- The Washington Times - Tuesday, December 5, 2006

The diamond industry has gone on the offensive, trying to polish its image during its most important season to counter the negative publicity of “Blood Diamond,” which opens Friday.

The film depicts the violent diamond trade in Sierra Leone in the early 1990s, when rebel groups would smuggle the stones out of the country to fund weapons during civil war.

Diamond dealers and trade groups have responded with a campaign to inform shoppers about what the industry has done to clean up the diamond business.

They say that since the events depicted in the film took place, the Kimberley Process Certification Scheme instituted standards that diamonds and dealers must go through when importing or exporting in participating countries. The World Diamond Council trade group says the process, supported by diamond-rich countries in Africa as well as the United Nations, has cut the number of blood diamonds from 3 percent to less than 1 percent of all diamonds sold today.

“What they’re talking about did take place, but only in certain parts of the world — in Western and Central Africa — in the 1990s,” said Ronnie Mervis of Mervis Diamond Importers, who yesterday began airing radio commercials guaranteeing that his products are not blood diamonds. “The real diamond supply and flow is in South Africa. It’s [thousands of] miles away, and it has nothing to do with the diamonds from South Africa.”

The World Diamond Council has started a Web site, diamondfacts.org, and diamond dealers are informing their staffs about the current state of conflict diamonds.

“The industry will soon be challenged by the fallout from a major Hollywood production starring Leonardo DiCaprio and tackling the issue of what most probably will be referred to in the media as ‘blood diamonds,’ ” World Diamond Council President Eli Izhakoff said at the group’s annual meeting in February. “The fact that we all are gathered here today is positive proof that the gemstone and jewelry industry is not prepared to allow conflict diamonds to sully our reputation.”

Analysts said it’s hard to predict what kind of impact the film will have on sales.

“It shouldn’t [have an impact] but one just doesn’t know,” said Kristine Koerber, a senior analyst at JMP Securities LLC in San Francisco who covers Tiffany & Co. “Is it really going to hurt traffic into stores? I don’t think so. I’m not expecting it.”

The African People’s Solidarity Committee, a group that says all diamonds are bloodied, has protested diamond stores in San Francisco, Philadelphia, Boston and St. Petersburg, Fla. It plans to hold additional protests Friday, when the movie is released.

Diamond dealers say they have received more questions from customers in recent weeks about their collecting practices and expect more once the movie opens.

“It’s an opportunity to talk more about what we have been doing — adhering to the Kimberley Process and we have vendor warranties about where [the diamonds] come from,” said David H. Sternblitz, vice president and treasurer at Zale Corp.

He said he doesn’t expect the movie to hurt sales.

“We feel pretty confident in terms of what our processes and procedures are. We are being responsible citizens,” he said.

So far, diamond companies appear to be enjoying a jump in sales this holiday season, a period when up to 40 percent of sales are made.

Tiffany & Co. recently raised its earnings expectations on good holiday sales, led by jewelry priced at more than $20,000.

About 1,000 people showed up at Mervis’ diamond truck show last weekend, a 50 percent increase from last year, Mr. Mervis said. While the show had more publicity this year, he attributes the record number at the seventh annual event to a good economy.

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