NGO claims widespread diamond smuggling to Guyana

Jun 11, 2008 News

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…Venezuela faces expulsion  from Kimberley Process

On Monday, several members of the Kimberley Process Certificate Scheme for rough diamonds called for Venezuela’s immediate expulsion from the 75-nation government system for widespread smuggling to Guyana.
Partnership Africa Canada (PAC) has repeatedly called for Venezuela’s expulsion because of the country’s non-compliance and continued refusal to allow teams from member countries to inspect that country’s diamond industry.
PAC, according to a story on the www.mineweb.com, claimed to have found “direct evidence that Venezuelan diamonds are being smuggled into Guyana. …Individual miners and co-operative offices openly admit they hide a majority of their diamond production from the government.”
Last week, Government officials in Guyana said that it has increased monitoring to stem the flow of illegal diamonds from Venezuela and Brazil into Guyana.
Guyana, over the past year, seized a large quantity of diamonds suspected not to come from here and believed to have been smuggled from the two neighbouring countries.
“Venezuela has been in a state of serious non-compliance for four years, and it is making a mockery of an important conflict prevention mechanism,” said Ian Smillie, of PAC.
Although a charter member of the Kimberley Process since 2003, Venezuela has submitted no statistical information and no annual reports after the first quarter of 2005, according to PAC.
The country annually produces an estimated 150,000 carats of diamonds, but has officially exported none since January 2005.
“A combination of high taxes, ineffective currency controls and bureaucratic ineptitude has driven Venezuela’s diamond dealers underground,” according to the report , “The Lost World Diamond Mining and Smuggling in Venezuela.”
“Diamond dealers told PAC directly that they funnel tens and even hundreds of thousands of carats a year from Venezuela, through Boa Vista in Brazil, to Georgetown in Guyana.”
The report asserted that “The Venezuelan Government seems indifferent to, and incapable of, fixing the problems with its diamond industry. As an example of its incompetence and indifference, Venezuela has not issued a single Kimberley Certificate in over a year and a half, not because the diamond trade has stopped, but because a name change at the Ministry of Mines left the designated civil servant without the legal authority to sign certificates.
In the 18 months since, no one in Venezuela’s Government has seemingly had the will or interest to change two words on the appropriate government document and put it in front of a minister to be signed.”
A check by Mineweb, late Sunday, of the Kimberley Process website revealed that, while both neighbouring Guyana and Brazil have received site visits from the experts of the Kimberley Process Team, no site visit has been made to Venezuela.
“The clandestine routing of Venezuelan stones into Guyana puts enormous pressure on a small and resource-strapped nation, that otherwise seems to be making an intelligent and energetic attempt to implement the Kimberely Process,” according to PAC.
In 2006, Venezuela reported producing 19,980 carats of diamonds, valued at $1.18 million, at an average of $69.55 per carat, according to the most recent data posted on the website. However, Venezuela reported no exports and no imports of diamonds.
PAC claims that “a significant fraction of Venezuelan production left the country completely without cover of Kimberley Certificates, straight to buyers in Europe and the United States. …The cessation of Venezuelan exports over 18 months ago should have been a signal flare to the Kimberley Process that something was wrong.
In its news release issued Monday, PAC noted that Venezuela finally attended two Kimberley Process meetings in 2007. “It denied the charges and said it would permit an international review team to visit during the first quarter of 2008. Different dates for the review have since come and gone, with silence from Venezuela.”
Anne Dunnebacke of Global Witness said, “Venezuela should stop wasting the time of the Kimberley Process, and the Kimberley Process should stop wasting its time on Venezuela.
KP ineptitude sends a disastrous message to other countries for whom participating is expensive and time-consuming.
The Kimberley Process must now expel Venezuela from its ranks.
Among the organizations calling for the ouster of Venezuela from the KP are Centre du Commerce International pour le Développement, Conakry; Centre National d’Appui au Développement et à la Participation, Kinshasa; Fatal Transactions, Amsterdam; Global Witness, London; Green Advocate, Monrovia; Network Movement for Justice and Development, Freetown; and PAC, Ottawa.

Venezuela’s diamond deposits are all located in Bolivar state, which is also considered a mineral-rich gold area. Diamond mining is carried out by teams of small-scale miners that use dredges and resumidors to mine and separate the diamonds.
PAC reports that Venezuela’s diamond production typically yields one-third gem quality, one-third industry and one-third bort diamonds that are ground into powder for industrial purposes.
Small miners are supposed to belong to cooperatives, which submit a monthly report to the regional mining office of members’ production as well as the purchase or disposal of a large piece of equipment.
“Good as this sounds in theory, in practice cooperative members largely cooperate in hiding their production, so that little in the way of taxes ever finds its way to the government,” PAC claimed.

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