Diamond Smugglers - I

Much of the Fall (or Spring, for those of you in the norhtern half of the world) I spent tracking down diamond smugglers of various stripes.

In Brazil, a report I wrote in 2005 on the various ways diamond traders were putting diamonds illegally into the international system finally bore fruit when the Brazilian federal police launched a series of raids under the codename Operation Carbon, resulting in the arrest of some ten diamond traders, most of whom I had named in my report. Operation Carbon was a particularly gratifying , in that the Brazilian government agency in charge of regulating the diamond industry - the DNPM- had denounced and rejected my report when it was published, and had even gone so far as to publish a counter report, supposedly rebutting my findings. The author of their rebuttal report - the regional head of the DNPM -was one of those arrested in Operation Carbon.

Here's an article on the arrests in the Folha de Sao Paulo. I have a translation somewhere, and if I find it I'll post it, but for the moment it's Portuguese only:

0/02/2006 - 13h03

PF e Receita prendem contrabandistas de diamantes no Rio e MG

da Folha Online

Receita Federal, Polícia Federal e Ministério Público Federal deflagraram hoje operação conjunta de combate ao contrabando de diamantes em vários Estados.

Batizada de "Operação Carbono", a ação prevê o cumprimento de 40 mandados de busca e apreensão em sedes de empresas e residências e também de 11 mandados de prisão. Pelo menos seis suspeitos já foram presos no Rio de Janeiro e Minas Gerais.

Participam da operação 260 policiais federais, além de 70 auditores fiscais da Receita.

Durante um ano e meio, a PF e a Receita investigaram um esquema de comércio clandestino de diamantes, articulado por empresários do setor, com o auxílio de contadores, doleiros e servidores do Departamento Nacional de Produção Mineral. Esse órgão é responsável pela emissão de um certificado que atesta a origem e a legalidade da extração das pedras.

Durante as investigações, foi constatado que, muitas vezes, as pedras são extraídas de garimpos ilegais nas regiões Norte e Centro-Oeste do país, ou mesmo no exterior, e posteriormente são atestadas por certificados falsos. Há indícios de que algumas dessas pedras sejam provenientes de áreas de conflito na África.

A operação combate, além do contrabando de pedras preciosas, os crimes de lavagem de dinheiro, sonegação fiscal e evasão de divisas. Dentre os investigados há pessoas cujos nomes constam de registros da Drugs Enforcement Agency (Agência Anti-Drogas dos Estados Unidos), da ONU e da Interpol.

Also ironic was at the time the Federal Police launched their raids, I was working on a follow up report, a rebuttal to the government's rebuttal. In the first report, I had deliberately left a couple of trails un-followed, in the belief that local media would follow up and that would create more news. For example, I had shown that one million dollar diamond export was clearly fraudulent, and I had given the name of a company - located in Belo Horizonte - through which the diamonds had been routed. I assumed some keen reporter would dig up the names of the director of the company and go ask just what was up. I underestimated the basic laziness of most reporters. In the year the report was out there, no one followed up. So now it was my turn again.

While raids continued and arrests piled up, I continued digging, determining that not only was that million dollar export phoney from beginning to end (the earth the diamonds came from had never been dug, the company through which the diamonds had been routed - yes I found their names and called - dealt in paint pigments, not diamonds, and had never hear of this export) but that fully one quarter of Brazil's diamond exports were demonstrably false. The country's fourth largest exporter was a dead man, Fabio Tadeu Dias da Silva. The third largest exporter was an indigent living in a homeless shelter. Someone was using the names of these people to create phoney paper trails to get contraband stones into the system so that they could be exported legally (with Kimberley Certificates) into the international market. As I wrote in my report, the odds on favourite for the mastermind of this scheme was a Belo Horizonte Diamond trader named Hassan Ahmad. Certainly, he was the one behind the fraudulent million dollar export. And he was only living breathing human being to benefit from the exports made by the dead man, Fabio da Silva.

My full follow up report is available on the website of Partnership Africa Canada, the Canadian NGO that commissioned the report: http://www.pacweb.org/e/

And once I put it up on my website, I will include a link here: