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he diamond engagement ring tradition could be the greatest PR scam ever invented. It is ingrained in society that everyone from the stockbroker to the janitor has to shell out thousands to the diamond

 
 

industry if he wants to marry his woman.

After all. It's "how you can make two months' salary last forever," right?

Eighty years ago, your great grandparents didn't do this when they

 
 

got married. They gave each other big wooden boxes and simple things like promise rings and hope chests. The allure of diamonds is part of a huge, century-long conspiracy by the diamond industry, namely giant De Beers, which controls stockpiles and sets the price of stones, which aren't the rarest in nature, even though they're the most expensive.

Janine Roberts has made a career out of following this seedy business and exposing the oftentimes disgusting lengths it goes to maintain control over the diamond's worth. She recently took a few moments to share some thoughts from her most recent book, Glitter & Greed: The Secret World of the Diamond Cartel.

 

 
 

BT: When did this whole diamond engagement ring thing start?

JR: Diamonds became engagement stones around the end of the recession. Ernest Oppenheimer, who was in control of De Beers in the 1930s, was shutting down diamond mines to control supply and keep the price of diamonds high. He sent his son Harry to New York to meet with advertisers, because he realized that he couldn't have diamonds being bought up just by rich people. They needed something that would appeal to everyone.

Well, everyone has to get engaged. So they spent a million pounds a year (about $1.7 million) to establish the diamond engagement ring as a sacrament -- a spiritual thing. "Diamonds are forever." They invented that and advertised it at every high school at the time. They got Paramount Studios involved by having the female stars wearing diamonds and by creating diamonds films. Marilyn Monroe's "Diamonds are a girl's best friend" and such. That advertising campaign created the myth.

It was quite different in old times. Diamonds in India, for example, were worn for many years mostly by men. Their hardness was a symbol of fertility. They had to create a new story about diamonds for the woman.

BT: The diamond industry, especially De Beers, which now controls a vast majority of the rough diamonds being sent off for polishing, will do whatever it takes to control the supply of diamonds and keep the prices up, according to your book. What other egregious examples are there of price fixing?

JR: De Beers always says they don't restrict supplies. But I've talked to sources, and researched industry books, and I found De Beers records with Ernest Oppenheimer quoted as saying they have bought out farms rich in diamonds and hid them.

One farm was in Arkansas. In about 1910 a pig farmer in Arkansas, about 120 miles south of Little Rock, was cleaning out the swill when he found some diamonds. He couldn't believe they could actually be diamonds, but hesent them to Tiffany's, who reported back that they really were. This farmer found a diamond pipe in Arkansas.

He hired a couple of companies to help him mine the top 40 feet or so to raise money for proper equipment to set up a full production mine. They sent stones to Tiffany by the tens of thousands. Good quality gems. Geologists came in from a mine manager of a De Beers mine in South Africa and also reported that this was a highly commercial deposit. There are plenty of records that this was so.

After about 20 years of work on the deposit, the owner of the mine went to New York to meet with Ernest Oppenheimer, who was a very big seller through Anglo American, a De Beers rival at the time. I have a copy of a cable sent from that meeting by the mine owner to a manger back in Arkansas. The Arkansas mine owner said that Oppenheimer has extraordinary ideas about mining, to shut down the activity, hide all the paperwork and "I'll explain when I get back."

Henry Ford was using industrial stones from Arkansas for his assembly line. Ford offered to pay premium price for them. That was refused. He asked the owner to name his price for the whole operation. To his amazement, he refused to sell it and instead shut it down. The allegation is that the mine owner went off to get a lucrative job with De Beers.

BT: And this is legal?

JR: The Justice Department believes it was a conspiracy to control supply.

The U.S. is the biggest market for diamonds in the world. Due to the Sherman Act's ban on international price fixing, diamond cartels couldn't control that mine in Arkansas, which appeared to be so rich that it could destroy part of the controlled market for diamonds. If the U.S. was independent of Africa, that would be disastrous.

So it stopped being a mine, and it is now a tourist attraction. For $4 you get a pair of boots and a spade, and you can dig a hole -- no deeper than four feet -- and take home what you can fill a bucket with by nighttime. If you see it, it looks like people picking mushrooms or strawberries -- crawling, looking for stones on the surface. The deposit was so rich that you can still find them there. People actually dig up around 300 a year.

I was down in a mine in South Africa on the Atlantic Coast, and I mentioned this to a mine worker. He laughed and said it had happened there. A large part of one deposit was turned into a game park. The miner told me De Beers had to ship in some antelope so there would actually be game. A geologist I talked to said that half of the reserves of the mine are in the game park.

BT: Does anyone ever try to stop this?

JR: Last year some documents from the prime minister in Namibia were leaked. Among them was a letter written by Maurice Templesman, who is very much the De Beers representative in the U.S. in a formal sense. The Namibian government had decided that it wanted to check the price De Beers was paying them for their diamonds. De Beers doesn't only buy all the product from Namibia; it also sets the price it's paying. The government is supposed to be De

 
 

Beers' partner, but it decided to make sure De Beers was paying the correct price, the market price. Maurice Templesman met with the president and prime minister, and the leaked letter was one he wrote back to them.

It said, roughly, "As I told you, we are prepared to make $50 million available to you that does not have to be reported officially if you don't check the prices De Beers is paying." This letter was released in Namibian newspapers.

The check never happened. De Beers probably offered them slightly more money for the diamonds so that there would not

 
 

be any proof that they were cheating on the price. There are stacks of documentation in my book of Namibian officials saying that they can't discover what De Beers gets for our diamonds.

BT: What about the link to terrorism, which is what suddenly got Americans interested in illegal diamond trading?

JR: There are reports of things going on in countries we know are involved with terrorism, but al-Qaida is only tip of the iceberg as far as using diamonds for military or aggressive purposes. There are documents in my book about what happens in the Congo, how U.S. Special Forces went in to get control of mines being taken over by rebels. The UN says that over a million people died over these wars in Africa, which seems to me far worse than what al-Qaida has been doing. There are Hezbollah merchants, Israelis sending conflict stones into Tel Aviv.

Really, you have this prolific natural resource in at least 20 countries. They are extremely cheap to mine, sold at extremely high prices, so they fund all sorts of nasty things in Africa.

BT: So when will people wake up to all this? Are people finally starting to pay attention?

JR: I just keep plugging away to see if people take it up. I've been told me that it's my work that inspired "conflict diamonds" work in the first place. But it's not good enough. Not far enough.

I found as I go around the U.S. that a lot of journalists treat me like some kind of heroine, which is wonderful. I didn't expect it, but it has let me talk about human rights issues on C-SPAN and Fox. They usually want me to talk about diamonds and terrorism, but I explain that it's very broad -- not just al-Qaida. Once I was on TV in Boston, and a woman from the Congo called up and said it was so good talking about what's going on in the Congo where it's like 100 September 11s happened. That was lovely. I'll just keep coming out around the world and hopefully things will start happening.

 

*BT*

In a darker age, Mike Bruno was a senior editor at the Rapaport Diamond Report, where he covered the industry's many issues in detail.