Diamond Flaws

President Obama will visit one kind of diamond, when he takes in a baseball game in Cuba this week.* And June brides have a many-faceted diamond on their ring fingers. For the independent miners paying the violent armed groups who control access to the rivers in the Central African Republic (CAR), the diamonds they find represent a treacherous way to scrape out a living.

     These miners are far removed from those who wear the diamonds and gold found in the CAR, Zimbabwe, Burkina Faso, Angola, and Mexico and the precious stones from Afghanistan and Myanmar (Burma) and from those who rely on the mobile phones, cars, computers, and other products that contain tungsten from Colombia and tantalum, tungsten, and cobalt from the Democratic Republic of the Congo. Before these raw materials become part of finished products, they change hands often in secretive and poorly regulated supply chains that span the globe.

     The UN, OECD, US, and EU all are taking measures to pressure companies to ask their mineral suppliers more questions and to notice warning signs. Berne Declaration, a Swiss non-governmental organization (NGO), knew Togo produced little or no gold, yet Swiss companies thought they were buying gold that originated there. Instead, their gold was coming from Burkina Faso. True to its advertising, De Beers is assuring consumers "a diamond is forever" by launching a pilot program to buy diamond jewelry and loose diamonds for resale, thereby reducing the need to buy new diamonds from unknown sources.

     Not only is there growing concern about the human rights abuses associated with the dangers independent miners face, but conflict in the world's poorest countries relies in part on financing from selling licenses to miners, collecting tolls on transportation routes to the mines, taxes, and mineral sales. In Zimbabwe, even the national security forces and secret police supplement their government budgets and escape government oversight by engaging in the mineral trade.

     There are money and jobs enough in the mineral trade for both miners and manufacturers to benefit by behaving responsibly.

*See the earlier post, "Good News from Cuba," for background on President Obama's trip to Cuba.

Corruption Has Consequences

Countries with a reputation for being free of corruption from abuse of power, bribes and kickbacks, and secret deals are attractive tourist destinations and prospects for business investment. Unfortunately, based on a study of 168 countries by the OECD (Organization for Economic Co-operation and Development), no country is totally free of corruption.

     In 2015, using a scale of 0-100, the OECD's corruption index showed 68% of the ranked countries scored below 50, indicating a serious corruption problem that took protesters to the streets in some countries. Even Denmark, which scored 91, has room for a bit of improvement. The United States and Austria, with scores of 76, did not make the top ten list of least corrupt countries, which included: Finland, Sweden, New Zealand, the Netherlands, Norway, Switzerland, Singapore, Canada, and Germany. Corruption caused Kim Jong-un's North Korea and Somalia to tie for last place in both 2014 and 2015.

     Brazil, now embroiled in a corruption scandal (See the earlier post, "Warning to Students: Don't Cheat."), dropped 5 points since 2014, and was in 76th place in 2015. Not a good prospect for countries sending teams to this summer's Olympics in Rio.

     The OEDC cautions that its corruption index is based on surveys of conditions institutions make within a country's borders. Countries might have a higher or lower score, if their corruption activities in foreign countries were measured. Indeed, half of OECD countries have been found to violate agreements to stop companies from paying bribes when they do business in countries outside their borders.

     The earlier post, "Cheating is Easy, but...," provides some anti-corruption strategies for doing business around the world.