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WDC President: Transparency, Compliance Vital for KP and the Banks
Q & A With Edward Asscher - World Diamond Council President
Jun 29, 2014 4:29 AM
By Rapaport News
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RAPAPORT... The World Diamond Council (WDC) represents the diamond industry within the Kimberley Process (KP), a regulatory body that aims to stem the flow of conflict diamonds into the diamond industry supply chain. Edward Asscher, president of the Royal Asscher Diamond Company, was elected to serve as the WDC president in May 2014 following recently implemented structural changes, and amid industry-wide discussions about tackling human rights issues affecting the trade. He recently spoke with Rapaport News about these and other issues at the World Diamond Congress meetings in Antwerp:
Rapaport News: What skill set do you bring to the position of WDC president?
EA: I have many years of experience in the diamond industry and I also served for four years as a senator in the Dutch parliament so I know how governments and policy works. That is invaluable experience because the function of the WDC is to work with the KP, which is run by governments. The WDC is an observer within the KP but we are in close contact with those governments, and we find that certain political and diplomatic skills are necessary to move ahead.
Rapaport News: What are the main challenges facing the WDC today?
EA: The KP has done wonders for millions of people in Africa – it has stopped wars and saved thousands of lives. But it is a mature organization, and when you’re dealing with any mature organization it is vital to assess if there are any blind spots or challenges.
In general, the challenges I see is that we need to create a level-playing field to ensure that each diamond center uses equal procedures, rules, and strictness. Secondly, the WDC has changed and is now representing all sectors in the diamond industry, including the mining, manufacturing, wholesale, trading, retail, and independent jewelers sectors. The diamond industry needs to become more transparent across all sectors.
Transparency, compliance and auditing are the three key words of the industry. On the one hand, we want to improve the KP to protect the integrity of our product. On the other hand, we need to protect the integrity of the diamond industry so that banks are convinced that we do our work properly, that we are bankable and that they can finance us.
My task in this is to handle the blind spots and challenges and try to address them in the KP and discuss them within the diamond industry. I have also reached out to the non-governmental organizations (NGOs) because they were always at the basis of the KP and although we don’t always agree I believe they play a very important role.
Rapaport News: Is it the WDC’s role to try to make the industry more bankable?
EA: We need transparency and compliance to make sure there is no competition or inconsistency between the centers on KP matters, but the banks are demanding the same. They have approached me and said that if the industry wants to remain bankable, they expect full support of the KP and adherence to its rule, and they also want compliance, auditing and transparency. You can’t look at one aspect alone.
Rapaport News: Can you give us an update on the conflict diamond situation?
EA: I think less than half a percent of goods in the market today fit the conflict diamond definition today. The Central African Republic (CAR) is not allowed to export any goods and there are issues in some other African countries. We are not going to solve all these problems but we have to make sure that diamonds don’t play a role in them.
We saw recently a parcel that was stopped had the right KP papers but the wrong content. The footprint of those diamonds actually came from the CAR, so that’s an issue that has to be addressed. At the moment, those goods are still here and will have to be confiscated. One of the questions that arise is what happens to confiscated diamonds?
We must make sure that diamonds contribute to the well-being of everyone that works in the diamond industry. That includes the miners, polishers, traders and retailers. I don’t want to expand the WDC to have to deal with human rights because there is no support for that. But I want to enlarge the definition for conflict diamonds so that it will include violence. I do not want to duck any issues where there has been a blind spot.
Rapaport News: The human rights issue has been a blind spot for the KP and the WDC in recent years.
EA: I know, but you have to realize that if we want to do well for the industry, we have to convince the industry itself. If we walk too fast, we walk alone and that doesn’t achieve anything. I cannot do anything without the support of my colleagues so we progress step by step.
Rapaport News: How should the industry tackle the issue of human rights abuses associated with its product?
EA: I don’t think we can do so within the KP because some governments do not support this. So we can tackle it outside the KP and the WDC can carry the torch and inspire people on this issue. We are not an NGO. We represent the diamond industry but what we most represent – and want to protect – is the integrity of our product. That includes protecting it from any problem, including human rights issues.
