UN reveals suspect diamond deal

The transitional government of Liberia has forged a 10-year deal that gives a previously unheard of mining company a de facto monopoly to buy up diamonds and other minerals produced in the west of the country, according to a United Nations panel of experts. “The National Transitional Government of Liberia has signed a secret agreement with the West African Mining Corporation (WAMCO), a company financed by the privately-owned London International Bank Limited,” the panel said in its latest report to the UN Security Council. The five-member panel expressed concern that the deal had been struck in an “atmosphere of secrecy” with a company of “unknown provenance” and cited its existence as evidence that a four-year-old ban on diamond exports by Liberia should be maintained. The ban was originally imposed in 2001, along with an arms embargo, to prevent the government of former President Charles Taylor from using the foreign exchange earned from diamonds mined in Liberia and smuggled in from neighbouring Sierra Leone to buy guns. “The Panel interviewed representatives of WAMCO in Monrovia. It transpired from that meeting that the company had had no previous experience in the mining sector whatsoever,” the report said. Liberia's Deputy Minister of Land, Mines and Energy, Mulbah Willie, told IRIN that the government chose WAMCO as partners since it was the first diamond trading company to offer its services. “They were there the first that came to Liberia and asked us – they said that they wanted to buy diamonds,” Willie told IRIN. “There is a lot of [diamond] smuggling in Liberia,” said Willie, “and if we are going to control the problem and adhere to the Kimberly Process, then we need corporate investment.” The Kimberley Process is an internationally recognised certification system for rough diamonds which was devised to prevent so-called ‘blood’ or ‘conflict’ diamonds from being sold on the international market. Many of these came from Sierra Leone, Liberia, the Democratic Republic of Congo and Angola. However, Willie hinted that the transitional government, whose members are mainly drawn from the three armed factions that fought each other in Liberia's 14-year civil war, might still back out of the WAMCO deal. “This is merely a statement of intent, and as far as I am aware, no deal with WAMCO had been ratified by parliament,” Willie said. The deputy minister said he was not privy to the full details of the agreement as he had just returned from official business in South Africa. London International Bank is a private bank that operates from offices in Grosvenor Place in the exclusive Belgravia district of central London. The bank's website says that it operates a property investment fund which owns buildings in Europe, the United States and North Africa. An official of the bank told IRIN by telephone that a statement on the proposed Liberia deal would be issued “soon”. The UN panel of experts expressed concern that as part of the proposed agreement, WAMCO be able to establish its own corps of private security guards. “Past experience with logging companies has shown that such organisations can quickly become militias,” it noted. However, Willie told IRIN that it was “normal” for mining companies in Liberia to have their own security forces with the power to arrest people on their own concessions. He noted that they were not authorised to carry guns. The UN Security Council extended its ban on exports of rough diamonds by Liberia in December 2004 for a further six months, with an undertaking to review the situation in March 2005. It agreed on Tuesday to keep the ban in force until June when it will come up for review again. The panel of experts concluded that the WAMCO deal “would create a de facto monopoly over much of Liberia’s diamond producing regions and would preclude market competition for the purchase of diamonds by dealers from alluvial artisanal miners,” surmised the Panel. “The people of Liberia are not likely to benefit from such an arrangement in the long term,” it said. Liberia remains in tatters after what was a brutal geurilla war which ended in 2003. But with a UN ban on exports of diamonds and timber - its two main foreign exchange earners - still in force, it is proving difficult to kick-start the economy and wean the ruined country off international aid.