There is only one person in the world who can out-rap Rap – and that is Rap himself. Deluding himself of his own importance as just another member of the World Diamond Council (WDC), Martin Rapaport, through his media, first generated the “news” of his pending intention to resign from this body. No public plea was made by anyone for him not to do so. Thus, Rapaport resigned, issuing a press release for the whole world to know. It must be frustrating for Rap that nobody really seemed to care. It truly is a non-event.

So why am I wasting this column on Rap? Because of the infuriating attempt to belittle so many good and honest members of the WDC – an organization of which I am a proud member. I know the WDC isn’t perfect – but it represents the greatest effort ever made by the entire diamond business to come together to fight against conflict diamonds. It has rightfully earned respect worldwide – with clearly one exception.   

Let’s first make one thing clear: Every decent person shares the disgust and the outrage over what is happening in the Marange diamond fields in Zimbabwe. Rap holds no monopoly on caring for these people living in a miserable and intolerable mining environment. For years, we have expressed in these columns that the Kimberley Process (KP) has major flaws (the system’s faults actually impelled us to coin the term “Kimberley Shmimberley.”) Where we differ from Martin Rapaport is that we don’t feel that any of the KP’s weaknesses warrant damaging the entire worldwide polished diamond trade by warning retailers not to rely on the WDC’s System of Warranties.

Rap labeled the WDC “a sham.” The WDC is not composed of a handful of nasty people sitting in a smoke-filled room trying to cook up lies for the consumers to swallow. The WDC consists of some 60 highly respected and responsible executives in our industry representing all major organizations covering the entire diamond value chain.

Blasting the WDC as Rap did and diminish its warranties, is basically questioning the sincerity and the integrity of people in organizations such as Cartier, Tiffany & Co., CIBJO, JVC, Sterling Jewelers, IDMA, WFDB and all the bourses, De Beers, BHP Billiton, Rio Tinto, etc. All these prominent industry names are the WDC.

The World Diamond Council’s System of Warranties

So while fully condemning the atrocities of the Marange diamond fields, there is absolutely no logical reason or justification to raise doubts about the integrity of the warranties issued every day by tens of thousands of traders in the diamond value chain. In the warranties, the seller “guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds.”

Rapaport takes issue with the definition of “conflict diamonds.” It is like arguing about what legally constitutes a traffic light or an elephant. Both the definition of conflict diamonds and the language of the warranties have been agreed upon and adopted by some eighty or so governments, the United Nations and explicitly confirmed in supporting legislation in the U.S., Europe and in the diamond-trading countries. Not a single person in the WDC can just create his “own” definition. It is ridiculous to belittle a warranty because the definition is not to the liking of one person. If people with a good conscience don’t want to trade in certain goods, they are free to make that choice – and I believe most of us do. That has to do with ethical trading practices – it has nothing to do with the accuracy or truth of the warranties.

It may well be that the definition needs to be reviewed periodically, but that is no reason to provoke distrust in the relations between diamond suppliers and retailers, or to inflame the trust between retailers and consumers. Clearly, Rapaport doesn’t hold the members of the industry in too high of a regard if it requires warnings to retailers - even though he makes a good living out of the trading platform he provides to these very same members of the trade.

Operators of online diamond-trading networks require all kinds of warranties from their clients. If the integrity of personal warranties is in doubt, surely the ethical thing for Rap to do would be to close his online trading platform immediately. If the seller’s warranties aren’t any good, why would they be better online?

Rapping in Tradition

Somehow, rapping hasn’t changed much in thirty years. In a legal textbook, Rapaport appears in a footnote as follows: “in the early 1980s the Diamond Dealers Club (DDC) Board of Directors exercised their authority to expel a member from the club for making public statements that tended to cast the industry in a negative light. They expelled Martin Rapaport for saying to the press, ‘diamonds, ethics, Feh! If the devil himself showed up they would sell to him.’”

