The Quest for a Moral Diamond

(Bloomberg Businessweek) -- From a pickup truck heading out of Freetown, Sierra Leone’s recent history is legible in the images that scroll beyond the passenger-side window. A hand-painted sign reading “Amputee Lodge” points to a structure serving victims brutalized by an 11-year civil war that ended in 2002. Next comes a billboard that says “Report Bribery,” a plea to resist the corruption blamed for siphoning away international relief funds and obstructing postwar recovery. A faded canvas banner—“Only You Can Stop Ebola”—is a tattered relic from a 2014 outbreak that killed thousands. As we ascend the hills on the city’s periphery, a glance in the rearview mirror reveals a thick brown stripe running down the face of a distant slope: the scar from a 2017 mudslide that devoured the homes of at least 3,000 people, killing more than 1,100 of them.

For a break from all this misfortune and calamity, stop looking out the window and focus on the man in the passenger seat of the truck.

His name is Emmanuel Momoh, and by general consensus, he’s the luckiest man in Sierra Leone. Until last year, Momoh, 44, wasn’t much different from anyone else in a country where more than 60 percent of the population lives on less than $1.25 per day. He cobbled together his living by selling peanut butter to stores in Kono District, a remote and mostly rural region in the country’s east, and by preaching at an outpost of the Deeper Life Bible Church. The village he called home, Koryardu, consists of 47 cinder block and mud houses, and it’s where he’s headed now.

Millions of years ago, volcanic eruptions oozed across the riverine valleys of eastern Sierra Leone, embedding diamonds into the soil. This geological endowment, first identified in 1930, has since generated billions of dollars in international sales. Closer to home, it’s sustained smuggling networks, fueled wars, and wounded the environment, all while bestowing no visible benefits upon Koryardu and other rural villages.

It has also made locals prone to long-shot gambling. If you have a shovel, you have a chance—that’s the mindset. In Koryardu almost all able-bodied residents have spent years digging, washing, and sifting sand and gravel. The World Bank reports that the artisanal mining sector is the country’s second-largest employer, after agriculture, providing work for between 300,000 and 400,000 people. The diamonds they find are usually tiny, better suited to industrial drill bits than wedding rings. Momoh started as an informally employed digger when he was a teenager, and for about a dozen years (minus a couple during the civil war, when he became a refugee in Guinea) he’d wade through muddy mining pools, digging for eight hours every day, usually finding nothing. In 2006, with a bit of money in his pocket from his peanut butter sales, he became a “supporter,” an organizer who hires a small team of diggers to search on his behalf.

Under an arrangement common in Kono, a supporter pays each of the diggers about $2.50 for eight hours of labor, laying claim to whatever they find. If diamonds are unearthed, the supporters take the stones to local gem brokers, who run conductivity tests to verify that they are indeed diamonds. In most cases, the brokers pay for the diamonds on the spot, and off the books. The supporters go home with a fraction of what the diamond will fetch as a polished gem—maybe 10 percent—and generally toss a few dollars to the diggers as a bonus.

In March 2017, one of the five diggers working for Momoh found a 709-carat rough diamond. To put that in perspective, the average diamond engagement stone in the U.S. weighs about 1 carat, roughly the same as a medium paper clip, and sells for about $6,000, according to industry surveys. This particular rock weighed about the same as a baseball or a D battery. Momoh wrapped it in a piece of white paper, stuffed it in a plastic bag, and recruited five trusted witnesses to accompany him to a local broker for verification. After the stone was tested, it was instantly clear to all present that it was a diamond and worth millions of dollars, maybe tens of millions.

Momoh could have sold it to the broker, in the process pocketing several hundred thousand dollars or so—a fortune by local standards. But he resisted the pressure to hand it over. Instead, he chose to take the diamond to federal mining authorities in Freetown so they could handle the sale. The government had never done such a thing, but Momoh believed that an aboveboard, government-supervised sale would net him a higher return, even after the feds took their share of taxes and fees. Some of those taxes, he believed, could be channeled back to Koryardu, which lacks electricity and running water.

