Illicit Diamond Trade Used by Hizballah and Others

Nairobi, Kenya (CNSNews.com) - The international community should speed up efforts to prevent terrorist groups from using the proceeds from illicit diamond trade to finance their activities and launder their funds, campaigners say.

A Nairobi-based African affairs analyst, Adan Mohamed, said it was "very likely" that groups like Hizballah still use the trade to raise additional revenue.

"Nothing much has happened in putting mechanisms in place to prevent diamond trade from being used to clean dirty cash or finance conflicts," he said.

Investigations by researchers, human rights groups, the United Nations and media organizations have revealed how Hizballah exploited weakness in the international diamond trade monitoring systems to hide their assets and raise funds.

The illicit trade was mainly carried out in the West African nations of Sierra Leone, Liberia and the Ivory Coast, and further south in the Democratic Republic of Congo (DRC).

The trade was allegedly facilitated in part by former Liberian President Charles Taylor, now facing war crimes charges in The Hague.

Taylor was the main sponsor of the notorious Sierra Leone rebel group the Revolutionary United Font (RUF), which controlled a significant segment of the country's rich alluvial diamond mines.

The RUF waged a brutal five-year war against the Sierra Leone government in which it targeted non cooperative civilians and punished them by amputating their arms. Some RUF leaders are in the custody of the International Criminal Court.

The gems mined by RUF were shipped to Taylor's Liberia for onward transmission to Hizballah, al-Qaeda and other illicit international buyers, according to published accounts.

The small but influential Lebanese community in West Africa, comprising mostly Shiites, was also found to be instrumental in facilitating the transfer of illicit diamonds to Hizballah.

A 2004 report in the Middle East Intelligence Bulletin, a publication of the Middle East Forum and the U.S. Committee for a Free Lebanon, said that although the U.S. authorities had been able to reduce the flow of Hizballah financing from networks in the U.S., "it appears that one lucrative source of Hizballah financing is still growing: the diamond trade in West Africa."

Security information consultant group Strategic Forecasting (Stratfor) said last month that Hizballah could finance new attacks on Israeli targets abroad using funds from a profitable "blood diamond" network in West Africa.

Another group that has in the past documented how Hizballah and al-Qaeda have used diamonds from West Africa to finance their terrorist activities is the international NGO, Global Witness.

In a new report, the group says efforts to monitor the international movement of diamonds have not been successful and more needs to be done.

Global Witness estimates that four percent of illegal diamonds get into the international market every year. The overall global diamond trade is worth over $60 billion and most of the retail sales are in the United States.

A project known as the Kimberley Process Certification Scheme (KPCS) was started in 2003 to monitor international diamond movement, in a bid to prevent the gems from being used to fund conflicts and fuel human rights abuses. Seventy countries have agreed to implement the plan so far.

Pamela Wexler, an attorney who authored the new report, said that although there was much to praise about the KPCS inaugural phase, it had not yet evolved into a fully credible check on the international movement of diamonds.

"Foremost are gaps in oversight, specifically of internal control systems in individual countries and of the peer review monitoring system overall."

Another key weakness was inadequate checks on private industry by individual governments.

The KPCS requires governments to implement import/export control regimes and to adopt systems to oversee their private sectors, and so keep a documentary record of rough diamonds as they travel from the mine to their polished state.

Diamonds must be shipped in sealed containers and export agencies must certify that parcels are free from "conflict diamonds."

Members also agree to prohibit entry of uncut stones arriving unsealed or without proper certification.

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Jesse, Liberia and Blood Diamonds

By Kenneth R. Timmerman
Insight Magazine | July 25, 2003

With the Congressional Black Caucus clamoring for President George W. Bush to dispatch U.S. troops to Liberia, after having voted almost unanimously against the U.S. war in Iraq, the president and his national-security team are weighing the costs of joining a multinational peacekeeping force in a nation that has ripped through several of them during the last decade. One thing neither Bush nor the Congressional Black Caucus is talking about publicly, however, is how Liberia began this latest phase of its spiraling descent into chaos.

