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Polishing the diamond's image

08:12 AM CST on Friday, December 8, 2006

By MARIA HALKIAS / The Dallas Morning News

Diamond jewelers say they're ready to handle shoppers' concerns after today's release of Blood Diamond, a thriller starring Leonardo DiCaprio with a plot pulled from the industry's darkest hours.

Warner Bros. Pictures
Djimon Hounsou stars in Blood Diamond, a new film expected to raise consumers’ concerns about gems mined in war zones and sold to fund armed conflict or civil war.

Brochures have been printed, sales staffers briefed and industry procedures formalized to deal with any tough questions on an emotional and serious subject – the brutality of forced-labor diamond mining camps that generate millions of dollars used to finance the arms trade and help perpetuate African bloodshed.

Lucky for the jewelry industry, it takes time to make a movie, and well before filming started in the West African country of Sierra Leone, jewelers from Irving-based Zale Corp. to the industry's legendary Harry Winston were busy getting ahead of the controversy.

The industry has taken steps to deal only in diamonds that are certified not to come from conflict zones.

"I can't say enough how serious this issue is," said Thomas J. O'Neill, chief executive of Harry Winston in Dallas, which has just opened the luxury retailer's first Texas store in Highland Park Village. "We have in place a very strong system, and our standards are at the top."

Mr. O'Neill said the movie, which had its Hollywood premiere Thursday and opens nationwide today, is an opportunity to generate awareness.

"I think anything that will highlight the brutality of what goes on in mineral-rich countries is something we're supportive of," he said.

Virtually all mainstream jewelers pledge that their diamonds are obtained from sources that adhere to the Kimberley Process Certification Scheme, which was established in 2003 to certify that shipments of rough diamonds are conflict-free.

The process gets its name from a May 2000 meeting of South African diamond producing states in Kimberley, South Africa, to come up with a way to shut down conflict diamond trading.

Now, industry and government officials fear that a consumer reaction to Blood Diamond could do more harm than good.

This week, a U.S. State Department official expressed concern that the film would inspire viewers to boycott diamonds and, ultimately, harm Africa's legitimate diamond industry.

At a briefing Tuesday, Deputy Assistant Secretary of State Paul Simons said that although it was true that 4 percent to 15 percent of the world's supply of rough diamonds once came from conflict areas, controls have been in place since 2002 that have reduced the supply to "significantly less than 1 percent."

More work to do

Watchdog groups and the diamond industry agree there's still work to be done to erase conflict diamonds all together.

"We're going to continue to work on this long after the movie leaves the theaters," said David Sternblitz, spokesman for Zale. "Ever since the Kimberley Process passed, we've required our suppliers to be certified that they are providing us with conflict-free diamonds.

"Now we're working up to third-party independent monitoring of suppliers," he said. "It's a tight supply chain and easy to track."

Amnesty International and Global Witness launched a Web site last month to educate consumers about the role of diamonds in funding conflicts in which innocent civilians have been slaughtered, raped and mutilated in wars across Africa. They want consumers to be part of the process at the retail level.

The effort's tag line is "Want your diamonds conflict-free? Ask to see the guarantee."

The diamond industry is very sensitive to consumer pressure, said Amy O'Meara, a spokeswoman for the business and human rights program at Amnesty International.

"We're not telling people to stop buying diamonds. We want them to make sure they're a force for good and ask questions and be satisfied with the answers, because there's a lot of fraud out there."

In the U.S., the Kimberley Process is enforced by the Clean Diamond Trade Act, also introduced in 2003, which requires annual reviews of the standards, practices and procedures.

Many are concerned that weaknesses may still exist in both implementation and oversight, creating loopholes that could allow conflict diamonds to enter the U.S.

Amnesty International estimates $23 million worth of conflict diamonds were smuggled out of West Africa last year.

Bad timing

The attention comes at an unfortunate time for the industry. Twenty percent of all diamond engagement rings are sold during Christmas, and the season generates the lion's share of profits for most jewelers.

Zale is especially under the gun to generate a decent Christmas, after a disastrous holiday season last year. This week Merrill Lynch gave Zale stock a sell rating.

In a written report, Merrill Lynch analyst Julie Chapgier said management's expectations for the holidays seem too high. "Holiday momentum at Zale's appears soft, and promotions to drive sales could hurt" profits.

Zale, which operates its namesake Zales chain, Gordon's, Bailey Banks & Biddle, Piercing Pagoda, and Canadian chains Peoples and Mappins, has provided its store staff with training materials so sales associates can communicate with shoppers about the issues. There's also a card with information to give to customers that refers them to the corporate and social responsibility section on Zale's Web site.

"It's been all over the news and even on Oprah. She devoted a whole show to it this week," Mr. Sternblitz said. "But so far we haven't had any questions from shoppers."

The Associated Press contributed to this report.

E-mail mhalkias@dallasnews.com

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