The diamond eventually sold at auction last December in New York for $6.5 million—much less than Momoh initially expected, but more than enough to radically change his life. And that personal tale could have been the sole focus of a story such as this one. It would have plenty of fish-out-of-water scenes of Momoh adjusting to his new circumstances, shopping for houses, opening bank accounts. We’d see him on his first airplane ride, traveling to Belgium to watch experts analyze the stone before it went up for sale. There’d be descriptions of him shivering on the streets of Manhattan the day before the auction, his eyes widening as he walked through the showrooms of Cartier and Tiffany & Co. Maybe there’d be a section centering on his return home, where hundreds of people gathered to welcome the new celebrity. The story of the diamond would, in short, be the story of a humble man who won the lottery.

But Momoh’s jewel has assumed a significance that transcends his own experience. His decision to buck tradition and make an end run around local dealers is being cited as a pioneering prototype—one that might spark a wholesale reformation of Sierra Leone’s artisanal mining trade and help redeem an international diamond industry that has never quite shaken its reputation for ethical compromise and exploitation.

Those broader implications are the reason for Momoh’s trip to Koryardu, where he hopes to convince his neighbors that his model of diamond dealing will finally bring some of the benefits back to them. It could help Sierra Leone rewrite its contemporary history, replacing some of the tragic images with more hopeful signs—new streetlights, new schools, new hospitals. These hopes are palpable. They carry weight. The closer Momoh gets to Koryardu, the harder they press upon him.

The truck bounces across a muddy dirt road and plows through knee-deep standing water. A girl, maybe 10 years old, walks along the roadside, dragging a machete through the dirt while balancing a basket of vegetables on her head. The high elephant grass crowding the sides of the path eventually thins out, and Koryardu emerges. The residents stream out of their homes and converge on Momoh, eager to hear that the diamond’s promised benefits might be on the way.

“Wow, the pressure—unlimited pressure,” Momoh says later, admitting that he was frightened by the swarming intensity of the crowd. “Everyone has their own plan now because of this one diamond.”

Momoh’s stone hit the diamond market at a time of uncertainty, when the industry’s ethics were being attacked from more sides than they’d been in decades. In the late 1990s and early 2000s, Sierra Leone’s civil war helped introduce the term “blood diamond” to the world, tarnishing the global trade by linking jewels to illegal arms deals and violent rebel groups. To save itself, the industry—along with the United Nations and civil society groups—created the Kimberley Process Certification Scheme, which would validate stones that originated from “legitimate sources” and were unsullied by conflict.

Those certificates helped restore consumer trust, but lately some of the same organizations that participated in the process have dismissed them as a failed experiment. The same week Momoh’s diamond was sold in New York, the nongovernmental organization Impact (formerly known as Partnership Africa Canada) became the second Kimberley Process co-founder to withdraw from the certification scheme, saying it had become a source of false confidence for consumers. That came on the heels of a temporary boycott of the Kimberley Process by a wider coalition of civil society groups, and of a mining conference in India at which Martin Rapaport, the founder of an influential diamond pricing index and trading network, delivered a speech concluding that the certifications he, too, had helped establish were simply “bullshit.” At the same time, the rise of lab-grown diamonds, which are chemically identical to mined stones and free of their ethical and political complications, posed a new threat to traditional diamond businesses.

It was Rapaport who first latched onto Momoh’s diamond as a way to rehabilitate the industry. When Sierra Leone initially tried to auction the stone, it did so in Freetown, which in effect limited the sale mostly to regional buyers. It attracted only five bidders, and the government rejected the top offer, of a little more than $7 million, as less than fair value. The Rapaport Group, which is based in New York and Israel, stepped in and offered to organize, free of charge, a second auction in New York that catered to international buyers.