And for good reason. The current crisis was in part the creation of the Rev. Jesse Jackson, a Democratic Party activist who claims to champion the rights of Africans to self-governance. As special envoy for democracy and human rights in Africa, starting in October 1997, Jackson was President Bill Clinton's point man for Africa. It was Jackson who spearheaded Clinton's 10-day African safari in March 1998, at a cost to taxpayers of $42.8 million. And it was Jackson who legitimated Liberian strongman Charles Taylor and his protégé, the machete-wielding militia leader in neighboring Sierra Leone, Cpl. Foday Sankoh. Without Jackson's active intervention, both leaders were headed toward international isolation and sanction. Thanks to Jackson, both retained power to murder another day.

At Jackson's prompting, Clinton made an unprecedented phone call to Taylor from Air Force One while flying over Africa. Until then the United States had shunned Taylor because of his grisly past. Among Taylor's many "accomplishments" were the murder of American Catholic nuns in Liberia and the storming of the U.S. Embassy in Monrovia.

The mainstream media has resolutely ignored Jackson's involvement in the diamond wars of Liberia and Sierra Leone, and he never has been hauled before a congressional committee to account for this behavior [see Kenneth R. Timmerman's New York Times best seller, Shakedown: Exposing the Real Jesse Jackson (Regnery Publishing, March 2002)].

Jackson first met Taylor in Monrovia on Feb. 11, 1998, thanks to the intercession of an old friend, a Liberian named Romeo Horton who had become a close aide to Taylor. Taylor had just been elected president of Liberia after a campaign riddled with intimidation in which he sent his infamous "Small Boys Units" throughout the countryside, waving their machetes at anyone who refused to vote for their man. But instead of hectoring Taylor on human rights and democracy - after all, that was Jackson's brief - Jackson embraced the Liberian strongman, as shown in a State Department after-action memo obtained under the Freedom of Information Act.

"During his 24 hours in Liberia, the Rev. Jackson met several times privately with President Taylor and appeared to establish a strong personal bond with him," the April 29, 1998, memo from the U.S. Embassy in Monrovia reads. "After Jesse Jackson's visit, President Taylor went out of his way to stress that Liberia is America's best friend in Africa, and that it was time to improve the bilateral relationship - a 180-degree change in direction from the public posture of the Taylor government before the Jackson visit."

In neighboring Sierra Leone, Sankoh and his Revolutionary United Front (RUF) militia had massacred tens of thousands of civilians and, teamed with disgruntled military officers, had driven elected president Ahmad Tejan Kabbah into exile. Jackson said in an interview that he considered Sankoh and Taylor to be like the gang leaders in Chicago, who could be "redeemed" by his careful ministrations. Rather than confront them, Jackson befriended them, over the howls of the State Department professionals.

"Secretary [of State Madeleine] Albright delegated Africa policy to [U.S. Rep. Donald] Payne [of New Jersey] and the Congressional Black Caucus," Sierra Leone's outspoken ambassador to Washington, John Ernest Leigh, told this reporter. A House International Affairs Committee staffer who followed Jackson's meetings with Taylor put it more bluntly: "The whole effort under Clinton was to mainstream Charles Taylor, and Jesse Jackson had a lot to do with it."

Just two months after his first meeting with Taylor, Jackson played host to a "reconciliation conference" at his Operation PUSH headquarters in Chicago. It was meant to drum up support for Taylor in the United States and to portray him as a modern democratic leader. Taylor appeared on a huge video screen that dominated the stage, while Jackson chirped, "It's morning time in Liberia."

Harry A. Greaves, a Taylor opponent who helped found the Liberia Action Party, called Jackson's conference "a PR exercise by Charles Taylor. The general perception in the Liberian community was that Jackson was a paid lobbyist for Charles Taylor." Jackson insisted to me that he "got absolutely no money from the government of Liberia" to play host to the conference. But Jackson had tried to exclude the opposition from the conference entirely, until Deputy Assistant Secretary of State Howard Jeter telephoned Jackson and insisted otherwise.