Rapaport News: In that sense the role of the WDC extends beyond the KP?
EA: Well it’s a very slow evolution rather than a revolution. Because the integrity of the whole pipeline and our product is at stake, we cannot take a KP certificate and say that everything is alright. When something is not alright we have to address it. I don’t necessarily know how to address it today, but these issues will be addressed.
Rapaport News: How does the WDC fit into the framework of new initiatives, such as the Precious Stones Multi-stakeholder Working Group (MSWG), that have been formed to ensure that diamonds are ethically sourced?
EA: I have taken a step back from the MSWG because it involves all kind of gems and gold and I want to limit the WDC to diamonds. In the past there were two reasons to defend the integrity of ethically-sourced diamonds: one was an ethical responsibility and the other was a business perspective because of the emotional and symbolic value of diamonds.
The third reason for today is the necessity of transparency and compliance, which runs parallel to what the banks want from us. I cannot include every subject in the work of the WDC but we can talk about each issue and see what can be done.
Rapaport News: Where are the points of concern regarding human rights violations?
EA: There are so many I don’t know where to begin. In protecting human rights in diamond producing countries, I think there are two aspects that we address: one is alluvial diamond mining and working groups like the Diamond Development Initiative (DDI) will have to be supported because it’s always the small individual diggers who are the victims of abuse. Then there is the institutional approach to human rights where you have to talk to governments, which is beyond my scope as WDC president, but I’ll do it anyway as long as I have the support of my colleagues.
Rapaport News: What was the outcome of the recent KP meeting in Shanghai?
EA: It was an inter-sessional meeting so there was no shocking news that came out of it. The main purpose was to establish procedures, and for the various committees to meet on certain issues. The big change at the KP was the establishment of the Administrative Support Mechanism (ASM) which was agreed to just before the Shanghai meeting.
The mechanism will help preserve the knowledge of procedures and methodology from one year to the next as the KP chair changes each year. In this way you’ll get a collective memory, which was one of the past criticisms of the KP. The ASM is being [financially] supported by the Antwerp World Diamond Centre (AWDC), India’s Gem and Jewellery Export Promotion Council (GJEPC) and the Israel Diamond Institute (IDI), and the AWDC is managing it.
Rapaport News: What’s changed at the WDC as a result of the restructuring?
EA: There is greater transparency and representation. Now, all sectors are represented in balance. There is also now a two-year term limit to the presidency.
Rapaport News: What is the WDC’s budget?
EA: We have a budget but you have to ask the treasurer what it is. The costs to the WDC include my travel costs and the travel costs of the legal counsel in New York. All other participants pay for themselves. We are also looking into appointing an executive director. So the budget is limited but so are the costs.
Rapaport News: Has the role of the WDC changed since its inception?
EA: The WDC is now a mature organization so of course it’s changed. We also live in a different time from 2003 when it began and that is something I feel that we have to address. Politics have changed, countries have changed and some of the issues have changed. Today, there’s a fight against money laundering and terrorism worldwide, and we want to make sure that our industry doesn’t play a role in it. All of these things are not the responsibility of the WDC, but we should be very open-minded to discussing it within the industry.
Rapaport News: What is your goal for the next two years as WDC president?
EA: I hope to have open-minded discussions and an open-minded industry. This industry is 400 to 500 years old and fairly conservative, and it takes a huge step to enter the twenty-first century. Change is not the first thing on people’s minds. We have to face the fact that discussions about human rights have to take place within the industry. Whether that’s through the WDC or any other organization is another issue, but we cannot avoid these discussions because they are of major importance for every product, not only diamonds.
This article is an excerpt from a market report that is sent to Rapaport members on a weekly basis. To subscribe, go to www.diamonds.net/weeklyreport/ or contact your local Rapaport office.
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Tags:
diamonds, Edward asscher, Kimberley Process, Rapaport News, royal asscher, World Diamond Council
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