Rapaport has long been considered an important and disruptive player in the diamond world. For decades, diamonds were assumed to be wholly nonfungible—that is, each stone was unique, and therefore pricing could never be standardized, as it is with traditional commodities such as gold and silver. But in 1978, Rapaport began to publish a weekly list of current diamond prices, sorted according to categories such as size and clarity grading. By injecting a little transparency into a pricing system that had always been mysteriously opaque, he became an enemy to legions of traditional brokers. That enmity didn’t stop his weekly report from becoming the industry’s international pricing bible, and Rapaport’s business eventually expanded to include a diamond-grading service, an auction company that runs 40 events per year, and an online trading platform that lists billions of dollars’ worth of diamonds every day.

In Momoh’s diamond, Rapaport saw a chance to introduce something new and intangible into a stone’s pricing composition: moral value. Before the December auction, he dubbed the stone the Peace Diamond, and he assured potential buyers that Sierra Leone’s government would pour some of its share of the profits back into the village where it had been found. “The idea is that this is a diamond that makes the world a better place,” Rapaport says. “We’re transcending the commodity aspect—which is that it’s a beautiful diamond, and big, and all that stuff—by selling the idea behind the diamond, not just the diamond itself.”

The winning bid of $6.5 million came from Laurence Graff, a billionaire English jeweler. To most observers, it was a sputtering anticlimax, bringing in even less than the bid Sierra Leone had rejected. Dorothée Gizenga, executive director of the Canada-based NGO Diamond Development Initiative, says that Rapaport’s intentions were good, but they were ultimately misguided. “The Peace Diamond didn’t work,” she says.

But Rapaport didn’t let up after the auction. At the American jewelry industry’s largest annual expo and trade show in Las Vegas this summer, he delivered a blistering speech. About 51 percent of the world’s diamonds are sold in the U.S., he said, and an estimated 20 percent of those come from mostly unregulated artisanal miners. Many of those stones—even certified ones—were still being smuggled through black market channels before entering the legitimate market, he added, and were funding terrorism and crime.

“Wait a minute,” he told the audience. “If the diamonds were smuggled, who bought them?” He extended an index finger outward and waggled it. “You did. You did. You did. We did. But we don’t take responsibility for that. We hide in Rodeo Drive.”

Rapaport had recently sent two of his sons to Sierra Leone to visit the villages of Kono and explore with rural diggers and government officials whether a trading scheme based on the Peace Diamond model might be accepted. Instead of trying to sell “some Kimberley Process piece of crap,” he asked his Vegas audience, what if jewelers could assure consumers that proceeds from the diamond they were about to buy would find their way back to the African village where it had been found?

The answer, he later explained, was clear to him: “You could sell the hell out of that!”

Ezi Rapaport, Martin’s 32-year-old son, spent much of early August inside the Radisson Blu Mammy Yoko hotel in Freetown. During the war, the building served as headquarters of the UN peacekeeping mission, until rebel forces seized it; today it’s the only international chain hotel in the country, which has made it a business hub. Rapaport held court in its patio restaurant. Politicians, entrepreneurs, entertainers, trade officials from the U.S. embassy, NGO directors, Miss Sierra Leone—if they were even mildly influential, he scheduled meetings with them. He’d tell them he was betting on the future of Sierra Leone, repeating a smoothly polished talking point: “We believe the real diamonds of Sierra Leone are the people.”

The Rapaports are Orthodox Jews, and Martin says that institutionalizing the Peace Diamond model in Sierra Leone would be an example of tikkun olam, a kabalistic concept that translates roughly as “repair of the world.” Essentially, it’s the idea that Jews should work to benefit the world at large, not only their own communities. This, and the family’s connection to Israel, is worth mentioning in part because many of the local buyers in Kono who acquire rough stones from diggers—the people the Peace Diamond model would disrupt most directly—are of Lebanese descent. For years, Martin has complained that some of the money entering the black market from West Africa’s artisanal mining trade ends up funding terrorist organizations. Intelligence reports from Western countries and testimony in the trials of al-Qaeda members support this.

