An Open Letter to Tiffany’s Chairman, CEO, Chief Sustainability Officer and Corporate Social Responsibility Committee

December 16, 2015 12:00 am Published by Leave your thoughts

           F.A.O.    Michael J. Kowalski, Chairman of The Board  

   Frédéric Cumenal, CEO, Tiffany & Co.  

   Anisa Kamadoli Costa, Chief Sustainability Officer 

   Lawrence K. Fish, Chairman, CSR Committee 

                Gary E. Costley, Member, CSR Committee 

                        Abby F. Kohnstamm, Member, CSR Committee


As members of Tiffany’s Corporate Social Responsibility Committee one of your responsibilities is “to identify and bring to the attention of the Board key Social Responsibility issues that may affect the business operations, brand image or reputation of the Company“. For that reason I bring to your attention some matters of serious import that appear to have been brushed under the carpet when Tiffany & Co decided to source diamonds from the Octea Diamond Group, a Beny Steinmetz Group Resources (BSGR) company, in Sierra Leone.

According to your web site, Tiffany’s Social Accountability Program is designed to ensure vendors are held to the exacting standards Tiffany & Co. is proud to uphold and that they protect basic human rights. The Program is supposed to “further
ensure that vendors providing the Company with finished goods, diamonds
and packaging materials are held to the exacting standards that Tiffany
& Co. is proud to uphold“.

Tiffany & Co would, I hope, never countenance, directly or indirectly, funding or supporting a regime guilty of gross human rights violations. However, BSGR, which is reported to be “one of Tiffany’s biggest (diamond) suppliers“ does just that.

According to media reports (here and here) the BSGR group of companies has a unique corporate structure and is controlled by a trust fund, the Steinmetz Foundation, of which the Steinmetz family is the beneficiary. 

Revenue from BSGR companies is channelled via the Steinmetz Foundation to the Israeli military which stands accused of war crimes and possible crimes against humanity by the UN Human Rights Council.  

This information can hardly come as a surprise to you as the following facts were readily available in the public domain, some on the Steinmetz Foundation website before it was revamped and scrubbed of all references to funding the Israeli military.   

  1. The Steinmetz Foundation has “adopted” a Unit of the Givati Brigade of the Israeli military.

  1. The Foundation purchased equipment for and supported the Unit during the Israeli assault on the defenceless, besieged residents of Gaza in the winter of 2008/2009 – operation Cast Lead.

  1. Over
    1400 Palestinians were killed during the assault, mainly civilians.
    Over 300 of those killed were children. Thousands more were maimed and
    traumatised during the three weeks of relentless bomb    ardment by Israeli forces from land, sea and air.

  1. A United Nations Human Rights Council Fact-Finding Mission into the assault – the Goldstone Report – found
    evidence that Israeli forces committed serious breaches of the Geneva
    Conventions amounting to war crimes and possible crimes against
    humanity.

  1. The Steinmetz–supported Givati
    Brigade was responsible for one of the most serious examples of gross
    human rights violations documented by human rights organisations and the
    UNHRC     during the Israeli assault on Gaza when 21 members of the Samouni family were killed and many others seriously injured, maimed and traumatized. The Israeli human rights group B’Tselem describes the incident as follows:

“¯“On 4 January 2009, at the start of the ground phase of operation Cast Lead, about 100 members of the extended a-Samuni family were huddled inside one house in the a-Zeitun neighborhood of Gaza City.
The next morning, an Israeli airstrike killed 21 people inside the
house, including 9 children and 10 women, and injured dozens of other
family members. During the next two days, the army refused access to
medical teams, in spite of being informed of the terrible outcome by
family members who managed to escape the bombed home and human rights
and humanitarian organizations, including B’Tselem.
When medics managed to get to site, they found four small children next
to their dead mothers in one of the houses, and evacuated several
wounded people. The army refused permission to evacuate the bodies and
they remained in the rubble for a further two weeks.”

(The findings of UN Human Rights Council investigation into this incident are detailed at pp.159 – 166 of the Goldstone report)

  1. On Dec. 20th 2012 Human Rights Watch reported that the Israeli attacks on journalists in Gaza in November 2012 were “evidence of war crimes”.

  1. The Givati Brigade played a central role in the 51 day Israeli assault on Gaza in 2014 which killed 2310 Palestinians, mainly civilians including over 500 children.

