VZCZCXRO1921
RR RUEHMA RUEHPA
DE RUEHAR #2954/01 3451725
ZNR UUUUU ZZH
R 111725Z DEC 06
FM AMEMBASSY ACCRA
TO RUEHC/SECSTATE WASHDC 3182
INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 04 ACCRA 002954 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EB for Sue Saarnia, AF for Carol Trimble 
 
E.O. 12958:  N/A 
TAGS: EMIN ECON EFIN AO GH
SUBJECT: GHANA: PRECIOUS MINERALS MARKETING COMPANY OUTLINES 
KIMBERLEY PROCESS COMPLIANCE MEASURES 
 
REFS: A) STATE 176544  B) STATE 176793  C) ACCRA 02616 
 
¶1. (U) SUMMARY: EconChief and EconOff met with Acting Managing 
Director Aristotle Kotey and Deputy Managing Director (Operations) 
George Asante of the Precious Minerals Marketing Company Ltd. (PMMC) 
on December 6, 2006, to discuss the actions Ghana has taken to 
ensure compliance with the minimum requirements of the Kimberley 
Process.  Triggered by concerns about conflict diamonds transshipped 
from Cote D'Ivoire alleged by the United Nations in an October 2006 
report, as well as weak internal controls noted by a Kimberley 
Process (KP) delegation in Ghana in late 2005, Ghana is following an 
Action Plan agreed upon in November 2006 by the KP Plenary in 
Botswana (see paragraph 9). PMMC representatives reported on the 
following activities to that end:  digitally photographing all 
diamond exports, conducting training sessions on the new reporting 
system to track sales, licensing 350 previously unregulated 
middlemen diamond buyers and sellers, defining a system to collect 
independent production figures, and forming a Joint Task Force to 
oversee implementation of the Action Plan.  END SUMMARY. 
 
¶2. (U) During Ghana's three month grace period, which ends February 
14, 2007, three one-week-long visits are scheduled by World Diamond 
Council (WDC) experts to examine, and photograph, the contents of 
outbound diamond shipments.  The first visit began December 4. 
Exports are only permitted from Ghana during these one-week 
monitored periods.   If Ghana fails to bring itself into compliance 
with KP standards, it risks being prohibited from exporting diamonds 
to KP countries.  A European Commission expert will arrive in Ghana 
around December 11 to provide high-level policy advice about 
internal controls and KP standards. 
 
¶3. (SBU) EconOff met with Andrew Coxon and Frank Govic, the two 
World Diamond Council Expert Ghana representatives, on December 8. 
During the first of three reporting visits, they photographed 
Ghanaian diamonds for export, focusing on the qualities of typical 
Ghanaian diamonds.  The experts suggested to the PMMC that it begin 
to accumulate a pictoral library of Ghanaian diamonds.  They noted 
two industry practices that make Ghanaian (or any country's 
diamonds) diamonds difficult to identify once exported.  First, the 
boiling diamonds in hydrofluoric acid to remove residue, which is 
now occurring at PMMC.  This is a regular industry practice that 
creates a shinier, more uniform appearance, with the illusion of 
higher value, but also makes it more difficult to discern the point 
of origin.  Second, if the diamonds have been grouped into 
categories according to use (e.g. separated into round versus broken 
stones), the point of origin is difficult to decipher as the typical 
mix of size and quality that an expert would expect to see from a 
particular area can no longer be used as a clue. 
 
¶4. (SBU) On the positive side, the WDC experts indicated clear 
distinctions that help identify Ivorian diamonds.  Ivorian diamonds 
come from one of two regions: Seguela, which typically produces 
higher carat size, rounded diamonds with a green skin due to 
radiation exposure, making them easily distinguishable from Ghanaian 
diamonds; and Tortiya, which produces brown rough diamonds, more 
similar to Ghanaian goods, but generally of a higher carat size and 
price.  While the average price of a Ghanaian diamond is $30-40, 
Ivorian diamonds are $150-200 because of their higher average size. 
Both experts told EconOff they were impressed with the organization 
of Ghana's efforts to meet KP standards, especially compared with 
other African countries and two recently visited South American 
countries. 
 