"If there are any adversaries who are not ready to reconcile, please leave the room," Jackson told the auditorium. He then demanded that Liberians stop using the Internet to publish information on Taylor's atrocities. "The international community frequents the Internet and takes note of whatever information is disseminated on the information superhighway," he said. "So, please stay off the Net."

In September, just five months after the "reconciliation" Jackson hosted in Chicago, Taylor's Special Security Service went on a killing rampage in an effort to track down and eliminate rival warlord Roosevelt Johnson, an ethnic Krahn whom Taylor accused of plotting a coup. When Johnson sought refuge in the U.S. Embassy, Taylor's men gunned him down in the entryway, wounding two embassy employees. The State Department was not amused, and asked Jackson to reprimand Taylor by phone. No record of what Jackson actually said was released but, in November 1998, during another visit to the region, Jesse again treated Taylor as a statesman.

With help from Britain and Nigeria (but not from Jackson), Sierra Leone's elected president Kabbah managed to return to power in March 1998. Sankoh's RUF guerrillas were forced back into the bush, and Sankoh himself was arrested, tried for treason and sentenced to death. It all could have ended there - if it hadn't been for Jackson, who intervened with Kabbah to get the death sentence against Sankoh lifted.

In January 1999, Sankoh's troops went on another killing spree and launched an offensive that brought them into the streets of Freetown. A West African peacekeeping force led by Nigeria managed to drive the rebels out of the capital and fought them to a stalemate. Again, it could have ended there if it hadn't been for Jackson's active intervention.

In May 1999, Jackson decided it was time to reinvent Sankoh, whose troops now controlled Sierra Leone's rich diamond mines. By this point, the United Nations and private investigators had published detailed reports on how Sankoh and Taylor were using "blood diamonds" to fuel West Africa's civil and regional wars, leading to international controls on the diamond trade. On the margins of a conference in nearby Ghana, Jackson "kidnapped" Kabbah, according to Kabbah advisers I interviewed for my book, and flew him to neighboring Lomé, Togo, where Jackson forced him to sign a cease-fire with Sankoh. "We had not expected or planned that agreement," former assistant secretary of state Susan E. Rice tells Insight, "or that Jackson would have a role in it." The impression among African policymakers at State was, she says, "Where did this come from?"

In July, under the terms of a power-sharing agreement that Jackson helped negotiate and which Kabbah vigorously resisted, Sankoh was released from house arrest, made a vice president in a new national-unity government and put in charge of Sierra Leone's diamond mines.

Now in government, Sankoh began smuggling out thousands of diamonds, many of which he sent to Taylor in Liberia in exchange for weapons. Jackson repeatedly raised the issue of the illicit diamond trade and the clandestine arms supplies with Taylor, who simply denied the charges, the State Department transcripts show. Jackson never pressed him further.

Jackson maintained direct contact with Sankoh after the Lomé accords were signed, telephoning him repeatedly with words of encouragement and promising him a "full pardon." Braced by Jackson's support, Sankoh and his RUF fighters built up their forces, thanks to the diamond trade, ignoring Jackson's pleas to disarm and give peace a chance. New fighting broke out in January 2000 in the hinterland. The cease-fire Jackson brokered lasted less than six months. By May the fighting took on crisis proportions when Sankoh's fighters murdered U.N. peacekeepers and took 500 of them hostage. Meanwhile Liberia, which produces no diamonds, reported that it had exported $300 million worth of the precious stones the previous year.

Jackson made one final attempt to halt the bloodshed in mid-May 2000. He tried in vain to cajole Taylor to "negotiate" an end to the hostage crisis, since Taylor was widely (and correctly) viewed as godfather of the RUF and as Sankoh's arms and diamond broker. In one telephone conversation with Taylor, on May 7, 2000, Jackson gushed: "Brother Taylor, word is coming through that you are playing a constructive role. Two or three wire-service stories. Congratulations! Your public leadership is important."

