11/19/02 | Joint Letter from Eli Izhakoff and Matthew A. Runci

Dear WDC Member,

This letter serves as a summary of important recent developments concerning the Kimberley Process and the continuing work of the World Diamond Council.

As you know, for the past two years, the diamond and jewelry industries through the World Diamond Council have been engaged in intensive negotiations with governments of diamond producing, processing and key market countries, along with representatives of a large coalition of non-governmental organizations (NGO’s) including faith-based, relief, and human rights groups, to devise a practical and effective method of ending the trade in rough diamonds from conflict-ridden areas in certain African countries. Throughout this period, the industry has remained steadfast in its resolve that for both business and ethical reasons, any connection, however small, between diamonds as a symbol of love and as an instrument of terror must be eliminated.

On November 5, 2002, representatives of the governments of 52 nations, including the United States, Canada, members of the European Union, and key African producers, adopted a system of governmental controls on the import and export of rough diamonds and committed to the simultaneous launch of the system on January 1, 2003. Known as the Kimberley Process Certification Scheme, the system mandates internal government controls, uniquely numbered and validated certificates, and tamper-resistant containers for all shipments of rough diamonds between participating nations. Further, the system binds participating governments to accept imports from and authorize exports to only other Kimberley Process participating countries. Moreover, the system is fully inclusive: additional countries may sign on to the system and trade in accordance with Kimberley Process procedures at any time.

Attending the Interlaken Conference from the WDC were Eli Izhakoff, Schmuel Schnitzer, Rory More O’Ferrall, Peter Meuss, Serguei Oulin, Mark Van Bockstael, Martin Rapaport, Zvi Shur, Barbara Masakala, Blackie Marole, Cecilia Gardner, and Matthew Runci.

At the same time, the diamond industry has pledged to subscribe to a system of industry self-regulation. Developed by the International Diamond Manufacturers Association (IDMA) and the World Federation of Diamond Bourses (WFDB) under the auspices of the World Diamond Council (WDC), the system of warranties calls for members of these organizations to make the following affirmative statement on all invoices for the sale of rough diamonds, polished diamonds, and jewelry containing diamonds:

“The diamonds herein invoiced have been purchased from legitimate sources not involved in funding conflict in compliance with United Nations Resolutions. The seller hereby guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds.”

To underpin this system of warranties, individual companies in the international diamond industry have pledged to instruct their independent auditors to verify that records of warranties are being created and maintained in the normal course of business in compliance with the Kimberley Process Certification Scheme. This auditors’ verification will be subject to government validation.

Further, IDMA and WFDB have previously jointly adopted a code of conduct binding on all member firms requiring that:

· They trade only with companies that include the bold face statement shown above;

· They not buy diamonds from suspect or unknown sources of supply and/or originate in countries that have not implemented the Kimberley Process Certification Scheme;

· They not buy diamonds from any sources that after a legally binding due process system have been found to have violated government regulations restricting the trade in conflict diamonds;

· They not buy diamonds in or from any region that is subject to an advisory by a governmental authority that conflict diamonds are emanating from or available for sale in such region unless diamonds have been exported from such region in compliance with the Kimberley Process Certification Scheme;

· They not knowingly buy or sell or assist others to buy or sell conflict diamonds;

· They insure that all company employees that buy or sell diamonds within the diamond trade are well-informed regarding trade resolutions and government regulations restricting the trade in conflict diamonds.

· The WDC is now preparing a complete compliance guide for the trade. It explains in detail the responsibilities of businesses engaged in the trade of rough, polished, and diamond jewelry under the Kimberley Process Certification Scheme and the Industry System of Warranties. This guide will be available shortly to all businesses engaged in the diamond and jewelry industries and will be distributed by the WDC through trade organizations worldwide.

Please note that additional key documents from the recent Kimberley Process meeting in Interlaken are attached to this letter for your reference. In addition, a link to the Kimberley Process website setting out the details of the Certification Scheme can be found at: http://www.kimberleyprocess.com.

Respectfully,

Eli Izhakoff
Chairman & CEO
Matthew Runci
Executive Director

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