US embassy cable - 04KINSHASA1976

C O N F I D E N T I A L SECTION 01 OF 03 KINSHASA 001976 
 
SIPDIS 
 
AF/EPS FOR KWALZ, EB/ESC FOR SSPECT 
 
E.O. 12958: DECL: 10/22/2014 
TAGS: EMIN, ECON, PGOV, PREL, CG 
SUBJECT: KIMBERLEY PROCESS VISIT TO DRC PROVIDES 
CONSTRUCTIVE CRITICISM 
 
REF: KINSHASA 1747 
 
Classified By: Econoff Peter Newman for reasons 1.4 b/d 
 
1. (SBU) Summary. At the request of the DRC government, a 
Kimberley Process review team visited the DRC in October. 
Although the GDRC has made some progress, it is not in full 
compliance with Kimberley Process regulations. There are 
still serious holes in the DRC's Kimberley Process system, 
and an estimated 40 percent of production is smuggled 
undocumented. Some government agencies involved in the 
Kimberley Process are functioning well, but the political 
will to maintain them and improve other offices is lacking. 
The review team was very open with the international 
community. It signaled that it will likely give balanced 
criticism of GDRC compliance, and that it recognizes the 
DRC's importance to the international diamond trade. End 
Summary. 
 
TEAM COMPOSITION 
 
2. (SBU) The Kimberley Process (KP) review team came to the 
DRC at the request of the Congolese goverment from Oct 11 to 
15. This is a positive and proactive step showing DRC 
willingness to achieve compliance with international norms. 
The review team consisted of Team Director Ambassador David 
Viveash (Canada), Mark Van Bockstael (Antwerp High Diamond 
Council), Kim Eling (European Commission), Jacqueline Lenka 
(South Africa Diamond Board), Abdoul Wahab Diakhaby (Guinean 
National Diamond and Precious Materials Bureau), and Emily 
Bild (Global Witness). The team granted ample briefing time 
to the international community, holding a COM dinner at the 
beginning of the visit and a diplomatic community outbrief at 
the end. Econoff, along with one British and one Canadian 
diplomat, travelled with the team to the interior of the DRC. 
(Note: Both DCM and econoff were told the USG was slated to 
lead this review visit. Due to the apparent unavailability of 
a USG participant, Canada agreed to head the delegation. DCM 
and Econoff were both asked about the lack of USG 
participation. End note.) 
 
THE POSITIVES 
 
3. (SBU) Organizing and educating artisanal miners will be 
key to tracking the source of diamonds and to providing 
miners with opportunities for economic development. The 
Service d'Assistance et d'Encadrement du Small Scale Mining 
(Saesscam) could be instrumental in this role, according to 
the KP team. They were impressed by Saesscam's ability to 
organize 23 cooperatives (50 percent of which are owned by 
expats) of small scale miners, usually working with dredges 
on rivers. Saesscam also is attempting to provide some 
business and safety training to the small scale and artisanal 
miners in the Kasais. At present, Saesscam does not have 
sufficient funds to fully deploy. As the number of 
cooperatives grow, however, so will Saesscam's receipts. 
Saesscam charges a fee for its services, which, beyond 
organizing the cooperatives, include monitoring of operations 
and safeguarding and transfer of diamonds. 
 
4. (C) Cadastre Minier (Cami) is the body that processes and 
registers mining and exploration titles. Its effectiveness is 
necessary for orderly development of the mining sector as it 
avoids chaotic licensing. The KP team cited Cami as a 
positive example of a well-functioning government 
institution. Van Bockstael forecasted, however, that within 
one year Cami will not function anymore because it works too 
well. (Comment: Cami has already been the subject of 
political attacks from the Minister of Mines. The Minister 
sacked the head of Cami, Ambroise Mbaka, during Summer 2004. 
Mbaka claimed the Minister did this because he would not give 
preferential treatment to a friend of the Minister in 
processing an application. Cami was also efficiently 
processing exploration and mining title applications to the 
point that the applications were piling up on the Minister's 
desk. If, after a period of 30 days, the Minister does not 
sign the titles, they automatically are accepted. There is 
speculation that the Minister did not like the restriction - 
as it limited his ability to "treat" each case - and thus, in 
August, prohibited Cami from accepting any new applications. 
End comment.) 
 
QUESTIONS AND CONCERNS 
 
5. (C) The KP team was uncertain if the system of 
acknowledgement of receipt of certificates is working well, 
or if the GDRC is following up on unconfirmed Kimberley 
Process Certificates (KPCs). The GDRC only gave half answers 
to the Kimberley Process team regarding statistical 
discrepancies in KPC reporting, according to Van Bockstael. 
Several certificates have arrived in Europe and Israel that 
have not been recorded in the DRC. Four countries from 
2003-2004 have reported exporting rough diamonds to the DRC, 
for which the DRC has no records. 
 
6. (C) Illegal leakages of diamonds cause 40 percent of DRC 
production (by value) not to be captured within the KP 
system. This discrepancy cannot be reconciled with the 
numbers from Congo-Brazzaville, which was accused of 
smuggling USD 350 million per year of diamonds from the DRC. 
(Note. Brazzaville was removed from the Kimberley Process in 
June 2004. KP participant countries are no longer allowed to 
trade in diamonds with Congo-Brazzaville. End Note.) 
According to Van Bockstael, the majority of diamonds (by 
value) traded in Brazzaville were from Angola and were 
smuggled through the DRC. The Congolese diamonds traded in 
Brazzaville were largely from Mbuji Mayi and did not reach 
the 40 percent (by value) figure. The sharp increase in 
exports from the DRC in July was essentially a shock while 
the diamond dealers moved to beat the learning curve and find 
new export channels. Eling noted that the KP cannot blame the 
DRC for having porous borders. The question should be focused 
on whether smuggling is part of the system. Team members were 
dismayed that while the GDRC was very concerned about 
leakages of its own diamonds, it had no interest at all in 
dealing with diamonds from neighboring countries which leak 
into the DRC. 
 
