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Home / Net News / Inside the ‘conflict-free’ diamond scam costing online buyers millions [Updated]

Inside the ‘conflict-free’ diamond scam costing online buyers millions [Updated]

You can’t help but stumble upon Brilliant Earth when searching for conflict-free diamonds online. It’s perhaps the largest online retailer of stones from conflict-free regions and specializes in those chosen from Canada, Botswana, and Russia. The stones, it promises, are tracked from dirt to door leaving the company with an uncanny ability to ensure the rock on your finger didn’t cost an African worker an arm, leg, or family member.

It’s an impressive claim. So impressive, in fact, the United Nations — an organization with near-bottomless pockets and infinite resources — falls well short of making it. Yet, if Brilliant Earth is to be believed, a company with fewer than 200 employees (according to Glassdoor) can.

Or, says it can.

In our independent investigation, we spoke with nearly a dozen diamond experts, tracked diamonds from Brilliant Earth’s inventory halfway around the world, and spoke with numerous contracted partners willing to lie, forge, and fake their way into certifying a diamond’s origin.

If you’re looking for an early takeaway, it’s this: there’s no such thing as certainty when buying a conflict-free diamond online.

But let’s start at the beginning.

For bride and groom, shopping for a diamond is as much a part of the wedding experience as arguing over the guest list. The ring, it follows, should be a diamond. And a 1940s ad campaign by De Beers taught the world most of what it needed to know about the gem: they’re forever, they signify love, and only an asshole would consider spending less than two-months salary on an engagement ring.

It’s perhaps the greatest con ever pulled.

What makes the ad so effective is its staying power. It convinced the world that diamond engagement rings — which weren’t really a traditional part of the wedding experience before the 1940s — were essential. Now, over half-a-century later, few remember where these pervasive thoughts came from. But if you need proof of the power of marketing, try telling friends or family you bought your fiancée an engagement ring with a cubic zirconia and measure the outrage. Or, best case scenario, the polite nods and smiles.

The De Beers campaign is no longer an ad, but a rule outlining the proper way to get married. And proper, of course, is buying a diamond. But not just any diamond, one that costs (at minimum) two-months salary. And for good measure, get the biggest, brightest, and clearest one you can afford.

Leonardo DiCaprio and Djimon Hounsou helped to change the narrative in 2006. Blood Diamond, a five-time Academy Award nominee, nudged the De Beers message aside and brought with it new talking points. We no longer gave much thought to how much to spend on a diamond, but questioned whether it was worth buying at all. The term “blood diamond” became a part of the American lexicon, and as societal a taboo as fur or foie gras.

Almost overnight, businesses seized on this newfound concern for African children and the use of diamonds as a funding mechanism for conflict throughout the continent.

Enter Brilliant Earth

Brilliant Earth was founded in 2005, and launched its website a year later. If the timing were an accident, it was a fortunate one.

Its pages are littered with imagery of African children as a reminder of the cost associated with buying a diamond from these conflict-ridden regions, or in Brilliant Earth’s case: other online retailers. That cost, the company is quick to remind you, might very well be human life. With a not-so-subtle tug on the heart strings, the company assures us there’s a better way: its way. Its claims to go “beyond conflict free” to provide stones for discerning consumers who might otherwise be forced to look inward in determining whether such a purchase is worth the cost of human life. For all its claims — and that of other retailers — we’re still talking about an industry with “acceptable risk” levels of 0.02 to 2-percent mixage.

Mixage, for the uninformed, is the quaint term used by the industry to describe blood diamonds that make their way into the legitimate supply. For all the promises of conflict-free diamonds in this industry, there’s no way to be 100-percent sure the rock on your finger came from a legitimately-sourced stone.

And Brilliant Earth, with all its promises, is no exception.

“It’s a crock of shit,” says one insider who wished to remain anonymous. The company, he says, is providing the same service as anyone else in the industry while at the same time acting as if it’s above it all. I’m paraphrasing, but his sentiment was echoed by nearly everyone we spoke with during our investigation.