Rapaport went to court. He filed suit against DDC and each of the twenty members of the board of directors, demanding $5 million in compensation from every director. He did more. The Federal Trade Commission (FTC) got involved setting off an antitrust investigation. By the way, the secretary of the DDC at that time was Eli Izhakoff. Yes, the same Izhakoff who now chairs the WDC. In the end, Rap settled the case.

His fondness of legal action has never disappeared. For disclosure’s sake, I should add that he has been in court against IDEX Online for many years for all kinds of odd reasons.

Rap’s Angels

I have always been amazed how in the rapping practices commercial expediency wins so easily over ethical principles. Some four years ago, when writing on the GIA Certifigate scandal - probably the largest fraud ever perpetrated by the industry on the consumer – I commented on an article written by Rapaport on the GIA issue: “Sometimes I question whether Rap realizes what he is rapping. Just read the following sentence very slowly: ‘Therefore, dishonest diamond dealers will always have an incentive to bribe graders/supervisors and graders — unless they are angels in heaven — are going to find it hard to resist the persistent and innovative offers of bribers. The more employees in a lab and the closer they are to the dealer community, the more likely it is that the lab will have graders or supervisors taking bribes.’” 

Wow - “If you are a grader and not accepting a bribe then you are an angel?” I wondered. “And, conversely, if a grader is not angel then he must be a briber because it is too hard to resist the bribes? I don’t believe that anyone in his right mind could make such a blanket statement.” What we wrote then, is also applicable to today. Allow me to quote my own article again:

“I don’t think that all diamantaires are crooks or potential bribers. Rap seems to think differently. He says: ‘Fortunately, there is a natural way to stop the bribing — deterrence through disclosure.’ He calls that the ‘natural’ way. I tend to differ: I think the natural way for a businessman to conduct diamond business is by being honest, by being ethical and by being decent. The ‘natural’ way is not to bribe. Period. To say that the ‘natural’ way to stop bribing is a function of the penalty, the loss of reputation or the loss of good name, is perverse. I tend to believe that we don’t do crimes because we believe that they are wrong – and that’s why we don’t do it.”

The point I want to make in the present context is that rapes and killings are atrocities that are undoubtedly far more serious than economic fraud. Nevertheless, one should be ethical and consistent. Rap might be forgiven for having taken the side of the “angels” in the Certifigate scandal by continuing his business with the GIA as usual. It never occurred to him to ask for warranties from his clients that certificates on his website were not fraudulently upgraded. Nor did he deny trading privileges to those suspected of having bribed.

The Zimbabwe situation is a far more serious matter. Rap has announced that he will “name and shame” those companies or individuals listing Marange goods on his trading platform. We wonder if he actually has the tools to check all his listings. Because Rap will not take the risk of even unwittingly providing a platform for Marange diamond trading, we assume that Rapaport will do the ethically correct thing and close down his trading net. Trust Rap to go in style: first we may expect some media reports that he contemplates the action and, if no one objects, he’ll issue the appropriate press release. Don’t hold your breath. 

As far as the WDC is concerned, even while writing these words its leaders are participating in an international telephone conference deciding on the appointment of a monitor to oversee the Marange operations and sign each parcel that leaves the mining area to guarantee that no human rights abuses were tied to these goods. The relevant KP members will probably decide on Abbey Chikane, who was the first Chairman of the Kimberley Process and whose integrity is beyond reproach. Abbey will probably get expert help to make his task meaningful and effective. The loss of a member hasn’t changed the WDC’s resolve to ensure that no human rights violations will take place in the Marange diamond fields. Will it succeed in doing so? I don’t know – but it won’t be because of lack of trying.

As far as the Rapaport resignation is concerned, they will   remove the name from the WDC website - when they find the time. Not doing so may risk accusation that the ‘trade is being lied to by having non-members on the member roll’ and the Rap name is being abused. (Nice legal idea: it may be a cause for claiming damages.) For the rest, we seriously doubt that any of its directors – including its chairman - will bother to make any comment on the Rap resignation. Neither will I.

Have a nice weekend.