When challenged by African reporters during a May 12, 2000, press conference as to why he was relying on Taylor and Sankoh to get the U.N. hostages released, when in fact they had orchestrated the hostage crisis themselves, Jackson said, "There is blood on everybody's hands and no clean hands. If Charles Taylor can talk to the [RUF] commanders and they hear that, that would be positive. It would be different if he were encouraging fighting, but he is not."

Then Jackson made a blunder that would make him an object of ridicule and scorn across Africa: He compared Sankoh to former African National Congress leader Nelson Mandela, who went on to become president of South Africa. On May 16, Jackson was all set to take off for Sierra Leone when an urgent message came into the State Department, warning that Jackson could be assaulted physically should he attempt to land. Foreign Minister Sama Banya even went on state radio in Freetown, urging Jackson to stay away. "When people in Freetown heard Jesse Jackson's statement comparing Foday Sankoh to Nelson Mandela, they were up in arms," recalls Sierra Leone Ambassador Leigh. "Comparing Nelson Mandela to a guy who was ripping arms off of babies was the biggest insult to Africa you could think of. Jesse Jackson destroyed the credibility of the United States."

During a conference call to leaders in Freetown, Jackson tried to retract his earlier statements but was openly attacked as a RUF "collaborator." One local journalist wrote bitterly that Jackson was known as a civil-rights leader in the United States, but that in Africa he was better known as a "killer's-rights" leader.

Arriving in Monrovia, Liberia, on May 17, 2000, Jackson declared, "President Taylor has been doing a commendable job negotiating for the release of the hostages. All the hostages should be freed and freed now. There is no basis for delay, there is no basis for negotiations." Jackson's comments would have been laughable were it not for the quantities of innocent blood that had been shed, thanks to his self-serving misbehavior.

By this point, the State Department had suffered enough of Jackson's alleged diplomacy and the failed agreement he had brokered. State Department spokesman Philip Reeker declared on June 5, 2000, that the United States was "not part of that agreement." Jackson summarily was fired as Clinton's special envoy shortly afterward.

But the Clinton State Department is not innocent in this affair. In a series of dispatches and briefing documents stamped "Secret," which the State Department declassified at this reporter's request, it is clear that Assistant Secretary of State Rice, an Albright protégé, and Deputy Assistant Secretary of State Jeter primed Jackson with intelligence, talking points and background papers throughout the entire three-year period he was Clinton's envoy. Indeed, the entire bureaucracy of U.S. diplomacy was put at Jackson's disposal with tragic results.

However, it also is clear that Jackson repeatedly took initiatives on his own, especially when it came to forging that strong personal bond with the Liberian dictator.

The United States and the citizens of West Africa now have a historic opportunity with the war-crimes indictment against Taylor that was released in June by the U.N.-backed Special Court for Sierra Leone. Taylor is seeking asylum in neighboring Nigeria, but already voices are being raised among Liberian opposition politicians and their U.S. supporters that he should not be allowed to escape prosecution.

Among the first questions they believe prosecutors should ask Taylor is who he paid off using Sankoh's diamonds. U.S. intelligence officers and their assets on the ground in Liberia reported back to Washington concerning these payoffs at the very moment that Jackson was negotiating a favorable role for Taylor and for Sankoh in Lomé, former CIA officers and other sources have told this reporter.

Who received the diamonds, how they were brokered onto the international marketplace in Europe and where the cash proceeds went remain mysteries. Charles Taylor knows many of the answers.

RIP Danny Pearl

November 16, 2001

Much-smuggled gem aids al-Qaida
Bought, sold by militants near mine, tanzanite ends up at Mideast souks

By Robert Block and Daniel Pearl
THE WALL STREET JOURNAL

MERERANI, Tanzania, Nov. 16 — In the shadow of Mount Kilimanjaro, miners with flashlights tied to their heads crawl hundreds of feet beneath the East African plain, searching for a purple-brown crystal that will turn into a blue gem called tanzanite. Many of the rare stones chipped off by the spacemen, as the miners are called, find their way to display cases at Zales, QVC or Tiffany. But it’s a long way from these dusty plains to U.S. jewelry stores, and the stones pass through many hands on their journey. Some of those hands, it is increasingly clear, belong to active supporters of Osama bin Laden.

