BY JUANA LEE
The jewelry sector is a billion dollar business that rakes in almost USD $300 billion per year. As fine jewelry, such as gems, become the ultimate luxury commodity, consumers are increasingly aware of purchasing “guilt-free” or “conflict-free” jewelry. With more awareness on the brutal business of gem and diamond mining, consumers are now gravitating towards extraction companies that advertise the words “sustainable” and “ethical.”
As a consumer who wants to purchase “guilt-free” gems, you may have heard about Gemfields Limited, a mining corporation that specializes in the mining and marketing of “sustainable and ethically sourced” gems. Or, you may have watched National Geographic’s most recent collaboration with Gemfields, a PR video that painted Gemfields’ as a “hidden gem helping a remote African community to shine.” As a gem connoisseur or even a casual consumer, one might believe Gemfields sells “guilt-free” gems. But if you do a little more digging, you may stumble upon Gemfields’ recent settlement that paid $7.8 million USD to settle human rights abuses in Mozambique.
In January, I published a piece on Gemfields’ quest for conflict rubies in Nthoro, Mozambique, as my contribution to improving corporate accountability in the extractive industry. With no field experience in Mozambique, I was limited to hours of research and an interview with Columbia University professor, Dr. Joanne Bauer. The release of my article coincided with a $7.8 million dollar payment to one hundred artisanal miners that accused Gemfields of torture, physical and sexaul abuse, and assault. Represented by the UK-based law firm Leigh Day, Gemfields agreed to a “no admission of liability” settlement to community members living near the Montepuez ruby mine in Mozambique. With the outcome of the case, I assumed compensation was a win for corporate accountability.
However, one month ago I was approached by Yianni Melas, the ex-Vice Chair of the International Colored Gem Association (ICA) Congress, about my article. Recently, Melas resigned as Vice Chair because ICA’s annual Congress event was being anchor sponsored by Gemfields. This was when I knew Mozambique’s ruby rush was bigger than just Gemfields. Instead of just one company, these human rights abuses involved a whole array of actors, including the Mozambican government. Yet there is still a blanket of silence draped over the gem industry. Why?
Even when there is clear evidence indicating that systematic human rights violations are occurring in ruby mines, actors that have a monetary stake in the gem business systematically ignore abuses occurring on the ground. This story unravels the messy connections between governments and private companies that protect the gem industry from accountability for its human rights abuses.
The most sought-after colour variety of ruby gemstones are called pigeon blood rubies because the colour of the ruby matches the color of blood drawn from a freshly killed pigeon. In Mozambique today, sadly, the blood spilled to get these rubies doesn’t come from pigeons, but from human beings.
Drawing on Yianni’s extensive network of gem specialists, geologists, businessmen and gem traders, we began to scour our contacts for more information about Gemfields and other related extractive companies. Our research proved far more difficult and complicated than I expected.
How is Gemfields getting away with murder?
In November 2011, Gemfields won an exclusive 25-year mining license located in the northeast of Mozambique within the Cabo Delgado Province to create Montepuez Ruby Mining (MRM), a joint venture between Gemfields and its Mozambican partner, Mwiriti Limitada. Since then, accusations of human rights violations ranging from murder, torture, sexual assault, and economic and social right abuses have been prevalent.
But when consumers question the ethical standards of gems, it is easy for Gemfields to skirt the question of “ethical” or “guilt-free” sourcing because it is generally difficult for gemologists to figure out where the gems came from – or what occurred in between the extraction and refinery process. According to a Hong Kong Tatler interview with Gemfields’ gemologist Elena Basaglia, “it shouldn’t matter where a gemstone is from… if you really love a gemstone, don’t overthink it.” But international industry standards, and academics who study the mining industry, say the exact opposite: that you should care very much where a gemstone comes from.
On top of sourcing, verifying the traceability of the gem is even more problematic because companies, like Gemfields, are unwilling to invest in creating artisanal mining sites, systems of tracking or adding value closer to the point of extraction.
But in order to improve sustainability, verifiability, traceability and ethical standards, the extraction sector has begun to realize that there must be a connection between on-the-ground mining resources and the big extraction companies. Supported by Moyo Gemstone Collaboration, an ethical gemstone collaboration between female artisanal gem miners, businesses can work hand-in-hand with local miners to “work safely, mine better, improve financial security and create stable and equitable markets for fair trade.”