The model the Rapaports envision would let diggers and supporters take their stones directly to a countrywide network of auction houses, which the Rapaport Group would help set up. The company generally takes a 5 percent commission for its auctions, according to Ezi; in Sierra Leone, this would be reduced or eliminated. Sales would be regularly scheduled and broadcast online to bidders from around the world. The national government would take a big cut of the sales, as much as 60 percent, leaving 40 percent with the miners (proportions that are technically already on the books for exported diamonds, but are often disregarded, leaving the government with nothing). Additionally, the government would be required by law to spend at least a quarter of its share on projects in the community where the diamond was found. These are the terms Momoh ultimately accepted for the sale of his diamond.

One day, Rapaport left the confines of the Radisson and made the rounds of Freetown’s government buildings, hoping to drum up political support for the plan. Morie Manyeh, the minister of mines and mineral resources, listened with interest as Rapaport outlined the auction idea at his ministry. Manyeh grew up digging for diamonds himself, and he’s convinced that the “resource curse”—the notion that small countries blessed with natural resources end up suffering as a result—is real. He guessed that local miners would embrace the auction idea but pointed out that their relationships with local buyers sometimes spanned decades and extended to informal loans. “The diggers can in difficult times go back to those people and say, ‘You remember I sold my diamonds to you? Well, my son is sick,’ ” he explained. “And they will give them a little something. That does not happen if you go to the government.”

Rapaport next visited Samuel Koroma, the acting director of the National Minerals Agency, which oversees Kimberley Process certifications in Sierra Leone and enforces mining and mineral export regulations. In a steamy office building full of scales and loupes and filing cabinets, Rapaport told Koroma that instead of trying to register, license, and monitor every artisanal digger in Kono, he should instead encourage them to sell directly to the government, as Momoh had. The idea didn’t land well; it was as if he’d told a lifelong drug enforcement officer to turn a blind eye to drug deals as long as the police department was getting a cut.

“Then you’re just making everyone illicit!” Koroma said.

Rapaport placed his hands on the table. “To tell you the truth, that’s not that bad,” he said. “It’s better for the government if nobody has licenses, and everybody pays 40 percent.”

The same day, Rapaport toured the offices of some other parliamentarians, several of whom posed a common question: Why should Sierra Leone listen to the Rapaport Group, whose auction for the Peace Diamond attracted a winning bid that was less than the one the government got and rejected?

“Well, now, that’s a very interesting question,” Rapaport answered. Making a bid wasn’t the same as delivering the payment, he said. That initial bidder had offered only $3.5 million when the diamond was put up for sale in New York. “I’d be surprised if they would have gotten the money,” Rapaport said. It isn’t unusual for local auctions to produce bogus bids. “And where did the money come from? Maybe it’s black market money. Maybe there’s a reason he wants to clean his money. I don’t know.”

But lobbying politicians could take Rapaport only so far. The diggers had to buy into the concept, and for that to happen, they had to see, and not simply be told, that a new method of selling would deliver benefits.

“The people of Koryardu, of the Kono District at large, want to see tangible development,” Saa Emerson Lamina, the chairman of Parliament’s mining committee, said. “Nothing else will satisfy them.”

To get to the mining pits where the diamond was found, Momoh trudges down a steep trail that’s been hacked out of the forest. Rapaport and several dozen villagers follow behind. Momoh brushes past ferns, carefully jumps over an advancing column of biting ants, crosses slick and mossy boulders in a shallow stream, and blindly tromps on a rubbery black centipede shining in the mud. The brisk hike takes about 25 minutes.

A few diggers stand in one of the pits, wading in cloudy brown water and sifting gravel in sluice pans. One of the villagers accompanying Momoh and Rapaport carries a video camera, and another hefts a large speaker, which he places on the pit’s sandy lip. Music starts blasting, and five men begin dancing in a tight group, flashing poses and hand signals before the camera.

