Do We Still Need a World Diamond Council?

Ever since the industry divided over Marange’s readmittance to the Kimberley Process in 2010 and 2011—and has stayed split since then—it’s become standard to take shots at the World Diamond Council.

Under past leadership, some U.S. groups seriously considered leaving the group. They didn’t, though Tiffany resigned over policy disagreements (quietly), as did Martin Rapaport (less so). 

When the organization was overhauled, the new revolving management structure was meant to be more representative and inclusive. And yet, this week, eight industry groups sat out the annual meeting in Antwerp over complaints that the organization had switched direction without consulting them. 

Part of the problem here is the new bylaws, which require members pay at least $10,000 dues. (This was necessary; it was going broke.) Not every industry entity has that kind of money, so to shore up its finances, the miners urged big clients to join, including some that had never previously showed much interest in conflict diamonds or industry politics in general. And they all get one vote, the same as all the groups that speak for thousands.

Sometimes, industry press releases require a decoder ring. The WFDB statement announcing the sit-out says the eight boycotting groups represent “98 percent of the industry.” You may wonder how that number was calculated. I am told that when you add the members of India’s Gem & Jewellery Export Promotion Council, the World Federation of Diamond Bourses, and CIBJO, you get 98 percent of the diamond industry. You can argue that with that math—Does it count informal miners? Retailers? Members of more than one group?—but the WFDB and GJEPC undoubtedly represent huge memberships, and their leaders resent having the same say as some sightholder whose sole qualification is forking over 10,000 bucks.

“If the representative organizations are pushed aside,” complained CIBJO president Gaetano Cavalieri in an email to the WDC board, “and effective decisions are taken without their knowledge, then all that the WDC can claim to represent is the opinion of several companies.”

Which brings us to the point that sparked this little firestorm: a series of breakout sessions at the meeting on “risk factors” to the industry, which Cavalieri and others view as an unofficial widening of the WDC’s charter beyond conflict diamonds, without prior membership approval. The leadership denies it’s expanding the mandate, but it’s worth asking: Why would that be a big deal anyway? Shouldn’t the industry’s issues be discussed at a trade-wide forum?   

First, if the WDC address these topics, some think that would encroach on the territory of already established industry groups, with their significant constituencies and democratically elected (if sometimes static) leadership. But more interesting is the fear factor. Any discussion on reputational risks has to touch on transfer pricing, sourcing, and the money laundering allegations in the Financial Action Task Force report. Those are topics not every diamond company, and every diamond center, wants on the table, particularly at the WDC. 

As GJEPC chairman Vipul Shah put it in an email to the board, if the WDC’s mandate is expanded, “[will] the KPCS also be amended to include all such issues?” Considering the KP has the force of law, to elements of the chain wary of new obligations, that’s playing with fire.

WDC leadership sources say they’re mystified by these objections, and swear they don’t have any kind of agenda and certainly aren’t seeking regulation; they just want a discussion of important issues. But diamond people can be a suspicious and conspiratorially minded lot. For instance, some truly believe that the push for a chain of custody is a ploy by big companies to squeeze out small ones. This baffles NGOs, who will tell you that responsible sourcing is elemental to being a responsible business. But those sorts of reservations are behind at least part of the dispute here. It probably didn’t help that De Beers publicly supported and scheduled its CEO to address the WDC sessions. “These [WDC] decisions are being made by private companies that may or may not have vested interests,” one WFDB member told me.

So when you take the dissenters’ wariness, and add that to the fact they feel left out of key decisions, there’s the feeling of: You are shoving this down our throats. What’s next? That is why the so-called biased survey raised such hackles; doubters thought it was designed to produce a specific end, rather than to legitimately determine members’ views.

Hopefully, greater communication and outreach efforts will put some of these issues to rest. I hear there are now sincere efforts to calm tensions, including a proposed brainstorming session of the WDC board in China prior to the KP plenary. The WDC end-of-meeting communiqué stressed the sessions discussed “industry issues and their impact on the KP,” and said they produced anodyne proposals like greater communication about the KP and aid for Ebola-affected countries. Having seen these controversies play out over the years, I expect at some point everyone will get together for a nice press release and grip-and-grin photo. But the differences of opinion that brought on this crisis will remain, and will undoubtedly resurface at the next skirmish.

The question is: Is it time for everyone to go their separate ways? The Dubai Diamond Exchange, De Beers, Tiffany, and Indian manufacturers all operate in very different environments, and come at things from very different perspectives. If there is no way to reach common ground, and if a simple survey is enough to spark a spectacle, maybe the trade’s representation at the KP should be rethought. 

The NGOs attend KP meetings both as separate organizations and as part of the NGO Coalition. For a while, some U.S. organizations considered aping this and applying for separate observer status. That has been put on hold, though observer status has been bestowed on the African Diamond Producers Association. Will other industry groups be next? 

The WDC will undoubtedly keep going—it runs the KP administrative function, among other things—but it’s possible that it may not be the umbrella organization it has been in the past. In his email, Shah argued that the World Diamond Council should try to be “the voice of all.” After the turmoil of this week, it’s worth asking if that’s still possible.

JCK News Director