Facts About the Campaign to Eliminate Conflict Diamonds

There has been a major breakthrough in the campaign to eliminate the traffic in “conflict diamonds.” All of the nations with significant involvement in the diamond trade have agreed on a global certification system aimed at preventing criminals from insinuating contraband diamonds mined in African combat zones into the legitimate supply chain. To supplement this government effort, industry leaders have created a voluntary self-regulation program.

We at Goodman’s Jewelers, Inc. welcome this important development and are very actively supporting the new system designed to safeguard our products’ integrity. This fact sheet describes highlights of the comprehensive system taking effect January 1, 2003.

Role of Governments

More than 60 countries have adopted a system to control the export and import of rough diamonds mined from January 1, 2003 onward. Known as the Kimberley Process Certification Scheme, it requires that each shipment of rough diamonds – before stones are cut and polished – be in a tamper-resistant container and accompanied by a government-validated certificate. Each certificate is uniquely numbered and contains data describing the shipment’s contents.

Participating countries have pledged to turn back or impound shipments of rough diamonds from any nation that fails to subscribe to the new standards. Shipments lacking proper certification will be treated in a similar way. The U.S. Customs Service is responsible for enforcement at American ports.

In the past, the legitimate supply chain was most vulnerable to exploitation between the time diamonds were mined in African combat zones and the time they were exported from the country of origin. Under the new system that problem is addressed as rough diamonds are packaged with a certificate of origin soon after they are mined. At later stages of the diamonds’ journey to market, rough diamonds also carry a certificate describing the shipment’s contents and confirming that the stones are coming from a Kimberley Process participant. Any country declining to participate is effectively barred from the international diamond trade.

Role of Industry

To supplement the government program, the International Diamond Manufacturers Association (IDMA) and the World Federation of Diamond Bourses (WFDB) – representing virtually all significant processors and traders – have established a regimen of self-regulation. Its principal element is a system of warranties that will accompany invoices covering the sale of rough diamonds, polished diamonds and diamond jewelry. The requirement applies to rough diamonds mined after December 31, 2002 and product fabricated from them.

Each time the diamonds change hands, the seller affirms to the buyer, in writing, that the diamonds come from legitimate sources “not involved in funding conflict {and} in compliance with United Nations resolutions…” Under a new code of conduct adopted by IDMA and WFDB, members are required, among other things, to deal only with sellers that use the warranty system.

Retailers who support the Kimberley Process must buy diamonds from dealers and manufacturers that adhere to the warranty system. At Goodman’s Jewelers, Inc. this policy is being followed. We have notified our trade suppliers of diamonds and diamond jewelry that merchandise we buy that is derived from rough diamonds mined after December 31, 2002 must be accompanied by a warranty. This warranty assures us that the supplier vouches for the legitimacy of the merchandise and that the supplier, in turn, has required the same warranty from their source of merchandise.

Between the government’s certification program and the industry’s warranty system, customers of Goodman’s Jewelers, Inc. can have a very high degree of confidence that the worldwide supply chain is protected from the introduction of additional conflict diamonds. The new system’s effectiveness will be monitored. Participants agree that if experience indicates improvements are needed, they will be made.