¶5. (SBU) In addition to providing technical assistance on 
photography, the experts suggested to PMMC that if duty taxes on 
diamond exports are raised (from 2 percent to up to 3 percent, the 
generally accepted worldwide figure), one-half percent be invested 
into the Ghanaian diamond industry, for example, for prospecting. 
 
 
--------------------- 
New Reporting Methods 
--------------------- 
 
¶6. (U) Between November 28 and 30, PMMC representatives visited 
Akwatia, the region where approximately 90% of Ghana's diamonds are 
mined.  On November 28, an educational program was conducted for 
diamond buyers and sellers.  It was also attended by members of the 
police force and Bureau of National Investigation.  The program 
introduced a new licensing and record-keeping system for middlemen 
who buy and sell diamonds in Akwatia, including new forms to record 
diamond purchases and sales, and emphasized that law enforcement 
officials would monitor the industry closely for illegal trading. 
On November 29, PMMC representatives traveled to surrounding 
villages to further discuss these topics. 
 
---------------------------- 
Licensing Buyers and Sellers 
---------------------------- 
 
ACCRA 00002954  002 OF 004 
 
 
 
¶7. (U) On November 30, 150 diamond buyers and sellers were 
registered in Akwatia for the first time, thereby creating a 
middleman market within the industry.  Each received an ID card and 
no-fee license, valid through December 31, 2006.  On December 5, an 
additional 200 were processed.  Beginning in January 2007, diamond 
buyers and sellers will need to re-register, and pay, for a 2007 
license.   Three categories of licenses will be available: A) To buy 
and sell diamonds in Akwatia, 150,000 cedis (approximately $15USD). 
Some of this money will go toward paying the individual's income tax 
for the year. B) To buy and sell in Akwatia, and to sell in Accra, 
500,000 cedis (approximately $50USD).  C) To buy and sell in Accra, 
2,000,000 cedis (approximately $200USD), or 1,000,000 cedis 
(approximately $100USD) to renew.  These buyers are the only 
category permitted to register outside of Akwatia; they can register 
in Accra.  There are currently 19 'top buyers' in this category, 
which in the future will be determined by specific high trade volume 
figures but PMMC did not specify any additional privileges or 
authorities beyond those buyers in category B. 
 
¶8. (U) The WDC experts clarified that category C, the 'top buyers', 
are also the diamond exporters -- and pay a large fee for the 
privilege.  The export license is not a new development.  The fee is 
currently approximately $30,000.  They also noted that category B 
buyers and sellers, the middlemen, are crucial to Ghana's diamond 
trade and the current effort to license and regularize their 
activities is a particularly important reform. 
 
-------------------- 
Miners and Tributers 
-------------------- 
 
¶9. (U) While the PMMC focuses on marketing and export figures, the 
Minerals Commission at Ghana's Ministry of Lands, Forestry and 
Mines, and Ghana Consolidated Diamonds (GCD), a state-owned 
organization, provide licenses to small miners and tributers, who 
are permitted to sell in Accra to the PMMC or top buyers (see 
category C above).  The Minerals Commission and GCD are working 
together to develop a system to collect independent production 
figures, which will be provided to the Mines Inspectorate and, in 
turn, compared with PMMC's export figures in an effort to monitor 
and ensure that Ghana's market does not include illegally 
transferred diamonds.  Embassy Accra is planning a meeting with the 
Ministry in mid December. 
 
¶10. (U) All records are hand written.  Documents will be collected 
monthly for review.  PMMC noted the potential for a central deposit 
point for all records in Akwatia.  All licenses/ID cards are on 
colored, patterned paper and will be laminated; PMMC noted the paper 
color will change annually in an attempt to prevent counterfeiting. 
 
 
---------------- 
Joint Task Force 
---------------- 
 
¶11. (U) As determined in the Action Plan, a Joint Task Force of 
senior Ghanaian officials, including representatives from the 
Ministry of Lands, Mines and Energy, the Minerals Inspectorate, the 
Minerals Commission, the Geological Survey, the Customs, Excise and 
Preventative Services, the PMMC, and the Ministry of Interior, was 
formed.  It met December 6 for the first time.  PMMC representatives 
speculated that the Deputy Minister of Lands, Mines and Energy would 
Head the committee. 
 
