The Lebanese Role

(via The Diamond World, 1981) David E Koskoff writes:

Here is an excerpt from The Diamond World:
The De Beers and Selection Trust crowd resent Jamil’s advantages, and especially the government’s unofficial but well-established policy of suffering te Koidu dealers to remain and, worse, permitting them to deal in dollars—for ‘Guinean’ stones only (but who is to say what stones come from where?). This makes Koidu a Monrovia outpost plumb in the heart of te Diminco lease. It also facilitates the laundering of black market currency transactions of whatever origin. But, says a De Beers person, “We’ve learned to live with that kind of thing.”

Notwithstanding Jamil’s overriding interests, diamond dealing among Koidu’s buyers is a highly competitive matter. Koidu dealers buy principally from Kono diggers, from the more sophisticated Maracca illicits, and from the Mandingo, many of whom are carrying in the Guinean stones. Something over 90 pecent of the black sellers are Muslim and come to the offices wearing gowns and either fezzes or the black Muslim equivalent of the yarmulke. There is also considerable trading between Lebanese themselves, and many stones have been traded several times within Sierra Leone before they are actually exported.

The Koidu dealers are a refreshingly honest lot of rogues, tremendously likable. They are quite open about the fact that all of their Guinean customers are smugglers; that many of the Sierra Leone stones in which they deal are illicitly mined, and that some of those stones may even have been stolen from Diminco; that they themselves have been knowingly if indirectly involved in illicit dealings in the past—and quite possibly, even right now. Nobody seriously maintains that the success of their operations depends principally on legitimate trade, and many of them are involved exclusively in illicit operations. Some are second-generation diamantaires and have been in the business all their lives. “Said” (as I will call him) is one of these.

Said is a solid and personable young man. He studied for two years in London but says that he did not approve of the dissolute life of hash smoking and wenching that typified te English college crowd, so left without taking a degree. He prefers life in Koidu to the sleazy sophistication of student London.

Said is only about twenty-four years old, but he represents twenty four centuries of Phoenician tradition. I asked him, “Is it better for a digger to sell his diamonds in Koidu or to the Diamond Corporation in Kenema? and in response he gave me most of what understanding I have of Lebanese trading techniques:

“That depends on whether you want to deal with me. I make you laugh, I make you cry, and I help you out in times of need. You have a bad time? Paid too much for a stone? Your old lady’s sick? You can tell me about it. I will listen. I will help. We never forget a person who is in need. The Diamond Corporation doesn’t want to know.

I give respect, dignity, I talk to them fine, and they appreciate that. In the bad times I couldn’t give good prices, but people came anyway. They said,” He’s a good boy, he gives good prices.” Maybe they knew it wasn’t so, but they came anyway because when I didn’t give good prices I still gave respect and dignity. It’s feelings you work with, not only money; you touch his feelings—he’ll never forget that.”

Said works out of an office where he greets the sellers in thier tribal gowns in his own informal western clothes. He deals with them good-naturedly, joshes, and has an easy and friendly rapport with them. They have obviously come to like him and to trust him. The trust element is all important in Koidu, as it is throughout the diamond world. Occasionally stones are left with him for safekeeping by potential sellers who must return to Guinea to discuss an offer with a partner; they may not return for their goods for over a month.

All of the Lebanese dealers have tremendous expenses for charity, handouts, and uncollectable ‘loans’. I watched while Said dispensed a stream of leaones to needy people who came in for help. To a great extent such kindness is a rather cynical casting of bread upon waters: Small courtesies today may give the opportunity for big killings tomorrow.

Said works all the time. When things slow down at his office, around six thirty at night, he closes up and goes home, but any seller can come to his house and he will return to his office at any time to close any transaction. “Work!” he said out of nowhere. And then he added, “....Money.”

For Sierra Leone, diamonds have been a curse of riches. It was once an exporter of its people’s basic staple, rice, but the diamonds and their lure drained off the agricultural workers to the diamond diggings. Now it must import rice and leave most of the potentially rich paddies idle.

The illicit dealings to which diamonds no nicely lend themselves have promoted a general spirit of lawlessness within the country and have corrupted the nation’s officials. At every turn, laws and practices have been changed to accomodate the illegal conduct of the diamond community, each time at a greater cost to the country and its citizens at large, theoretically as an effort to entice the illicit element into more nearly legitimate avenues, but at least partly as a bid by the politicians to win the goodwill of te criminal element.

By opening the diamond lands to the diggers in 1956, the country gave up the significant tax income that would otherwise have come to it from the much more heavily taxed SLST and reduced the country’s total mineral wealth potential by giving lands over to less efficient producers. About all that was gained for the country was the legitimizing of the diggers, and the dubious possibility that the diggers might henceforth pay some export duties. There was no point to asking them to pay income taxes. If required to to so, the newly legitimate diggers and dealers would retaliate by smuggling their stones across the border to Liberia, and the country would lose the export duty as well. On De Beer’s advice, the diggers and dealers were exempted from the income tax. Everyone else must pick up the share of taxes that the diamantaires, some of the country’s wealthiest men, might otherwise have evaded anyway. The exemptions lures laborers to socially unproductive pursuits, and encourages the channeling of Lebanese capital into tax-exempt diamond investments, rather than into investments that would be both taxable and otherwise more desirable from soceity’s viewpoint.

All this was done ostensibly in the hopes that the diamond people would at least pay the export duty. But they didn’t. Smuggling went right on. So on the Diamond Corporation’s urgings the export duty was reduced from 7.5 percent to 2.5 percent, about the same as Liberia, where a 3 percent duty is computed somewhat more leniently. Would the diamond men at least give the state that much? The answer has been yes and no. With the drop in duty early in 1978, smuggling declined to very little. Then, a 5 percent devaluation of the leone in the fall of 1978 badly affected confidence in the leone and was an impetus to increased smuggling to Monronvia, where the stones could be sold for dollars. The hosting of the OAU conference and other government improvidences is likely to lead to further devaluation of the leone, and increased smuggling.

The country received real tax moneys from SLST, and both taxes and dividends from Diminco, but these moneys have largely been squandered, rather than invested in capital improvements r job-creating enterprises of lasting benefit to Sierra Leone. The country has gotten nothing out of the alluvial diamond mining scheme other than the increased popularity of its ‘statesmen’.

It can’t last longer. Diminco will almost certainly cease to be profitable in the next few years, and the alluvial-scheme patches are already being worked over for the second and third times. Grave economic adjustments are ahead for the country when Diminco ceases contributing, and for the diggers when they have to hang up their sieves. When it’s all over, all that Sierra Leone will have to show for it will be an emotional and fiscal letdown, and the remembrances of good days gone by.

I hope the new government will utilize the natural resources in a constructive manner with good management + compassion. The people of Sierra Leone have suffered enough.