A TRADE GROUP called the Tanzanian Mineral Dealers Association denies that bin Laden’s al-Qaida has any role in the tanzanite trade. But in the bars and cafes that dot the streets of Tanzania’s mining community, the radical connections are no secret. According to miners and local residents, Muslim extremists loyal to bin Laden buy stones from miners and middlemen, smuggling them out of Tanzania to free-trade havens such as Dubai and Hong Kong.

“Yes, people here are trading for Osama. Just look around and you will find serious Muslims who believe in him and work for him,” says Musa Abdallah, a Kenyan who has worked as a tanzanite miner for six years.

EMBASSY BOMBINGS

Many details of the trade remain murky, such as whether its main role is to earn money for the militants or simply to help them move funds secretly about the world. Still, William Wechsler, a former National Security Council member in charge of counterterrorism under President Clinton, says there is little doubt that bin Laden’s links to gemstones, including tanzanite, have been used at times to help fund his terror activities. Al-Qaida’s dealings in tanzanite in the 1990s were detailed at length during the recent federal trial that convicted four bin Laden men in connection with the U.S. embassy bombings in Tanzania and Kenya.

Alex Magyane, a Tanzanian government official actively investigating the tanzanite trade, says he has recently traced bin Laden-linked smuggling of rough stones through Kenya to bazaars in the Middle East. “Beyond any doubt, I am 100 percent sure that these Muslim gem traders are connected to Osama bin Laden,” the official says.

Tanzanite is so rare it is mined in only one place on earth, a five-square-mile patch of graphite rock here in northeastern Tanzania. Legend has it that Masai tribesmen discovered the gem when a bolt of lightning set fire to the plains, and some crystals on the ground turned blue. In 1967 an Indian geologist identified the stone as a rare form of the mineral zoisite and determined that it turned a velvety blue when heated to 400 degrees Fahrenheit. Tiffany & Co. named it “tanzanite” and promoted it as “the most important gemological discovery in 2,000 years.” Tanzanite became a U.S. marketing phenomenon, second in popularity only to sapphire among colored stones.

HEART OF THE OCEAN

Its popularity soared when movie fans learned that the sapphire heart-shaped pendant Kate Winslet hurled into the sea in the movie “Titanic” was actually tanzanite. By then, the U.S. was selling $380 million of tanzanite jewelry a year.

Yet Tanzania’s official exports of uncut tanzanite crystal totaled a mere $16 million last year. Rampant smuggling spirits as much as 90 percent of the production out of the country, Tanzanian government statistics show. Local traders often buy plastic bags full of rough stones, paying cash and exchanging none of the paperwork that would trigger a 3 percent export duty. And in faraway places where the rough tanzanite is cooked, cut and polished, such as the Indian city of Jaipur, dealers say they don’t question suppliers closely about sources.

Mererani, which is a 30-minute drive from the mines along a treacherous dirt road, is reminiscent of a Gold Rush town, with shacks, bars, brothels and hordes of young men hoping for a strike. Besides a few big mechanized mining operations, hundreds of individuals hold tiny, 50-yard-square claims that they mine as best they can. Working with the “spacemen” who descend the tunnels are “snakes,” the term for boys who sift piles of grit on the surface and sometimes wriggle into the crevices too small for adults. Restaurants play on the dreams of prosperity, taking names like New York and The Big Apple. But alongside the dreams and the decadence, a religious radicalism is brewing.

Tanzania’s Muslims, who make up about 40 percent of the populace, have long practiced a “soft” Islam, tolerant of drinking, revealing dress and their many Christian neighbors. But Muslim radicalism began to rise in the early 1990s, fueled by poverty and financial support from Islamic charities abroad. It included the al-Qaida cell that bombed the U.S. embassy in Tanzania three years ago.