7. (C) Political wrangling around the control of the diamond 
trade inhibits the development of a strong tracking and 
evaluation system in compliance with KP regulations. The 
competition between the Minister of Mines, Eugene Diomi 
Ndongala, and the CEEC was evident at both the Kinshasa and 
provincial levels. Each tried to upstage the other in 
presentations, to the point of even hosting competing dinners 
for the team the same evening. This institutional tension is 
complicated by the diffuse structure of institutional roles 
in the diamond sector. Both Eling and Van Bockstael referred 
to the Aug/Sept 2003 gaffe by Minister of Mines Diomi where 
he accused Miba of fraudulently exporting USD 10 million of 
diamonds to the UK. This was because the Vice-Minister of 
Mines, in place of the Minister, signed the KPC for the 
shipment. The KP team has specifically asked the GDRC to 
clarify how many signatures are the minimum and who are the 
authorized signatories for the KPCs. Furthermore, some 
responsibilities are replicated, such as the presence of the 
Mining Administration in comptoirs at the same time as a CEEC 
representative (reftel). 
 
TRAVEL TO THE INTERIOR 
 
8. (C) Econoff accompanied the team to Mbuji Mayi and 
Tshikapa on Oct 12-13. The meetings in Mbuji Mayi generally 
 
SIPDIS 
revolved around Miniere de Bakwanga (Miba - the diamond 
parastatal). Team members were generally not impressed by 
Miba's facilities or its growth plans. Security was spotty in 
the sorting room and equipment was substandard and 
antiquated. Not one member of the senior management team of 
Miba was present during the visit. Besides meeting with Miba 
and regional CEEC and Ministry of Mines authorities, the KP 
team visited several comptoirs in both Mbuji Mayi and 
Tshikapa. The GDRC made a strong effort to round up miners 
 
SIPDIS 
and negotiants with government-required ID cards to 
demonstrate that diamonds are being tracked through an ID 
system. There were two comptoirs in Mbuji Mayi that were 
accepting diamonds from sellers (be they miners or 
negotiants) without identification. (Comment: What was 
troubling in those instances was that the CEEC and Mining 
Administration representatives were present and were not even 
enforcing the minimum standard of ID cards. They let the 
transactions take place regardless. End comment.) 
 
KIMBERLEY PROCESS AS AN ASSISTANCE BODY 
 
9. (SBU) One of the topics raised at the outbrief for the 
international community was the use of the Kimberley Process 
as an assistance body. Ambassador Viveash stated that the KP 
does not have the funding necessary to provide technical 
assistance on its own but it encourages Western donor nations 
to direct funding to projects to improve compliance with 
Kimberley Process regulations. Mark Van Bockstael noted that 
the KP is beginning to look at the idea of technical 
assistance and will soon hold seminars on KP implementation 
and "Diamonds for Development." He also stated that the KP 
could become a clearing house for ideas to channel to donors. 
OTHER OBSERVATIONS 
 
10. (C) Van Bockstael was concerned that the DRC continues to 
have a production quota for the comptoirs of USD 30 million 
per month (total for all comptoirs). This encourages cheating 
because when DRC production drops slightly the comptoirs must 
source their diamonds from Angola to meet the quota. Removing 
the production quota would allow greater purchasing and 
cashflow flexibility to the comptoirs while opening the 
market to other firms that may not be able to strongly 
contribute to the quota. 
 
11. (SBU) Van Bockstael noted that Mbuji Mayi is rising in 
importance in the international diamond trade because. the 
industrial quality stones of the type found in Mbuji Mayi are 
only found in one other mine in the world, the Argyle Mine in 
Australia. The Argyle mine is extremely mature and will 
likely be exhausted in the next 5-7 years. The Indian diamond 
polishing industry, which relies on these industrial quality 
diamonds, has become a multi-billion dollar business and will 
force a shift in purchasing from Australia to Antwerp or 
direct from the DRC to gain access to the stones it desires. 
Production in Mbuji Mayi will have to increase to meet the 
demand from India. Investment should begin to grow regardless 
of DRC internal political conditions. 
 
12. (C) One of the new smuggling methods mentioned by Van 
Bockstael was the use of KPCs as transit documents. For 
example, a diamond shipment and accompanying DRC certificate 
could be sent to Switzerland. Once in Switzerland, the owner 
of the parcel could transform the diamonds to a banking 
transaction (rather than a mineral export) and move the 
diamonds to a non-participant country. (Note: Van Bockstael, 
Eling and Viveash all noted that Switzerland is close to 
being removed from the KP rolls if it does not stop this sort 
of activity. End note.) 
 
COMMENTS 
 
13. (C) Comment: The KP review team came to make sure that 
the Kimberley Process continues in the DRC, not to chastise 
GDRC performance. The DRC is not in full compliance with 
Kimberley Process regulations. The DRC's rising importance in 
the international diamond trade, however, makes it impossible 
and unwise to remove the country from the Kimberley Process. 
The KP team recognized the difficult internal political 
conditions that exist, and are of the opinion that the DRC 
system is, and will be for a long time, a work in progress. 
Recommendations will likely focus on clarifying internal 
divisions of labor and on increasing traceability from mine 
to comptoir. Unfortunately, the structures of the KP system 
and the institutions which work well (CEEC, Saesscam and 
Cami) are all under attack by competing political interests. 
Though the GDRC appears very engaged and willing to listen to 
the recommendations given by the KP, follow-through, as 
determined by momentary political necessities, will likely be 
spotty. End Comment. 
MEECE