Brum Fischler is part of this old school of diamond trading. He's spent six decades in the business and now presides over Antwerp's polished diamond exchange. These trading centers are private clubs, which share membership lists. It's a powerful way to control behavior in the industry, Fischler says. "We have force on people who are members. Expel them. At same moment he is expelled, all the bourses around the world know. The business for these people is out."
For those who play by the rules, the diamond industry is like family. Fischler grew up in the business after losing all his own family in the Holocaust. As a young boy, he migrated to Cuba, started a diamond business there, then fled when the communists took over.
Fischler says the diamond business is different from any other because it was built by refugees. He notes, "With a building you can't go away. With the diamonds you can go away. All my life my parents, my grandparents had to fly away because of pogroms. The diamonds have always saved us. With diamonds you can go away."
Diamonds offered Jewish refugees like Fischler a new life. The stones were a portable, easily convertible form of wealth. But these attributes also make diamonds ideal contraband. They can cross borders undetected and don't have serial numbers. They're perfect for smuggling and money laundering.
In March of 2000, a United Nations' report charged that Antwerp's extremely lax import controls make it easy to smuggle diamonds here…especially conflict diamonds. In the wake of September 11, American investigators are studying the possibility that the terrorist group Al Qaeda bought diamonds from rebels in Sierra Leone and sold them in Belgium to finance their operations. The potential to make and conceal enormous sums of money draws criminals from all over the world into the industry.
How Conflict Diamonds Taint the Market
In a street café in the gangster-filled Yugoslav city of Podgorica, we meet a young diamond smuggler who doesn't want his real name used. Instead, we'll call him Dragan. He has a soft, boyish face, wears a black Versace t-shirt and sips a Coke as he explains how he smuggles diamonds from Sierra Leone into Antwerp:
"When I travel I use a Belgian passport. I fly to Istanbul and from there go to Freetown. In Freetown I go to a hotel that was arranged and meet with the manager who is my contact. He brings the diamonds to me in a room and I inspect them.." Dragan continues, "Then I pack up the diamonds in a soda can with a false bottom or in sandwiches, or in toys that I bring or in false-bottomed suitcases. Then I fly back to Turkey and from there to Belgium. It's all arranged so I can easily pass through customs."
Dragan says he works for a large, well-known, seemingly legitimate diamond firm in Antwerp. He wouldn't say which one. He estimates he that he's made about thirty smuggling runs from Sierra Leone to Antwerp in the past five years. He says he smuggles the stones into Belgium two ways: smaller hauls by airplane, larger quantities by boat:
"These are the large shipments of 200-500 stones. Sometimes we hide the stones in with a cargo of cotton thread. The boxes aren't opened at customs. We bribe the officials."
Once Dragan gets the diamonds to Antwerp, the money flows back to Sierra Leone…. along with guns and grenades.
Dragan explains, "Here's how it works: We pay an arms dealer who then ships weapons to Sierra Leone. I was there two times when we delivered money to a Bulgarian arms dealer. Sometimes we just deposit money into their bank accounts."
In Antwerp's diamond cutting shops, rough diamonds are sliced and burnished into finished gems. If Dragan's blood diamonds are sold to a dealer who mixes them with legitimate diamonds, they vanish into the legal trade. So this is how conflict diamondsan estimated 4 percent of the businesstaint the entire stream.
Next: An International Effort to Block Conflict Diamonds