Alongside the Kimberley Process Certification Scheme (KPCS), which was the first step to address the problem of conflict diamonds in the jewelry supply chain, the Responsible Jewellery Council (RJC) was formed in 2005 to create standards and certifications for jewelry practices — including human rights, labour rights, environmental impact, mining practices and product disclosure. Under the RJC’s 2013 Code of Practices, companies must incorporate business responsibility to respect the United Nations Guiding Principles on Business and Human Rights, have a written policy on human rights, carry out human rights due diligence processes and have a remediation process for victims of human rights abuses. This questions Gemfields’ gemologist’s assertion that sourcing doesn’t matter.
According to Forbes, the RJC has done work to create standards and define practices, which is considered a good start for ethical mining. As stated in a Forbes’ interview with Stewart Grice, VP of Mill and Refining for Hoover & Strong, “Don’t let perfect be the enemy of good. Just start somewhere.”
But, Gemfields is not a member of the RJC – indicating that the provisions stated under RJC’s Code of Practices are not prerequisite to Gemfields’ Code of Conduct.
As a company that champions itself as “a world leading supplier in responsibly sourced coloured gemstones,” Gemfields’ recognition of human rights and ethical mining is already in question.
Human Rights Violations
In 2016, investigative journalist Estacio Valio wrote a piece on Gemfields’ bloody ruby business titled “Moz villagers digging for rubies ‘shot and left to die,’” which discussed the intentional murders of artisanal miners by Gemfields.
Since Gemfields has not cooperated with the local artisan mining associations to give land for locals to explore, hundreds of local miners die in the process of trying to get rubies illegally. With a national poverty rate of 41 to 45 percent, local artisanal miners are mining to survive. In an interview with Valio by Yianni, “Gemfields also refuses to buy from [artisanal miners.] There is no accountability or recognized association for the artisanal miners and they are killed… Justice must be pursued for these human rights violations.”
In one instance, Valio followed the story of Antonio Geronimo, an 18-year-old artisanal miner who was extracting rubies in Namanhumbir, Mozambique on MRM land. In order to keep the mine “safe” from illegal miners, Gemfields hired government security guards to protect the mine “at all costs.” While Geronimo was mining, he was attacked by Gemfields’ “enhanced security measures. According to fellow artisanal miners, “he dragged himself out of the ruby deposit and crawled for about 100m. Then he died.”
It is clear that mining on MRM territory is illegal, but the morality and ethical principles behind killing innocent artisanal miners is barbaric. In an interview with Yianni, he explained the situation:
The real illegality isn’t the people digging it, but it’s the fact that Mozambican generals and politicians, through corruption, manage to control all the natural resources of the country. Starving people through corruption cannot compare to a father who is simply digging to feed his family who are dying. When corporate greed and politics plunder the natural resources of a country, and leave the common people to starve, it seems ironic to call [artisanal mining] a crime – it’s not a crime to mine and do what’s necessary to feed one’s family.
According to the Director of the Montepuez Hospital, Dr. Salvador Jacinto, the result of illegal mining has been growing poverty and poor health amongst the families of illegal miners.
In response to these gruesome and graphic testimonies, Gemfields stated that:
The article presents, in a one-sided manner, preconceived views that simply do not correspond with the reality on the ground. Neither Gemfields nor MRM has ever sanctioned or condoned any such acts of violence, and would never tolerate conduct of that nature. The company is proud of its commitment to the responsible mining of coloured gemstones and is determined to transform the industry into one that is transparent, acts conscientiously and benefits all stakeholders, including local communities.
In a game of back-and-forth between Gemfields and investigative journalists with clear indications of human rights abuses on the ground, how can corporate accountability prevail?
The Big Shots
In a multinational corporation like Gemfields, it is important to ensure the right CEO is running the company. Shareholders want the CEO to embody strategy, vision, culture and shareholder value to ensure that the goals and values of the company are met. But, Gemfields’ choice as CEO doesn’t fit that model.
