LIBERIA: RESULTS REPORT: IMPLEMENTATION OF THE KIMBERLEY

UNCLAS SECTION 01 OF 03 MONROVIA 001135

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EMIN ECON PGOV EAID LI
SUBJECT: LIBERIA: RESULTS REPORT: IMPLEMENTATION OF THE KIMBERLEY
PROCESS CERTIFICATION SCHEME (KPCS) IN LIBERIA


1. SUMMARY: UN Sanctions on the Liberian diamond sector were lifted
in April of this year following the Kimberley Process 3rd Expert
Review Mission findings that Liberia met the minimum requirements of
the KPCS. The mission report detailed further preparations necessary
to ensure that internal controls were effective. From end May to
early September, the USAID Office of Transition Initiatives (OTI)
provided assistance to the Government Diamond Office (GDO),a part
of the Ministry of Lands, Mines and Energy (MLME),targeted to
support internal controls and procedures prior to lifting the
government imposed diamond mining moratorium. A hotline for advice
was installed; a public awareness campaign about new KP procedures
was conducted in mining communities and some regional offices were
opened. The GDO website remains under construction and work remains
on the 'Chain of Custody' process with a supporting database. END
SUMMARY.

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Background
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2. The Kimberley Process was established as an intergovernmental
response to conflict diamonds entering the marketing chain. With a
ban on diamond trading within the neighboring country of Ivory Coast
still in place, the Liberian model for Kimberley compliance had to
be more robust than normally accepted and is based on an advanced
'Chain of Custody' mechanism that is designed to ensure that rough
diamond production is tracked from extraction to eventual export.
This system works through a series of 10 regional offices located
within the formal mining areas of Liberia. Production is verified at
the regional office where vouchers for rough diamonds are issued to
mining license holders. The voucher permits the producer to trade
his diamonds within the network of authorized diamond dealers and
brokers. The tracking system reinforces the newly constructed and
equipped Government Diamond Office, the authority that will appraise
the value for taxation and issue Kimberley Process certificates to
parcels of diamonds destined for export.


3. The Kimberley Process Chairman noted that in Liberia the real
work would begin following the lifting of sanctions and Liberia's
formal admission to the KPCS. As sanctions were lifted the previous
US Geological Service program expired. With key recommendation areas
incomplete the need for Technical Assistance remains.

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Purpose
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4. OTI financed a short term consultant to support the efforts of
the Government Diamond Office to comply with key KP recommendations
prior to the lifting of the mining moratorium, prioritized as a)
developing import procedures b) continued testing and fine tuning of
Liberia's KP procedures c) training of database staff d) outreach
and training activities for staff and stakeholders and e) the
opening of the remaining regional offices. In addition the
consultant was tasked to support MLME staff to incorporate other
government agencies into the work of improved diamond governance,
continue work on Mano River Union harmonization and become an active
member of the KPCS Working Group of Artisanal/Alluvial producing
countries.

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Study Tour
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5. The consultant made an early visit to nine of the regional office
sites to assess capacity of regional offices and officers as well as
the level of stakeholder understanding of the new procedures. Of the
10 targeted, only four regional offices were complete, with staff
and equipment deployed. Previous community awareness campaigns had
focused solely on regional office locations. Surrounding communities
had received little information.


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OTI Grants
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6. An expanded campaign to increase mining community awareness of
new diamond governance procedures was financed under an OTI grant. A
local theatre group, 'House of Freedom' toured communities around
the regional office locations delivering focused drama to over 70
sites. Regional officers and GDO staff also participated in these
events which greatly improved local understanding. The campaign also
provided a telephone 'hotline to the GDO', with posters, signboards
and fliers handed out by immigration to arriving passengers. The
hotline has been accepted as a KP-recommended best practice for all
member states.


7. Prior to the deployment of the drama group all Regional Officers
attended a two-day workshop (funded through a second OTI grant)that
focused on managing regional offices, developing confidence within
the communities and the working relationship between other MLME

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field operatives. Confusion over overlapping roles was addressed;
however, the relationship between Mining Agents, Mineral Inspectors
and Regional Officers will require continued attention.


8. A third OTI grant, still being executed, increases lines of
communication and transparency. Through the creation of a GDO web
page it is anticipated that all procedures and license applications
will be available on line. The networking of the GDO system is
assisting database operators to have instant access to the system
designer.

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Achievements
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9. Import Procedures. The Import Procedure was developed, circulated
and accepted.