¶12. (SBU) COMMENT: The actions being taken by PMMC appear to be a 
good faith effort to comply with each element of the Action Plan. 
This opinion was further reinforced by the positive outlook of the 
WDC Experts.  However, as the new licensing, recording, and tracking 
data will only exist in paper form, with no database records, 
tracking the diamonds from mine to export will be difficult, and 
credible auditing a major challenge.  In Post's view, PMMC, in 
cooperation with the Task Force, should outline a specific process 
for collecting or compiling the information into a usable form and 
develop enforcement measures.  Post also thinks PMMC should consider 
building upon the WDC experts' work by continuing to monitor exports 
through photographic records.   END COMMENT. 
 
¶13. Text of Action Plan, Adopted November 2006 
 
Administrative Decision 
 
Plenary has reviewed the reports of the Chair's Special Envoy to the 
Republic of Ghana (November 2006), the UN Group of Experts on Ctte 
d'Ivoire (UN document S/2006/735) and the Kimberley Process review 
visit to Ghana in December 2005, and concludes that these could 
constitute crdible indications of significant non-compliance wih 
the minimum requirements of the Kimberley Process Certification 
Scheme (KPCS). 
 
ACCRA 00002954  003 OF 004 
 
 
 
Plenary takes note of the recommendation of the Chair's Special 
Envoy that Ghana should implement the recommendations of the UN 
Group of Experts on Ctte d'Ivoire and the Kimberley Process review 
visit to Ghana, in particular, the recommendations on strengthening 
Ghana's internal controls. 
 
Plenary welcomes Ghana's commitment to address urgently the issues 
identified in the above-referenced reports, and Ghana's willingness 
to receive a review mission. 
 
Plenary decides that Ghana's compliance with the minimum 
requirements of the KPCS should be verified by a review mission 
within three months. 
 
In accordance with Section VI, paragraphs 13 to 15 of the KPCS, and 
Section III, Paragraph (a) of the Administrative Decision on 
Implementation of Peer Review in the KPCS (ADPR), Plenary therefore 
decides to send a review mission to the Republic of Ghana which 
should take place by 28 February 2007. 
 
As set out in Section VI, Article 14 of the KPCS, "Review missions 
are to be conducted in an analytical, expert and impartial manner 
with the consent of the Participant concerned". The terms of 
reference for review missions are set out in Annex II of the ADPR. 
Consistent with the provisions outlined in Section 1 of the ADPR, 
the mandate for the review mission to the Republic of Ghana should 
also include an assessment of Ghana's implementation of the measures 
in the Annex hereto, and recommendations on such further action as 
may be required. 
 
As recommended by the Special Envoy, Ghana should report to the 
Chair on its implementation of measures, as detailed in the Annex, 
by 14 February 2007. 
 
Plenary welcomes Ghana's efforts to prepare a draft Action Plan and 
recommends that Ghana enter into a dialogue with the Working Group 
on Monitoring on a finalised Action Plan with a view towards 
strengthening its internal controls, based on the recommendations in 
the review visit report. 
 
Plenary requests the Working Group on Monitoring to monitor on an 
ongoing basis Ghana's compliance with the minimum requirements of 
the KPCS and its implementation of these measures, and to inform 
Participants and Observers, through the Chair. 
 
Plenary requests the WGDE to review Ghana's estimate of actual 
production capacity. This review should draw on existing sources of 
production data to be provided by Ghana, together with such other 
sources as may be available. The WGDE is further requested to make 
recommendations to the Chair through the Working Group on Monitoring 
on any further information requirements. 
 
Plenary welcomes the offers of technical assistance by the World 
Diamond Council, the United States, the UAE, South Africa and other 
Participants. 
 
