogling at priceless diamonds elegantly set in classy jewellery. As a man who had travelled all the way from strife-torn Sierra Leone, where many of those stones were being mined to fund a raging civil war, he was shocked to see people paying a fortune to take home jewels that were drenched in the blood of innocent civilians.
But then, Solomon Vandy never came to Surat in Gujarat. On the pavements of a mini-market, just off Varachha Road, hundreds of people are huddled in small groups. They are diamond merchants and each one of them is holding a square lens and a blue tray with gems that may not be more than a few millimetres long, but are worth tens of thousands or occasionally even lakhs of rupees.
This is Surat’s diamond bazaar, where the precious stones are sold, polished and cut and then mostly exported. Among the gems, the Directorate of Revenue Intelligence (DRI) fears, may be conflict diamonds procured from Africa.
The DRI, which recently expressed concern that some of the blood diamonds may have found their way into India, is now officially in “no comment” mode. But insiders point out that there is cause for concern. “If we have to catch blood diamonds it has to be at the very point of their entry, be it the airports or sea ports, but once they enter Surat and they are polished, it becomes impossible (to trace them),” says a DRI official. “We have hit cold trails many times despite having some leads,” the official says.
Late last year, a UN report stated that $23 million worth of conflict diamonds had entered the legitimate market from Côte d’Ivoire, some of them smuggled through Ghana.
The New York-based World Diamond Council says while there have been several high-profile arrests across the world, none of the people rounded up is an Indian. Yet Indians are not beyond suspicion either. The theft of diamonds worth $1 million and the murder of a high-profile Mumbai-based diamond trader, Ashwani Puri, in Angola in early 2004 only added to the long-held fear that some Indians may be involved in the murky trade.
The industry, however, feels that the diamond dealing in the city is above board. “Trade in illegal diamonds has been almost fully contained after the implementation of the Kimberely Process (KP) Certification Scheme and we in India are ensuring that every diamond that is imported and exported is accounted for,” says Sanjay Kothari, chairman of the Mumbai-based Gem & Jewellery Promotion and Export Council (GJPEC).
KP is an agreement which governments, the diamond industry and international non-governmental organisations reached in 2003 to stem the flow of conflict diamonds. Under the system, diamond-exporting countries issue a certificate with every rough diamond that is exported from their territory, attesting that the diamonds are conflict free.
But Kothari does not rule out trading in blood diamonds by “unscrupulous elements” in the industry: “There might be some bad apples. But within the industry, we are very strict as it involves our reputation.”
Conflict diamonds are largely blamed for armed struggles in countries such as Angola, Sierra Leone, Liberia and the Democratic Republic of Congo. “But smuggling and illegal trade is not something particular to my country or Africa,” says Francois Balunuene, ambassador of the Democratic Republic of Congo in India. “In fact, we have come across cases when Indian merchants did not declare every rough diamond they bought and no doubt this was illegal,” he says.
The Surat Diamond Association (SDA) says it carefully follows the international ban. “There might be a few people who go to African countries and bring a few carats of rough diamonds illegally,” says Muljibhai V. Dhameliya, president of SDA, which has a membership of around 3,000 diamond establishments in Surat. But Muljibhai holds that SDA has not come across any of its members being involved in the illegal trade.
DRI officials believe that because of the nature of the trade, spotting conflict diamonds is next to impossible. And because the industry is high-profile — India exported around $11 billion worth of polished diamonds last year — the intelligence agencies are wary of moving without proper evidence.
The DRI, for instance, is yet to question anybody on the use of the controversial gems. “We would be interested in examining the visa stamps on the passports of various diamond dealers we suspect of trading in blood diamonds,” says the DRI official. “But we need a smoking gun first,” he says.
The industry is worried that the controversy may affect the trade in Surat, where the diamond industry employs around 8 lakh workers in some 5,500 units. The hub of the diamond polishing industry in India, which last year cut some 90 per cent of all diamond pieces in the world, Surat mostly deals with smaller stones.
“At a time when we are facing quite a few problems such as shortage of skilled labour, decreasing margins and the threat from synthetic diamonds, the allegation of conflict diamonds is the last thing we need,” says Dhameliya.
The diamond-polishing industry in the country is largely an unorganised sector, which means that there are no uniform checks and counter-checks. Some of the larger units insist that the rules are being followed scrupulously. “Since we are aware of the implications internationally, we are very careful,” says Umesh Shah of the Rs 900-crore, Mumbai-based Shrenuj and Company. Adds Sohil Kothari, director of Fine Jewellery Mfg, “Our customers in the US and Europe compel us to follow the processes, and we in turn ensure that the rough diamonds that we get are 100 per cent conflict free.”
But experts in the industry point out that it is not difficult to bypass the KP system. “At a time when the world demand is growing at around just three per cent, and more and more people are looking at the Indian market which is growing at around 25-30 per cent, unaccounted diamonds can very well find their way into the markets here where hardly anybody is aware of either the genuineness of the stones or whether they are conflict diamonds or not,” says an industry watcher.
The modus operandi of bringing the illegal diamonds into the country may have also undergone a change. “The KP definitely has loopholes. People now import semi-polished diamonds from the conflict zone countries, polish them fully here and then sell them,” says Ramit Kapoor of the International Gemological Institute, Mumbai.
One of the major problems is that people in India seldom ask for certification when buying diamonds. K.K. Sharma, director, Indian Diamond Institute, Surat, which is a consultant to government bodies, points out that Indians are largely ignorant about where their gems come from. “We have a presence in 133 towns across the country and to date not a single retailer or customer has asked if the diamonds we sell come from the conflict zone,” adds Arun Bhatnagar, COO of D’Damas, a diamond jewellery retail outlet chain.
But ignorance, in this case, is far from bliss. “Hamara saara business bharose pe chalta hai (our whole business runs on trust),” asserts Jayakar, a Surat diamond trader, when asked how he can be sure that the gem he is handling has not come from a conflict zone. Trust, however, is often known for its breaches.
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