10. Diamond Tracking Procedures. Test runs continued, mineral
vouchers reprinted, a hotline for advice developed, KP certificates
produced, received and specimens circulated to KP together with all
contact details. The mining moratorium was lifted at the end of July
and licensing of diamond miners, dealers and brokers commenced.


11. Training Database staff. Database procedures reviewed and staff
continued to update the database with direct assistance from
database designers. With the lifting of the mining moratorium the
system was cleared of test information and database staff began to
enter live data.


12. Outreach and Training. Workshops with potential dealers, brokers
and miners were completed in Monrovia. Regional officers continued
to brief stakeholders in regional office areas with messages
reinforced by the House of Freedom drama group. Training workshop
for all regional officers were held in Monrovia.


13. Regional Office deployment. Some problems remain with the
deployment of UNMIL containers at three original locations. The
Kavilahun office will now be moved to Bambala, and the location of
Camp Alpha has been finalized. Weasua remains inaccessible and the
container originally slated for Camp Alpha will be used to open an
office in Sinoe. Temporary accommodation has been found in all
locations and regional officers with necessary equipment have been
deployed to all locations with the exception of Sinoe.


14. Incorporation of other government agencies. A request for the
Ministry of Finance to supply one customs official to the GDO was
granted. GDO staff and the customs official held a workshop at
Robertsfield International Airport to brief customs officials and
airport security on new procedures. All major border points in
western and northern Liberia have been visited and representatives
of government agencies briefed.


15. Mano River Union harmonization. The deputy minister made one
visit to Sierra Leone as part of the Diamonds 4 Development support
to Mano River Union harmonization.


16. KP working group. Liberian representatives participated in the
Working Group of Alluvial/Artisanal Producers meetings held during
the KP intercessional in Brussels in June.

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Additional Issues
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18. Independent Diamond Valuer (IDV). A tender document for the
supply of independent diamond valuation and training services has
been prepared and forwarded to the Public Procurement and
Concessions Commission (PPCC). Interim IDV services have been
provided to the GDO through the USAID GEMAP LIBAMM program to
support newly trained GDO valuation staff during early exports.


19. Budget. The consultant assisted the GDO in the formation of its
2007 - 2008 budget application. The initial draw down of funds is
awaiting final authorization within the MLME. Included in the budget
are substantial salary increases for GDO staff and regional officers
in keeping with KP recommendations and an allocation to pay for the
procured IDV services


20. Chain of custody. The chain of custody remains potentially
flawed if it is based on the immediate integrity of all diamond
miners to report their production to the regional office. It is also
dependent on all sales transactions being adequately recorded.
Despite best intentions, the 20 regional officers cannot effectively
manage this system on the front line. There is a need to increase
the number of regional officers.


21. Other training needs. The workshop held with Regional Officers
included a session to coordinate the activities of all field staff.
The need to include ministry Mining Agents and Mineral Inspectors
within training programs was evident to ensure a 'united' front.
Mining Agents are the start of the mining license trail and Mineral
Inspectors are responsible for ensuring operations are legal.

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22. First Export. Liberia has recently exported its first diamond
parcel under KPCS. The parcel consisted of stocks accrued prior to
the lifting of sanctions and as such were not verified by the chain
of custody. The discussion on how to handle stocks and even
uncertified production continues.

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Necessary Actions
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23. Support to Database and Chain of Custody.
While GDO staff will continue to drive procedures upstream through
direct contact with dealers and brokers, regional officers will be
stretched to ensure all production is registered. With Liberia as a
KP focus nation, a measured package of assistance designed to
protect and develop the 'Chain of Custody' and the supporting
database is necessary.


24. Benchmarks. There are a series of activities related to KP
recommendations for which the Government of Liberia is directly
responsible. An illustrative list includes, but is not limited to:

--GDO budget implemented
--Additional staff recruited (regional office coordinators and
additional regional officers for Sinoe)
--Progress on the IDV tender
--Action on the Liberian Shipping Registry
--Invite KP review mission 2008

These items should be tasked as a series of performance benchmarks.



25. Extension services and benefits: The Diamonds for Development
(D4D) initiative was developed by the Government of Liberia through
the MLME in partnership with UNDP, highlighting the development of
policies that return benefits to mining communities. This program
must work closely with MLME in support of chain of custody within
mining areas.


26. Presidential Task Force: A task force was established to oversee
the implementation of the Kimberley Process in Liberia. Remaining
work is now of a more technical nature and the task force should
examine its future role. A possibility could be the establishment of
an oversight board.

BOOTH