In Mererani, a new mosque called Taqwa has brought an openly radical Muslim presence to the tanzanite district. Taqwa’s imam, Sheik Omari, has issued edicts that Muslims miners should sell their stones only to fellow Muslims. The diktats breed resentment. “The fundamentalists have established a mafia to dominate the trade,” says Abdallah, the Kenyan spaceman. “Even if non-Muslims offer better prices for our stones, we are harassed by the fundamentalists not to sell to anyone but them. Many Muslim miners obey because they are scared of them.”

The Taqwa mosque is still under construction on a dusty side street. Inside a temporary prayer hall of wood and corrugated metal, miners are taught the importance of avenging the “arrogance” of America and defending Afghanistan from “U.S. oppression.” Support for bin Laden is a duty, miners are told. The faithful of Taqwa often address one another as Jahidini, a Swahili word that means Muslim militant. Some routinely greet one another as “Osama.”

After prayers, the mosque’s courtyard becomes an open-air gem-dealing space, where Sheik Omari and other mosque leaders trade tanzanite with small-time miners. In between haggling, the elders preach the virtues of suicide attacks as a way to defend their faith.

‘TICKET TO PARADISE’

“Remember, Islam teaches us that your body is a weapon,” Sheik Omari tells a group of young men in Swahili. “But if you die, you should take as many of your enemy with you as you can. This will be your ticket to paradise.”

Asked if he works with or belongs to al-Qaida, Sheik Omari gives a vague answer, as do others at the mosque. ” ‘Al-Qaida’ means ‘base.’ I don’t know any base. But Islam says we must support our brothers and sisters and those who defend Islam from its enemies,” Sheik Omari says.

The mosque traders, who aren’t licensed as dealers but act as informal middlemen, make clear the gem business must serve their militant brand of Islam. “We as Muslims must unite in dealing in gemstones to help one another and to generate funds to defend Islam from those who want to destroy it,” says Aman Mustafa, a Kenyan gem broker and teacher at the mosque, who says he has studied Islamic law in Sudan.

U.S. investigators of al-Qaida’s business say that it is designed to create self-sustaining networks and cells. Here in Mererani, some proceeds from the tanzanite trade are plowed back into expanding Taqwa’s influence. “This mosque is being built with tanzanite,” Sheik Omari says. “Our Islam is stronger with our efforts to create a Muslim force in this gemstone.”

KENYAN CONNECTION

Magyane, whose government title is regional mine officer, says some of the stones bought by the Muslim militants are smuggled through “rat routes” to the Kenyan city of Mombasa. That city is a stronghold of al-Qaida sympathizers and was a base for the 1998 embassy bombings.

Throughout the embassy-bomber trial this year in New York, several bin Laden associates or former ones, both state witnesses and defendants, referred to dealings in tanzanite in the mid-1990s. Testimony described how the stones moved through Kenya to Hong Kong via one of two al-Qaida companies, Tanzanite King or Black Giant, set up by defendant Wadih el Hage, a gem dealer and former personal secretary to bin Laden. El Hage is serving a life sentence for his role as the bombers’ financial facilitator.

Bin Laden supporters trading tanzanite today face no interference from Tanzanian authorities. “We have no proof they are involved in terrorist activities,” says the mining area’s regional governor, Daniel Ole Njoolay.

Adadi Rajabu, head of Tanzania’s counterterrorism police, adds that “before 1998, we never knew there were people smuggling gemstones on behalf of a terrorist group. But it is not an area we have looked at carefully. Most of our attention since 1998 has been focused on operatives who were likely to be engaged in activities like bombings, not business.”

ROAD TO DUBAI

Sheik Omari and Mustafa say they sell their stones to a prominent local dealer, Abdulhakim Mulla, who Mustafa says sends some of the gems on to Dubai. The dealer denies the Dubai connection. In any event, on a recent day Sheik Omari could be overheard telling miners to bring perfect stones to the mosque, because “our market in Dubai only wants perfect stones.”