  1. The UN Human Rights Council, Amnesty International, and Human Rights Watch concluded that Israeli forces were guilty of serious human rights violations – suspected war crimes – in Gaza.

After information about the Steinmetz Group “adopting” a Unit of the Givati Brigade and supporting it during operation Cast Lead came to public attention the company deleted all reference to this from the Foundation‘s website – an apparent attempt to conceal their support for suspected war criminals. However, a screen shot of the website was already widely circulated on the internet. A redacted versions of the website confirmed that the Foundation “donate to the IDF” for a period before that too was deleted.

“Conflict Diamonds“ or Blood Diamonds?   

The Tiffany brand is supposed to be synonymous with cut and polished diamonds of the highest quality and provenance. Tiffany’s patrons pay for and expect the best. For diamond buyers, the desirability of diamonds is intrinsically linked with love, romance and celebration.   It is, therefore, absolutely imperative that a diamond is not tarnished by association with human rights violations at any stage along the production pipe from mine to finger.

Despite this obvious fact, Tiffany’s Corporate Social Responsibility policy is heavily focused on “responsible mining” (mentioned over 50 times in Tiffany’s Sustainability Report (TSR) 2014).  Someone reading the report could be forgiven for thinking that blood diamonds were no longer an issue of concern for the jewellery industry as, surprisingly, the term blood diamond doesn’t appear once in TSR 2014.

Concern about human rights in the diamond industry shouldn’t end at the mine gate – where the remit of the discredited Kimberley Process ends. Downstream of the mining sector, diamonds that generate revenue used to fund human rights violations legally enter the unregulated end of the supply pipe.

As you are aware, the Kimberley Process definition of a “conflict diamond” is narrowly defined as “rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments.” (My emphasis)  Consequently, diamonds, cut and polished or rough, that generate revenue used to fund rogue regimes guilty of human rights violations evade the KP regulations. Billions of dollars of these blood diamonds enter the legitimate market each year.

Compounding this major flaw, which was deliberately built into the KP regulations, is the bogus System of Warranties (SOW). The SOW was introduced by the World Diamond Council to paper over the gaping hole in the regulations. It creates the illusion that the regulations banning “conflict diamonds“ extend to cut and polished diamonds and it promotes the falsehood that KP compliant diamonds are conflict-free. The SOW amounts to nothing more than a written statement from a vendor declaring:

“The
diamonds herein invoiced have been purchased from legitimate sources
not involved in funding conflict and in compliance with United Nations
resolutions. The seller hereby guarantees that these diamonds are
conflict free, based on personal knowledge and/or written guarantees
provided by the supplier of these diamonds.”

During the 2014 Israeli assault on Gaza members of the Israeli Diamond Bourse raised 250,000 shekels for the soldiers, bought bullet proof vests and sent truck loads of equipment to those responsible for the carnage which many observes, including the Palestinian President, Mahmoud Abbas, described at the time as genocide.

Furthermore, it is estimated that revenue from the Israeli diamond industry generates about $1bn/yr in funding for the Israeli military which is guilty of grievous human rights violations.   

Despite this, diamonds from Israel, Angola and Zimbabwe, states with less than exemplary human rights records, all come with a written guarantee from vendors stating that they are conflict-free. This demonstrates that the SOW is a complete charade which does not, and cannot, guarantee the ethical credentials of any diamonds.  

 

Transparency 

Although Tiffany’s source 25-35% of their diamonds from third-party sources the identities of those suppliers are not disclosed. This lack of transparency is at odds with Tiffany’s claims to “have long challenged both the mining and jewelry industries to improve-to increase transparency, and prioritize environmental protection and human rights.“ 

 

Given that 50% of the diamond sold in the US in value terms come from Israel it is likely that some of Tiffany’s diamonds are sourced from companies in Israel where, according to data published by the Israel Central Bureau of Statistics, the diamond industry is notorious for discrimination in employment against non-Jews who make up 25% of the population.  

Tiffany’s supports the Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption. Principle 6 outlines the measure companies should undertake to ensure fair employment practices throughout their supply chain. If Tiffany’s source cut & polished diamonds from companies in Israel they would be aiding and abetting employment discrimination against the indigenous, non-Jewish, Palestinian population of Israel.  

