Kimberley Process

Kimberley Process Certification Scheme (KPCS) Background Africa has a history of political turmoil, which often led to frequent Coups staged by the military. These armed forces used proceeds from sales of illegitimate diamonds to fund their operations. In Angola, UNITA used the illegitimate trade of diamonds to fund itself. This resulted in sanctions being placed upon Angola by the United Nations Security Council (UNSC) in July 1998. The world became aware that “conflict diamonds” were being used fund and sustain armed rebel forces in various African countries.

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Establishment of the KPCS A meeting of Southern African diamond-producing states was held in Kimberley in May 2000 to discuss issues presented by conflict diamonds. This meeting signified the beginning of what would later become known as the Kimberley Process. Also in the year 2000, The World Federation of Diamond Bourses and the International Diamond Manufacturers Association met in Antwerp and passed a resolution creating the World Diamond Council (WDC). The WDC was mandated to develop and implement a tracking system for the export and import of rough diamonds.

This system was to be used to prevent conflict diamonds from entering the mainstream diamond trade. In December 2000, to support the WDC, the United Nations General Assembly adopted a resolution calling for the creation of an international certification scheme for rough diamonds. That proposed scheme became the framework for the Kimberly Process Certificate Scheme. A Kimberley Process meeting took place in Interlaken, Switzerland in November 2002. At this meeting 37 nations signed the Kimberley Process Certification System. They all agreed that a certificate would accompany rough diamonds on import and export.

Rough diamonds will not be exported to countries that are not participants of the System. The System was officially implemented in 2003. That same year, South Africa was appointed as the first Chair of the Kimberley Process. Participation in the KPCS Participation in the scheme is open to all producing, exporting and importing countries, as well regional economic blocks. Participation is voluntary; KPCS currently has 49 Participants, representing 75 countries. KP members account for approximately 99. 8% of the global production of rough diamonds.

The member countries form a network of countries that deal exclusively with non-conflict diamonds. In order for a country to be a participant, it must adhere to the following requirements: • Ensure that any diamond originating from the country does not fund and support any rebel group • Ensure that every diamond export be accompanied by a verifiable and forgery resistant Kimberley Process certificate as set out in Annex I of the KPCS document • Ensure that rough diamonds are imported and exported in tamper proof containers • Ensure that no diamond is imported from, or exported to, a non-member of the scheme.

It should be noted that the scheme is only a “soft law”. As such, it is not legally binding on the participating countries. Due to this status, no legal action can be taken against a country for the violation of the recommendations within the scheme. The scheme relies on the willingness of the participants to adhere to ethics and good governance. Compliance with KPCS Compliance with KPCS is self-regulated by the Participants. So over and above the requirements mentioned above the Participants need to further comply with the following requirements: Implement internal controls that are designed to prevent the presence of conflict diamonds from shipments of rough diamonds that are exported from and into its territory. In implementing internal controls the Participants should make every effort to comply with the recommendation as set out in Annexure II of the KPCS document • Align the legislative environment in its country to support the requirements of the KPCS. Amend or enact appropriate laws or regulations to enforce the KPCS. Ensure that appropriate penalties are enforced for transgressions. Cooperate with other Participants willingly on all levels. Regularly share information with other Participants including statistical data on mining production and participating in peer review exercises. • The WDC created a System of Warranties for diamonds that has been endorsed by all KPCS participants. Each company trading in diamonds must also keep records of the warranty invoices received and the warranty invoices issued when buying or selling diamonds. This flow of warranties in and out must be audited and reconciled on an annual basis by the company’s auditors.

Failure to comply with the requirements of the KPCS will result in a suspension and possibly expulsion from the KPCS. In an instance where non-compliance is reported, Participants are given an opportunity and support to comply with the requirements before they are suspended. This is the current case with Zimbabwe. The Structure of the KPCS [pic] The KPCS relies on The Chair supervises the KPCS. The Chair is elected on an annual basis at a plenary meeting. Various Working Groups then support the Chair.

A Working Group on Monitoring monitors each participant to ensure that it is implementing the scheme correctly. Then there is the Working Group of Diamond Experts that reports on the difficulties in implementation and proposed solutions. The Statistics Working Group, which reports on diamond trading data. The Participation Committee reports to the Chair on its recommendations on proposed members hoping to join the KPCS. The Selection Committee reports on its recommendations on who should be the next Vice-Chair.

After a year of being Vice-Chair, the successful candidate becomes the Chair. The annual plenary sessions of the Kimberley Process bring together all participating countries, industry representatives and civil society members (As Observers), the plenary session provide a platform for discussion and decisions regarding the implementation of the Kimberley Process Certification Scheme (KPCS). In addition to the plenary meeting, members of KP working groups also gather during the yearly ‘intersessional’ meeting to discuss technical issues specific to their group.

Short Comings with KPCS The Participants of the KPCS are both first world and third world countries. The resources at the disposal of these countries and the context within which they implement KPCS requirements vary. Some countries are better positioned to comply compared with others. Also the fact the KPCS is a soft law, increases the possibility of certain countries not complying with KPCS. ———————– Plenary and Intersessional Meetings support the workings of the Structure

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