Former CEO of BHP Billiton Ltd., acting CEO at Jupiter Mines Ltd., recently ex-CEO and now Chairman of Gemfields, Brian Gilbertson had his fair share of controversial press. “The ego has landed” is what former employees of BHP Billiton called Gilbertson when he landed his private helicopter. After his immediate resignation from BHP in 2004, after only six months at the job due to “irreconcilable differences” with the board, his endeavors expanded to other companies.
That same year, he formed Pallinghurst Resources LLP, a UK private equity firm investing in the mining industry with a primary listing on the Johannesburg Stock Exchange and a secondary listing on the Bermuda Stock Exchange. With an initial investment of US$150 million from his business partner Viktor Vekselberg, a Russian billionaire with longstanding ties to Russian president Vladimir Putin, he formed the company. But as a UK based company listed in Johannesburg and Bermuda Stock Exchange, Pallinghurst follows lax standards for disclosure, accountability and transparency, in comparison to the London Stock Exchange.
In 2007, Gilbertson negotiated to buy Fabergé from Unilever for $38 million. But his business partner Viktor Vekselberg was not included in the deal. After Vekselberg found out, he sued Gilbertson in the Cayman Islands and revoked his agreement with Gilbertson to install him as the chairman of the world’s biggest aluminum corporation once Vekselberg finished merging Sual and Rusal. But the litigation did not stop Gilbertson from advancing the Fabergé business. In 2013, Fabergé completed its merger with Gemfields – a merger announced by his private equity mining giant, Pallinghurst.
Since 2017, his son, Sean Gilbertson, was appointed as the new CEO of Gemfields and executive director of Pallinghurst. That same year, Fabergé received an unsolicited takeover offer from Pallinghurst which, according to Jon Yeomans, journalist at the Telegraph, “had UK investors reacting with fury to a “brazen” and “outrageous” takeover offer.”As Brian Gilbertson rules over Gemfields and Pallinghurst, the limited transparency and accountability regarding the acquisition of Fabergé is a clear conflict of interest.
To make the relationship more complicated, Fabergé is a member of the previously mentioned RJC. The company is set to achieve RJC certification by April 2020, but Fabergé does not mention human rights or ethical sourcing in its Code of Conduct. In addition, the gems extracted by Gemfields’ mines, including blood red rubies, are seen in jewels crafted by Fabergé – violating RJC’s Code of Practices that are applicable to all RJC members.
According to Gemfields’ Group Limited, Dr. Christo Wiese, an investor and Director of Gemfields and one of the richest South African billionaires, owns 160,388,407 shares of Gemfields, equating to approximately 11.20 percent of the company. Yet, in 2018, the South African Revenue Service (SARS) filed a legal claim against him and former executives of a law firm ENSafrica for more than 217 million rand (~USD$16 million) in unpaid taxes.
Evidently, several members of Gemfields’ Executive Board have reputations for low standards of transparency, accountability and ethics – and this translates into their extractive practices on the ground.
The Mozambican Government: Gemstone Power and Politics
Gemfields and Mwiriti Limitada currently control approximately 100,000 hectares of land in Mozambique – equating to half of New York City, or 300 Central Parks. Deep underneath Gemfields’ bloody ruby-filed land, beautiful red rubies are surrounded by rough brown dirt. Out of the 100,000 hectares, MRM has a concession of approximately 300,000 hectares, which is one of the most extensive concessions granted to private interests anywhere in the world. According to The Extractive Industry Civil Coalition, the MRM mine has the potential to produce 40 percent of the world’s total ruby output. In 2016, MRM dug more than 100 million dollars worth of rubies from the ground. But an investigative report by Valoi for Foreign Policy concluded damning evidence that “a number of human rights concerns over violence and land rights associated with Gemfields’ operations raised questions about their pledge of high ethical standards.”
Although the Gemfields paid $7.8 million in compensation for victims to put the human rights allegations to rest, there is a deep level of politicalization around gems that has not been talked about. Specifically, the clear collaboration between the Mozambican government and Gemfields. While MRM is 75 percent owned by Gemfields, Mwiriti owns the rest. To make things more complicated, Mwiriti is co-owned by army General Raimundo Domingos Pachinuapa, a senior member of the ruling Frelimo party.