How to ensure you’re not buying a blood diamond

The short answer is: you can’t. Try as it may, the diamond industry is beholden to the laws of human greed. Many have tried to reform the diamond industry, with the UN being the latest. All have failed.

No legitimate company willingly buys diamonds from conflict regions, at least not anymore. It’s a great start, but one that comes with a number of flaws that find tainted diamonds entering the legitimate supply. And the companies responsible for buying and selling these stones have accepted this as a cost associated with doing business.

Here’s how it works.

Brilliant Earth Contract by Bryan Clark on Scribd

Companies like Brilliant Earth work with dozens of contractors and intermediaries who do business on their behalf. These intermediaries are all contracted on what essentially amounts to a promise they’re buying uncut stones (called “rough”) from conflict-free zones and delivering them to processing facilities for cutting. The processing facilities are also contracted intermediaries for Brilliant Earth. The facilities, typically in India, ensure they receive legitimate rough from wholesalers, and that at no part of the process will they allow tainted stones to enter the supply. They then certify that the cut diamonds are the same ones originally purchased.

It’s a lot of promising, a lot of paper, and little actual oversight.

The paperwork is a necessary part of The Kimberley Process Certification Scheme (KPCS), a 2003 process outlined by Global Witness, and enacted by the United Nations. Through increased scrutiny of chain of custody documentation and a governing set of rules for included member states — of which there are now 81 (the EU counts as one member) — KPCS believes it can rid the world of blood diamonds, even if nobody else does.

One of its biggest advocates, a NGO instrumental in the policies that shaped the KPCS, Global Witness, bailed on the program in 2011. According to its founding director, Charmian Gooch:

After the Kimberley Process was launched, the sad truth is that most consumers still cannot be sure where their diamonds come from.

The scheme has failed three tests.

It failed to deal with the trade in conflict diamonds from Ivory Coast, was unwilling to take serious action in the face of blatant breaches of the rules over a number of years by Venezuela and has proved unwilling to stop diamonds fueling corruption and violence in Zimbabwe.

Brilliant Earth doesn’t care much for it either:

Unfortunately, the Kimberly Process misleads consumers and does not attempt to stop the worst abuses in diamond mining … Worse, it’s so limited in scope that it grants “conflict free” certification to diamonds mined in violent and inhumane settings.

It’s ironic. For all the failings of the KPCS, and there are many — The Guardian once called it “a perfect cover story for blood diamonds” — Brilliant Earth relies on its regulation and a series of audits (which we’ll look at later) to prove the origin of its stones.

And this, as we found out, is far from foolproof.

The chain of custody pinky promise

To legally move diamonds across an international border, members of the KPCS have to provide documentation certifying their country of origin. Although the first is the easiest step in the chain of custody, there’s no such thing as certainty in the diamond industry.

Take Liberia. From 1989 to 2003, Liberia struck a deal with neighboring Sierra Leone — a country the UN banned from exporting diamonds — to trade arms in exchange for channeling illegal diamonds out of of the country as legitimate imports. In 2007, apparently convinced the country had righted itself, the KPCS allowed it entry into its inner circle, where it remains to this day. Never mind the 2014 report about Liberia using child labor to man its mines.

Or, there’s The Republic of Congo, a country with no diamond mines when granted entry into the KPCS. Despite the lack of mines, The Republic of Congo managed to export massive quantities of diamonds originating from, well, your guess is as good as mine. After being kicked out of the KPCS in 2004, it was re-admitted in 2007.

As easy as step one might seem, it’s far from a sure thing.

Diamonds are dug from the ground as rough; the rough is then bought by a wholesaler; the wholesaler then slaps a KPCS certificate on the exported stones before moving them to centers in Belgium, Israel, or India for processing. Before doing so, he’s often required to sign a promissory note of sorts that there was no foul play and that these are indeed legitimate stones purchased from KPCS member states. The next step is a bit of a blind spot. After receiving legitimate stones, processing centers must then turn hundreds (or thousands) of pieces of rough into cut and polished stones that might one day be used as jewelry. Each piece of rough could produce as many as a half-dozen smaller, finished jewels.