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.
An International Effort to Block Conflict Diamonds
Leaders at Antwerp's diamond councilbasically the diamond chamber of commerce that's known by it's Flemish abbreviation HRDfear that the controversy over conflict diamonds might spark a consumer boycott of all diamonds. As a result, Belgium has decided to show the world that it recognizes the problem and is responding.
Mark Van Bockstael, Director of International Affairs of the HRD, is trying to prevent conflict diamonds from entering the market in Antwerp and around the world.
Van Bockstael says Belgium has changed its practices and stepped up enforcement since the UN report came out. Diamonds from Sierra Leone and Angola now must have certificates showing they don't come from a war zone. Belgium also publishes data showing where its diamonds come fromsomething other trading centers in the secretive diamond trade don't do. But Van Bockstael says Belgium can only do so much. So it's backing something called the Kimberley process, an international effort by diamond mining and trading countries to block traffic in conflict diamonds:
"Can we stop conflict diamonds today? The answer is a clear no. We cannot." says Van Bockstael. "The reason that we are working with the Kimberley process is to have the legislation in place to do so."
Their aim is to create an international certification systema paper trail for all the stones. It's been a slow and complicated process to get more than thirty countries to agree on a plan.
Charmian Gooch is co-director of Global Witness, a humanitarian watchdog group in London. She says the diamond industryin Antwerp and elsewherehas been stalling on conflict diamonds:
"The reason that everybody is at Kimberley trying to deal with this problem is because the diamond industry refused to do this. …The point here is that the industry has played a game of saying it welcomes government regulation and is waiting for governments to tell it what to do. Well, that's patently ridiculous," continues Gooch. "The industry should be really moving forward, embracing independent audit to prove to consumers that it is no longer involved in funding conflict."
While the diamonds may allow warring factions to purchase arms, food and supplies, Van Bockstael argues that blaming diamonds for the civil wars in Africa is too simplistic. He notes, "I hope people understand what we are trying to stop with the Kimberley process; this is not necessarily a guarantee that conflicts will be stopped. Diamonds have been unduly identified as the sole part of conflict."
Diamond traders say much the same thing. It's not diamonds that have hacked off children's limbs in Africa. Diamonds, they say, have only brought joy to people.
Antwerp's diamond industry is on the defensive. It can't compete against the cheap labor in Asia's cutting centers…. The luxury goods market is depressed… Americans aren't buying diamonds like they used to. The Japanese market has shriveled. And the issue of blood diamonds threatens to explode again if the international certification system fails.