According to African Intelligence, the leading news source specializing in political and economic developments in Africa, in Mozambique, a circle of generals from the Frelimo party control all mining projects, especially those associated with precious rubies. After striking a deal with Gemfields, General Raimundo Domingos Pachinuapa began earning a percentage of every ruby sold, as long as he keeps locals in line. According to locals, “Pachinuapa has destroyed farms to clear the way for corporate mining and rendered artisanal miners unemployed.” To make things worse, according to the International Association of Convention Centres (AIPC) and Africa Confidential, Samora Machel, the son of former president Samora Machel, sits on the board of Gemfields, as do many Frelimo bigwigs.
Article 13 of Mozambique’s Mining Law states that the Government is responsible for a) the protection and administration of the national heritage of mineral resources; and g) protecting the communities where mining activities are authorized and promote socio-economic development. But with the government’s collaboration with Gemfields, the government has violated the provisions enlisted in the Mining Laws.
The joint venture between Gemfields and Mwiriti Limitada has been strongly criticised for human rights violations at its ruby mine in Montepuez. In 2015, Al Jazeera’s program “Africa Investigates” funded Valoi, alongside award winning filmmaker Callum Macrae, to expose and investigate the disturbing allegations against Gemfields that “threaten to cast a dark shadow on [the company’s] projects.”
According to the Al Jazeera documentary, Gemfields wanted to acquire Namuja, a village in Mozambique for mining concession. However, citizens of the village refused to relocate. When villagers said no, the village was burned to the ground by “forces serving the interests of Gemfields.” But as stated in Article 32 of Mozambique’s Mining Law: “Communities must be previously consulted before the granting of an authorization for the beginning of mining exploration; and the government shall create mechanisms in order to allow the engagement of communities in mining protects located where they are settled.”
One villager said, “from the corner of the village they started destroying the houses with machines. Then after, they burnt the houses.”
Macrae stated that “a huge gulf exists between [Gemfields’] promises and the local community’s expectations. Everyone interviewed felt Gemfields should be doing more and felt betrayed by the company. This was echoed by three community chiefs, including that of the Nsewe village.”
Apart from the shady dealings occurring within Gemfields itself, blanket silence is still prevalent because Gemfields is working alongside the Mozambican government to rein terror on citizens.
In 2015, villagers from Namanhumbir reported that three different security forces, the Mozambican Police Protection (PRM), the Rapid Intervention Force (FIR) and the Land, Environmental and Rural Development Protection Force (MITADER) raided Namanhumbir, Mozambique.
That same year, Geronimo Potia’s 18-year-old son Antoninho was shot dead by Frelimo-orchestrated security agents who patrolled the village. Alongside Antoninho, another artisanal miner was shot dead. “We didn’t report it to any authority. We were afraid of approaching them. Even today, we’re still afraid of going there. Do you want us to go there and get shot?” the fathers said.
“He was left to die on Namanhumbir’s red soil on 19 April 2015, his body was carried home to his father,” said Valoi.
Fatima Mimbire, an advocate at the Extractive Industry Civic Coalition, said “we consider that the millions of dollars of Gemfields or other companies will not be worth anything if the trend towards militarization and use of force to repress the communities affected by the extractive industry is not stopped immediately.”
After allegations of human rights abuses against Gemfields exploded on Al Jazeera and other large media networks, the then-CEO Ian Harebottle replied by stating that “Gemfields is highly disappointed with this allegation and suggests the [villagers] would seem to be manipulating facts.” The inherent ignorance behind the sourcing and traceability of Gemfields’ gems showcases the company’s blind eye towards the ethics of extraction and human rights.
In line with previously mentioned RJC, the World Jewelry Confederation (CIBJO) describes itself as the “United Nations of the jewelry business,” representing all individuals, organizations and companies that are related to the jewelry, gem and precious metal industry. In 2017, CIBJO concluded an annual congress event that focused on responsible sourcing of coloured gemstones. With official consultative status with the UN Economic and Social Council, the CIBJO follows strict guidelines for responsible sourcing and trading.