“They’re shooting a music video,” Rapaport says. He’d gotten in touch with them during a previous visit to the country and encouraged them to come up with a song that might promote the Peace Diamond idea. He nods toward a man lip-syncing into a dead mic. “They’re the communicators around here—the musicians. They’re an important part of getting the message out.”

The men encourage Rapaport to step into the frame with them. He consents, swaying to the music and gamely testing a few moves while one of the vocalists mugs for the camera and raps:
 
Rapaport family says we are the diamonds.
No more blood diamonds!
Wanna tell you ’bout the Peace Diamond!
We are the diamond!
Wanna celebrate the Peace Diamond!
Rapaport family, thank you for everything.
Rapaport family, thank you for coming to rescue me!
 

During a pause in the filming, Rapaport offers some lyrical advice. “You gotta reduce all that ‘Rapaport’ stuff,” he tells the singer. “More about the people! The people!”

The music flares up again, and the performers resume dancing. Rapaport walks over to stand near Momoh, who watches the spectacle without expression. The rappers eventually surround the pastor, trying to coax him into the shot, but he stares straight ahead, his face a mask of determined noncompliance.

Frustration has been slowly building inside Momoh from the moment he arrived in Kono. Every time he visits his village, he’s met by neighbors who are increasingly impatient because the Peace Diamond still hasn’t paid off for them. They were told they’d get new roads, a medical center, a school. Momoh can’t help but feel that they hold him responsible for their disappointment.

The tour of the mining pits complete, Momoh leads the way back to the village, via a clearing where felled tree trunks lie in the dirt. A few workers wearing hard hats and reflective construction vests mill about, one wearing a T-shirt under his vest that says, “Jesus is Coming—Look Busy.” These men are employees of a Chinese company with which the government contracted to deliver the promised infrastructure improvements to Koryardu. Momoh notes that the workers have been clearing the area for months, and they’re still not done. In the dirt near the workers’ feet, there’s an empty foil sachet of Black Commando gin.

“The people are not pleased,” Momoh says.

His frustrations come to a head after a local teacher confronts him, angrily demanding to know what’s going on with the new school building. To find out, Momoh walks toward another would-be construction site. A partial cement-block perimeter wall, a foot or two high, is all he finds. No workers have touched the site for weeks, he’s told.

“It’s as if we’re begging!” he says, his deep voice rising, fraying a little at the edges. “And to be frank, with the money they have for this village, they could demolish the whole village and build it again! The money is there! I have seen all the documents! The money is there!”

Momoh’s patience has dissolved. “Where’s the foundation? This is the only school! There’s no other school besides this! They are taking advantage of the people here because they are just villagers. This is very bad!”

Rapaport tries to calm him, but concedes that the projects must move faster if other local diggers are ever going to follow Momoh’s example. “I’m telling the government that they have to be completely transparent and put up a picture and a sign saying exactly when the projects will be finished,” he says. “And they should buffer it up, manage expectations—allow enough time for them to actually be able to deliver. They can do this.”

That evening, Rapaport ventures into Koidu, a city about 45 minutes from Koryardu where the regional diamond trade is largely based. It’s a riot of raw capitalism, full of low-slung brokerage houses with barred windows and stores selling shovels and sluice pans. In the middle of it all he finds the Kay Marie Lounge, a darkened nightclub with a bright electric sign: THE HEARTBEAT OF KONO.

Inside, a dozen people gather in the sticky gloom of a VIP section. It’s an impromptu meeting of the leaders of the Kono District Miners Union, a syndicate with about 500 members, most of them artisanal diggers. Rapaport talks to them about the importance of ethics and transparency, and they tell him about how the local buyers—“cartels,” they call them—collude to underpay them for their stones. Rapaport outlines his plan to bring Peace Diamond-style auctions to Kono. “Maybe we could get a higher price for you than the cartels you have over here,” he says. They nod receptively. One woman, who says she represents the district’s female diggers, sounds almost desperate for help. “If you had an office here,” she tells him, “we would know we have somewhere to run to. To rescue us.”