To Westerners in the gem business, mention of Dubai raises alarms. For one thing, the emirate is known as a center of money laundering and the underground cash-transfer system known as hawala, much-favored by bin Laden. Dubai also has no gem-cutting industry. It lies far outside normal channels for the trade in rough gemstones, most of which go to Jaipur, to Bangkok or to a few other traditional centers of cutting and polishing.

“Dubai is the kind of place that should throw up a flag that something is definitely askew,” says Cap R. Beesley, president of American Gemological Laboratories in New York, which tests colored stones. “When you see any rechanneling through nontraditional destinations like Dubai, it means someone is finding some financial incentive not to play by the book.”

U.S. law-enforcement officials have identified Dubai as a haven for al-Qaida business interests. The FBI and the Treasury Department are currently trying to help the United Arab Emirates, of which Dubai is a part, to crack down on the abuse of Dubai’s free-trade zones by terrorists and criminals. While this effort mainly focuses on gold smuggling, the U.S. also has reports that al-Qaida uses tanzanite as a way to move funds around the world, says a U.S. government investigator familiar with Dubai.

Out of more than 12,000 pounds of official tanzanite exports from Tanzania last year, a mere 13 pounds were sold to Dubai dealers. But Magyane estimates that a hundred times that amount actually made its way to Dubai, through smuggling.

CASH BUSINESS

In Dubai, on a strip of small jewel shops along a creek, Africans often go door to door trying to sell plastic bags full of unrefined gold and sometimes uncut gemstones for cash. D.B. Siroya, an Indian dealer based in Dubai for two decades, says he has sometime acquired rough tanzanite in Dubai on behalf of Indian friends, buying from sellers he knows.

The cash element is part of what makes the gem trade attractive to al-Qaida, according to Wechsler, the former U.S. counterterrorism official. He says the gem business is also attractive because it is tiered, with many layers of brokers, traders, cutters, polishers and wholesalers between miner and consumer.

A U.S. government-funded report last year for Tanzania’s mining industry noted that the country’s gem industry was “subject to abuse by money launderers, arms and drug dealers.” Afgem Ltd., a South African mining company, has been trying to change that. It advocates branding tanzanite stones with tiny laser-etched logos and bar codes, plus other regulations to discourage smuggling. But its plan last year ignited clashes with small miners, who, Tanzanian intelligence claims, were funded by foreigners with a stake in the current loose system.

The many tiers in the business make it possible for unsavory players to get in and out without leaving much of a trace. In the U.S. jewelry industry, which consumes nearly 80 percent of tanzanite gems, many participants say they have heard industry reports of tanzanite links to al-Qaida only recently, and tend to discount them.

QVC Inc. says it has met with its seven tanzanite vendors to make sure they comply with its ethics code, which says QVC won’t knowingly deal in gemstones “that originate from a group or a country which engages in illegal, inhumane or terrorist activities.” Darlene Daggett, executive vice president of merchandising, says that if tanzanite “definitively can be linked to terrorist activities, we will not continue to sell it.”

Zale Corp. says it has heard “bits and pieces” about such a link, but not enough to know if it needs to change procedures. “It comes down to knowing who we do business with and knowing where they get their stones,” says spokeswoman Sue Davidson. “But all we really know is what they’re telling us. Without some kind of gemstone authorization, certification and tracking system in place, we cannot guarantee that no stone has been smuggled.”

Zale CEO Robert DiNicola adds: “If it came to light that there is a problem with tanzanite, we wouldn’t deal with it.”

Jewelers of America, a retail jewelers’ trade group, says it has been focusing on the “far more significant consequences to human life” of “blood” diamonds, those whose sale helps to fuel African conflicts. “I’m not suggesting we are not willing to look at other connections,” but “we need more information,” says the group’s chief executive, Matthew Runci.

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