According to an inside source, recently, Gemfields was removed from CIBJO’s commercial members list. With CIBJO’s stringent focus on responsible sourcing, this unprecedented move to remove Gemfields’ as a member indicates that the company’s extraction practices did not meet CIBJO’s responsible business guidelines – legitimizing the human rights allegations that have been raised in recent years.
After the $7.8m settlement, the bigger issue of ruby politicalization between the government and Gemfields remains silent.
How can Gemfields be held accountable?
The most difficult question is who can hold Gemfields accountable for their systematic human rights violations occurring in Mozambique. As seen in the $7.8 million settlement between victims and Gemfields, the home state (UK) has jurisdiction over the company’s international affairs.
Based on the UN Guiding Principles on Business and Human Rights, all companies must follow a set of guidelines for States and companies to prevent, address and remedy human rights abuses committed in business operations. To add, the United Nations Global Compact outlines ten principles for companies to meet fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption. These ten principles are derived by the Universal Declaration of Human Rights, ILO’s Declaration on Fundamental Principles and Rights at Work, the UN Convention against Corruption and the Rio Declaration on Environment and Development. However, Gemfields or Fabergé are not official participants to the UN Global Compact.
While the UN Guiding Principles and Global Compact are not legally binding – Mozambique and the UK have both ratified all fundamental ILO Conventions that cover various rights at work. Interestingly, Mozambique and the UK have also ratified the UN Convention against Corruption, where states must uphold anti-corruption laws and policies to adopt, maintain and strengthen systems that promote transparency and accountability. Moreover, Mozambique’s domestic mining laws indicate that the individual rights of community members must be respected at all times.
With several legally and non-legally binding international conventions, declarations and norms, as well as domestic law, upholding the principles of corporate and state transparency and accountability, it is clear that the Mozambican government as well as Gemfields are in violation of these provisions.
Even though the host state (Mozambique) has jurisdiction over the mining concession area, because Gemfields is working alongside the Mozambican government, it is difficult, if not impossible, for the Mozambican government to hold the company accountable. Even with jurisdiction from the host and home countries, accountability is extremely difficult to achieve with lack of transparency from the host country itself.
To reiterate my interview with Dr. Joanne Bauer, Adjunct Professor at Columbia University’s School of International and Public Affairs and Vice Chair of Inclusive Development International, “clever business and human rights strategies need to be multipronged; looking at a wide range of strategies to figure out how to sequence them and approach it from all angles until justice is obtained.” Bauer argues that a multitude of approaches, such as a public campaign and an exposé analyzing investment chains or even working with shareholders can penalize Gemfields in some way. However, in the case of Gemfields, Bauer believes that human rights commitments aren’t retroactive – it would be for investments going forward. “Gemfields would have to keep moving forward, but they do not necessarily have to provide remedy to have access to capital… remedies remain rare, particularly when it comes to economic and social rights,” she said.
In an interview with the chief prosecutor of Montepuez Attorney General Pompilio Xavier Wazamguia by Valoi, he stated that: “A company such as Gemfields, is headquartered in a country which is one for the world’s foremost human rights defenders… Gemfields should talk to their collaborators so they can stop harassing, violently assaulting and brutally beaten people – that is not good for the company’s image.”
There must be growing pressure from the international community, gem trading companies, the extractive sector and civil society to hold Gemfields accountable for the grave, brutal and barbaric human rights abuses occurring in Mozambique.
Conclusion
Bloody human rights violations are common occurrences within the extractive industry. Yet with increasing international dedication to human rights, gem traders, gemologists, geologists and investigative journalists, like Yianni Melas and Estacio Valoi, have dedicated their career to ethical gem sourcing – prioritizing human life over money. Even though a group of gem-enthusiasts have prioritized the concept of “ethical sourcing,” Gemfields is just one example of how money and power can easily set a new agenda. With new information on how the “blanket of silence” is bolstered by the aiding and abetting of high-profile business executives and companies, such as Mwiriti Limitada, there is an unforeseen monopoly over the ruby and gem business to extend to Russian billionaires and Mozambican police officers. Insofar as consumers continue purchasing blood red rubies by Gemfields, the company will continue intensifying human rights abuses, torture and murder on Mozambique’s crimson red land.