Sun, Jul 11, 2004 - Page 7 News List

Republic of Congo accused of trading in `blood diamonds'

AP , KINSHASA, CONGO

Millions of dollars in smuggled central African diamonds are being routed through Switzer-land and the United Arab Emi-rates to evade controls at the world's main diamond market, say investigators trying to curb trade in conflict diamonds.

In a confidential report, the investigators called for "urgent corrective action" by the Republic of Congo, accused of actively circumventing controls. Republic of Congo's government denied all the allegations.

Essentially, investigators accuse Republic of Congo -- which mines comparatively few diamonds of its own -- of smuggling in diamonds from neighboring central African nations, and falsely certifying the gems as mined on its soil. It then sends the diamonds out on to the world markets through the United Arab Emi-rates or Switzerland.

Dealing with the smaller diamond centers allows the African country to avoid the rigorous certification process at the world's diamond hub, Antwerp, Belgium, the investigators say.

Republic of Congo officials -- apparently seeking to evade taxes and hide revenues -- also are formally declaring the gem-quality stones in Switzerland at far less than their market price, investigators concluded: just US$0.98 a carat on average, compared to the average market price of US$75.90 a carat for uncut, unset stones.

The allegations are the findings of a May 31 to June 4 mission to the Republic of Congo by a team evaluating compliance for the UN- and diamond industry-backed Kimberley Process Certification Scheme.

In its report, the Kimberley monitoring team concluded that "no guarantee can be provided that the diamonds flowing through the Republic of Congo are conflict-free."

The Kimberley Process is meant to certify and track diamonds from mines to jewelers' display cases with the aim of keeping illicitly traded diamonds out of legitimate markets. The certification program is the industry's response to growing world concern about "blood diamonds," which fueled and funded 1990s' wars in Liberia, Sierra Leone and Congo.

Forty-five countries have signed on since the world's US$6 billion-a-year diamond industry began the process in late 2002. Republic of Congo, one of the signatories, has been cited for alleged widespread violations from the start. Industry watchdogs accuse it of trafficking in smuggled diamonds from Congo, its much larger, diamond-rich neighbor.

Victor Kasongo, head of Congo's diamond regulatory body, said Friday that diamonds were "flying out" of his country because of smuggling across the Congo River to the Republic of Congo, where taxes on the trade are lower and export controls more lax.

Last year, according to industry giant De Beers, Congo was the world's fifth-largest diamond producer in terms of value, accounting for US$700 million in diamond production and 7 percent of the world market. Republic of Congo, however, has comparatively little actual diamond production.

"All that people think about us is wrong. Congo is not a destination for diamonds coming from various other countries," mining ministry official Louis-Marie Djama said.

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