20 December 2013

Liberia: Diamonds Smuggle Busted

In the midst of reported constrained being faced by the Government of Liberia in developing capacity to properly monitor mining activities across the country, the United Nations Panel of Experts is reporting widespread trafficking of natural minerals here, unabated, including diamond and gold, among others.

Most of the gems entered Liberia from neighboring Sierra Leone to avoid that country's tax of 15 percent on special stones valued at over $500,000, while smaller, low-value diamonds are typically trafficked directly from Liberia to buyers inside Sierra Leone, the UN Panel of Experts discloses.

According to the report, released to the UN Security Council in mid-November, Leone Government Gold and Diamond Office observed in 2012, a marked decrease in the export of special stones since the introduction of taxation in 2009.

"A senior official at the Government Gold and Diamond Office told the Panel in Freetown in September 2013 that he believed that a significant amount of the "special stones" from Sierra Leone were being trafficked through Liberia", the report reads.

Commenting on the anomaly found at the Regional Diamond Office in Ganta, Nimba County, inside Liberia which indicated a significant spike in production, from almost no production in 2011 to 13,000 carats in 2012, the Panel says it continues to await technical analysis carried out under the Kimberley Process to determine whether those diamonds originated from Côte D'Ivoire or elsewhere.

However, the UN reports that during a visit to Ganta in September, it was unable to identify any significant upsurge in mining activity and thus remains concerned as to the provenance of this production.

"On 1 October 2013, diamond industry sources reported to the Panel that Monrovia-based diamond brokers had recently bought large quantities of diamonds originating from the Marange field of Zimbabwe, while others had recently purchased diamonds trafficked to Liberia from the Central African Republic", the Panel details.

It says sources have revealed that they had noticed an increase in the export from Liberia of partially polished stones, noting that "Once diamonds receive only a minimal number of facets, they may be considered manufactured goods and thus fall outside the controls on rough diamonds of the Kimberley Process, which means that they do not require certification prior to export."

It notes that sources believed that a manufacturing facility operating primarily to circumvent Kimberley Process controls existed in neighboring Côte d'Ivoire, and that the movement of diamonds through Liberia from Zimbabwe and the Central African Republic represents a new element of trafficking that the Panel continues to investigate, while the export of partially polished stones is an attempt to exploit loopholes in the Kimberley Process Certification Scheme.

The Panel believes that Liberia's compliance with the Kimberley Process Certification Scheme is worrisome, adding that besides structural problems affecting the day-to-day functioning of the upstream component of the chain of custody, poor governance and weak State authority over peripheral areas of the country's territory are facilitating illicit trafficking in natural resources, in particular diamonds and gold.

While in the short term it could be considered that, even though poorly regulated, the alluvial mining sectors provide desperately needed livelihoods for young men, in the longer term, the increasingly growing autonomy of some remote mining regions may provide havens for those seeking to profit from instability and rebellion, the UN warns.

The Panel details that from January to September, 2013 the Government Precious Minerals Office appraised for export a total of 416.5 kg of gold valued at $16,512,373.64, generating $495,458.90 for the exchequer of Liberia.

It says Government control over the alluvial gold sector remains very weak, and that poor infrastructure, remote border locations of many mines and the underfunding of personnel of the Ministry of Lands, Mines and Energy make monitoring of the sector extremely difficult hence, the illegal mining of and trafficking in gold continues here, almost entirely unhindered.

According to the report, while official exports from January to September 2013 total 416.5 kg, industry sources revealed that actual annual production is likely to reach 3,000 kg.

"Some traffickers are smuggling up to 10 kg of gold per week through Côte d'Ivoire and Guinea, where it is smelted into bullion and then trafficked on to the United Arab Emirates; there, it is sold on the international market. The majority of this trade is controlled by Mandingo and Fulani traders who repatriate capital through informal banking mechanisms. Liberian gold is also reported to be extremely pure, with only a negligible 3 per cent of mass lost during the smelting process."

The report reveals that although most of the gold production takes place in south-eastern Liberia, particularly in Grand Gedeh, River Gee and Sinoe counties, there exits significant activity in the Gola Forest region of Grand Cape Mount County, which is adjacent to the Sierra Leonean border.

The Panel visited Kawelehun and Fornor, remote villages deep in the forest, on 28 June 2013, and found large numbers of young men, many of whom had been former combatants from both Liberia and Sierra Leone and were involved in illegal gold and diamond mining, as well as drug trafficking and bush meat hunting.

Liberian forest rangers reported to the Panel that those miners were often extremely aggressive to outsiders and government officials and feared that the presence of the miners may likely pose a major obstacle to the creation of the proposed Gola Forest transboundary peace park, an area of 2,000 square miles, which, while providing a sanctuary for the region's plant and animal life, is also intended to be a closely monitored zone for ensuring border security between Liberia and Sierra Leone.

"The Panel learned from mercenaries among their sources in Monrovia and Grand Gedeh County that some of these individuals had been recruited in February 2013 to fight for government forces in Mali", the report concluded.

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