When the diggers sell to the local brokers, they’re paid on the spot. If periodic internet-broadcast auctions were established here, the diggers would have to sit on their finds for a while until bids could be placed. “How long could people wait to get the international price?” Rapaport asks the room.

“That’s the thing,” says one of the miners. “We are hungry. We need to eat.” The man consults briefly with the others, and they settle on a time limit: two weeks, maximum.

Rapaport had been thinking a monthly auction would be about right. He tells them, “We have to be positive, we have to be persistent, but we also have to be patient.”

In the months since their company bought the Peace Diamond, the experts at Graff Diamonds have been peering deeply into the stone, noting its colors, charting its mazy imperfections, strategizing how to maximize its value. “As sometimes happens, the rough is extremely hard, so it takes more time and effort to cut,” says Graff, the purchaser. He’s hopeful a polished, premium-quality pear-shaped diamond larger than 100 carats can be extracted, along with numerous other smaller diamonds. The stones will be laser-inscribed, certified by the Gemological Institute of America, then displayed in Graff showrooms and at exhibitions around the world. The potential value that might come from the stone’s community-oriented backstory, Graff says, was one of the reasons he made the winning bid.

After the auction last December, the government promptly paid Momoh his share—about $2.5 million. Momoh paid his five diggers about $130,000 each. He also made similar contributions to Kono’s paramount chieftain and to the village chief, and he’s been paying tithes to his church. That’s left him, after taxes, with about $1 million, he says. So far, Momoh has invested mostly in real estate, buying three houses in three different regions of Sierra Leone. He also bought a plot of land near the house he bought in Freetown, where he has started to build a school.

Momoh and all the diggers he employed now spend most of their time in the capital city, not in the village. If anyone believes this amounts to a betrayal of their community, that person probably has no idea what life is like in Koryardu. “If I want to improve my life,” says Komba Johnbull, the 19-year-old who first spotted the diamond in the gravel, “then I can’t stay in my village. There would have been no way for me to further my education there.”

That might not be the case if the government finishes the village school. The day after he visited Koryardu, Momoh returned to Freetown in his truck and promptly got on the phone with federal mining officials, arguing that the pace of construction had to be addressed. They assured him, and later Rapaport, that the projects were going forward, the money was accounted for, and the government was committed to seeing this through. By late 2018 frustrations over the pace of building spurred the government to suspend the Chinese company’s contract, and it began reviewing the possibility of awarding the project to a different outfit. The Rapaports, for their part, installed solar electricity in a building in the village, with lights and cellphone charging stations for the residents.

Despite his occasional frustrations, Momoh seems the ideal ambassador for the auction project. He exudes self-assurance. He’s polite but doesn’t suffer fools. He speaks about everything that has happened to him in the past year from an impressively wide-angled and practical perspective. The worst thing he could do, he says, would be to blow his money on frivolous extravagances. His dream is to achieve financial self-sustainability through his school project, which would be financed through private tuitions. He could be a walking example of how to respond to good fortune. When he talks about his goals, they are always community-based, and most of them involve funneling benefits back to Koryardu.

There’s one project he dreams about, however, that isn’t strictly practical. In addition to the basic infrastructure projects that the government has started to build in Koryardu, Momoh would love to see something symbolic take shape.

He dreams of a clock tower. A structure of brick and stone that rises above everything else in Kono. Maybe the names of all those who buy Peace Diamond stones—starting with Laurence Graff—could be inscribed into a stone at its base. It would be a monument that everyone would pass every day, for generations.

The government has told him to forget the idea. He’s well aware that reasonable people can argue that Kono needs a lot of things before it needs a clock tower. But he’s not so sure it’s true.

“We need something that we can look at with pride,” he says. “A reminder of good things happening. We need to be reminded of that.”

To contact the editor responsible for this story: Jeremy Keehn at jkeehn3@bloomberg.net, Daniel Ferrara

©2018 Bloomberg L.P.