One of the foundational principals underpinning the UN Corporate Responsibility to Protect Human Rights states that the responsibility to respect human rights requires that”¯business enterprises “seek
to prevent or mitigate adverse human rights impacts that are directly
linked to their operations, products or services by their business relationships, even if they”¯have not contributed to those impacts.“ 

 Tiffany’s relationship with BSGR is at variance with the company’s commitment to upholding and respecting human rights throughout the supply chain. Given that those impacted by human rights violations carried out by the diamond-funded Givati Brigade, in particular the surviving members of the Samouni family who are still in need of medical attention and
assistance to reconstruct homes destroyed by the Israeli bombardment,
the question of remedial actions to mitigate those adverse human rights
impacts needs to be addressed.  

The UN Global Compact states: “The weight of international criminal law jurisprudence indicates that the relevant standard for aiding and abetting is knowingly providing practical assistance or encouragement that has a substantial effect on the commission of a crime“  Companies that sign up to the UN Global Compact have a responsibility to carry out due diligence which is described as “the
ongoing process taken to identify, prevent and mitigate and account for
negative human rights impacts which the company may cause or contribute
to through its own activities or which may be directly linked to the
company’s products, operations or services by a business relationship.“

The development of BSGR’s mine in Sierra Leone was helped by a $50 million loan from Tiffany’s. This, and the purchase of diamonds from BSGR, means that Tiffany’s is inextricably linked to the human rights violations committed by the Givati Brigade.   

 

Corporate social responsibility necessitates affirmative action by management to protect a company from exposure to moral and legal hazards. In 2014 Tiffany’s included the following, previously unreported, risk factor in the company’s Form 10-K report to the Unites States Securities and Exchange Commission (SEC):  

“In
addition, adverse publicity regarding TIFFANY & CO. products or in
respect of the Company’s third-party vendors or the diamond or jewelry
industry, and any media coverage resulting there from, may harm the
TIFFANY & CO. brand and reputation, cause a loss of consumer
confidence in the TIFFANY & CO. brand and the industry, and
negatively affect the Company’s results of operations. The considerable
expansion in the use of social media over recent years has compounded
the potential scope of the negative publicity that could be generated by
such incidents.” 

This suggests that Tiffany’s was aware of the potential damage to the company’s brand and reputation arising from its relationship with BSGR. Rather than severing all ties to the Steinmetz Group, which sought to conceal their support for Givati Brigade, Tiffany’s continued to sell diamonds sourced from a company that supports suspected war criminals while claiming to have measures in place that protect the integrity of the supply chain and uphold the company’s standards for social and environmental responsibility.  

In recent days Tiffany’s duplicity has continued as the company evaded answering specific questions on their Facebook page that questioned the ethical provenance of their diamonds sourced from BSGR.  Instead, they have repeatedly pasted the following reply which doesn’t address the issues of concern to their fans:  

“We
believe that knowing the origin of our precious metals and gemstones is
key to ensuring that mines are operated in environmentally and socially
responsible ways. For that reason, Tiffany has direct sourcing
relationships with mines around the world. In addition, the vast
majority of rough diamonds sourced by Tiffany are also cut and polished
in our own state-of-the-art facilities. We believe in investing in local
manufacturing, paying a living wage, transferring both craft and
management skills to our workforce and contributing to the well-being of
the communities in which we operate. To learn more, please visit Tiffany.com/CSR.” 

While BSGR diamonds may not be “conflict-diamonds”, they are generating revenue used to fund a military Unit guilty of gross human rights violations.  Diamonds that fund human rights violations are blood diamonds.  

While Tiffany & Co’s efforts to promote “responsible mining” and prevent “conflict diamonds” from entering their supply chain are laudable, the failure to fully secure their supply chain means that diamonds linked to gross human rights violations in Palestine can still infiltrate their supply.

If
Tiffany’s cared as much for children in Palestine as they do for salmon
in Alaska their Sustainability Report would have a much stronger
commitment to closing the loop holes which facilitate the trade in
diamonds that are generating revenue used to fund gross human rights
violations in Palestine.

Tiffany’s should act immediately to disassociate itself from BSGR and ensure
that their cut and polished diamonds are not a source of revenue for
regimes guilty of gross human rights violations in Africa or Palestine.

This article was first published by Mondoweiss on 8/12/15

Categorised in:

This post was written by Sean Clinton

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