Dubai under fire

Rob Bates

In the past decade, the growth of Dubai as a diamond center has been phenomenal—more than $40 billion in diamonds are now traded in the most populated city in the United Arab Emirates, up from $5 billion less than a decade ago. The reasons are obvious: It offers traders a free-trade zone with no taxes on imports and exports, backed by a government that tries not to interfere with business. By contrast, rival Antwerp has had to cope with now-lifted sanctions on Marange diamonds, and faces a possible E.U. prohibition on Russian gems. Dubai has none of those concerns.

But in the last month, the desert city known for its 90-degree temperatures has faced a different kind of heat over just how laissez-faire its oversight is. Last month, Antwerp World Diamond Centre, the Belgian industry group, announced it had seized a parcel of diamonds from the Central African Republic—gems that are banned by the Kimberley Process. That parcel came from Dubai. And while the AWDC did not name its rival in its statement, it pointedly referenced CAR diamonds receiving “forged KP certificates that are insufficiently controlled via other diamond hubs.

Peter Meeus, chairman of the Dubai Diamond Exchange (and former CEO of the AWDC), tells JCK that Dubai received the parcel from the Democratic Republic of Congo with a valid KP cert. He says local experts perform physical inspections on every parcel but this certificate did not raise questions. And while Antwerp authorities told him the shipment came from a trader known to deal in CAR goods and matched a “digital footprint” of goods from that country (and apparently contained the same volume of goods as previous legal CAR exports by that trader), he is not convinced of its provenance.

It is not such a clear-cut case,” he says. “We showed the pictures to many people, and it could be Guinea, it could be South Africa, it could be many places.”

He notes his center does not have access to the same digital images that Belgium has, but Dubai is willing to take the lead on developing a digital database to identify problem goods.

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Source JCK Online