Gaborone 
9 November 2006 
 
Annex 
Measures to be included by Ghana in its Action Plan 
 
From 24 November 2006, Ghana will only export rough diamonds once 
the following measures are in place: 
the contents of all shipments to be photographed digitally by 
Ghanaian authorities, and examined prior to export by an independent 
expert (as made available through the technical assistance offered 
by WDC) to advise on their origin.  To assist in the provision of 
this exceptional technical assistance, WDC experts will be available 
to examine the contents of shipments for one week every four weeks 
on a schedule to be notified to Ghana (ie three visits prior to 14 
February 2007). 
 
With immediate effect, any shipments containing diamonds of 
suspected non-Ghanaian origin should be: 
seized; 
reported to the Working Group on Monitoring; and 
confiscated and subject to follow-up investigation and prosecution, 
in accordance with national legislation. 
 
a) By 31 December 2006, Ghana is requested to: 
Identify existing sources of information on the production capacity 
of Ghana and provide these to the Working Group of Diamond Experts 
(WGDE). 
 
b) By 14 February 2007, Ghana is requested to: 
Provide an estimate of current actual production capacity of each 
diamond producing area broken down by sector (industrial (ie GCD), 
 
ACCRA 00002954  004 OF 004 
 
 
licensed artisanal, illegal ghalamsey activity) to the WGDE, which 
will review the estimate. 
 
 
By 14 December 2007, Ghana is requested to: 
develop a detailed plan to improve internal controls (specifying 
who, when, how and benchmarks) which should draw on the Moscow 
Declaration on Improving Internal Controls in Alluvial Producers and 
at a minimum, should include the following components: 
registration and licensing of all actors involved at each stage in 
the diamond business (including concession-holders, tributers and 
local diamond buyers) to include ID cards with unique ID numbers; 
all internal trade to be between registered parties only; 
exports permitted only by licensed exporters (LBCs).  So-called 
'test exports' by any other party must be stopped immediately. 
recording of all transactions from mine to PMMC involving rough 
diamonds by the issuance of receipts by the seller. 
Receipts should include: 
registration details of each party (buyer and seller) including ID 
number, and for miners, also, the allocated claim or production 
area; and 
the origin of the diamonds. 
buyers in each transaction must keep all receipts of purchases in 
their books. 
monitoring and oversight of each stage, including spot checks and 
regular audits, and in particular, oversight of the activities at 
the  diamond market in Akwatia; 
regular audit of PMMC records and procedures by an independent 
auditor or an authority such as the Ghanaian Auditor General; 
effective enforcement of existing legislation relating to the KPCS. 
 
 
Ghana already has implemented, or has legislation allowing for 
implementation of certain aspects of 4 above, including registration 
of certain actors in the diamond industry with identification cards 
with unique identification numbers; issuance of mining licences by 
the Minerals Commission and audit of PMMC records. 
 
In its report due by 14 February 2007, Ghana should therefore: 
provide copies of the 2005 audit report on PMMC to the Working Group 
on Monitoring; 
report on activities, and improvements, during the next three months 
concerning: 
enforcement of the requirement for all transactions to be 
documented, in particular from mine to licensed diamond buyer; and 
monitoring and oversight of production and internal trade from mine 
to point of export; 
report on progress made on a strategy to address the remaining 
issues identified in paragraph 4 above. 
 
As soon as possible, Ghana is requested to: 
Convene a meeting of the Ministry of Land, Mines and Energy, the 
Minerals Inspectorate, the Minerals Commission, the Geological 
Survey, the Customs, Excise and Preventive Services, the PMMC, the 
Ministry of Interior and other relevant government authorities to 
establish a Joint Task Force of senior officials of all government 
authorities referred to above, to be headed by a senior official 
from an appropriate authority. 
Provide the KP Chair with contact details for the Head of the Joint 
Task Force to enable information exchange. 
 
This Task Force should meet regularly (at least monthly) with the 
first meeting to be held by 14 December 2006 to oversee 
implementation of the Action Plan, in particular, improvements to 
internal controls and the measures herein, and should ensure 
effective information sharing and co-ordination. 
 
To help the WGDE in determining an objective "footprint" of the 
Ghanaian diamond production, the Ghanaian authorities have agreed to 
collect and disseminate to the WGDE detailed packing lists of rough 
diamond exports going back as far as possible, for instance from 
1990 onwards. 
 
End text of Action Plan 
 
BROWN