The Rise and Fall of Diamonds

by Edward Jay Epstein

  N. W. Ayer further attempted to plumb the diamond mind in the mid-1970s by retaining the firm of Daniel Yankelovich, Inc., to poll a representative sample of the American public on its attitude toward diamonds. The study was continued over five years, and from this highly sophisticated analysis of public opinion emerged a rather surprising picture of a man, rather than a woman, as "the key figure in the diamond jewelry acquisition process."

  In the case of engagement rings, men played a dominant role in 88 percent of the purchases; indeed, in 46 percent of the purchases, the man bought the ring without any participation whatsoever from his fiancee. In purchasing other pieces of diamond jewelry, the study found that women also only rarely participated in the decision. "Not only is a woman unlikely to buy diamond jewelry for herself," the study continued, "she is also unlikely to buy diamonds for anyone else." The essence of the diamond transaction was that it was a gift from man to woman.

  The gift, moreover, contained an important element of surprise. "Approximately half of all diamond jewelry that the men have given and the women have received were given with zero participation or knowledge on the part of the woman recipient," the Yankelovich study pointed out. N. W. Ayer explored this "surprise factor" in an analysis that observed: "Women are in unanimous agreement that they want to be surprised with gifts.... They want, of course, to be surprised for the thrill of it. However, a deeper, more important reason lies behind this desire . freedom from guilt." Some women had pointed out that if their husbands enlisted their help in purchasing a gift, like diamond jewelry, their practical nature would come to the fore and they would be compelled to object to the purchase.

  Women were not totally surprised by diamond gifts: Some 84 percent of the men in the study "knew somehow" that the women wanted diamond jewelry. The study suggested a two step "gift-process continuum." First, "the man 'learns' diamonds are O.K." from the woman; then, "at some later point in time, he makes the diamond purchase decision" to surprise the woman.

  Through a series of "projective" psychological questions, meant "to draw out a respondent's innermost feelings about diamond jewelry," the study attempted to further examine the curious semi-passive role played by women in the diamond relationship. The man-woman roles seemed to closely resemble the sex relations in a Victorian novel. "Man plays the dominant, active role in the gift process. Woman's role is more subtle, more oblique, more enigmatic. . . ." Like Victorian sex, women seemed to believe there was something improper about receiving a diamond gift. They spoke about large diamonds as "flashy, gaudy, overdone and otherwise inappropriate." Yet, through its psychological probing of the female mind, the study found, "Buried in the negative attitudes ... lies what is probably the primary driving force for acquiring them. Diamonds are a traditional and conspicuous signal of achievement, status and success." It noted, for example, "A woman can easily feel that diamonds are 'vulgar' and still be highly enthusiastic about receiving diamond jewelry." The element of "surprise, even if it is feigned, plays the same role of accommodating dissonance in accepting a diamond gift as it does in prim sexual seductions: it permits the woman to pretend that she has not actively participated in the decision. She thus retains both her innocence and the diamond."

  In projecting from this data a strategy for De Beers for the future, N. W. Ayer suggested that the objective of advertising was "to perpetuate the positioning of diamond 'jewelry as the most special of all gifts, so that men will continue to 'know' and women continue to 'teach' that diamonds are acceptable and wanted." While the advertising agency candidly recognized that "available research has not shed light on how the man learns that a diamond gift would be acceptable to his wife," it nevertheless pressed for a campaign of highly emotive advertising that would reinforce this cryptic male "awareness" of female "receptivity." Specifically, it suggested that the "tone of the copy" should project "a strong sense of confidence in the voice of the giver that the gift will be especially well received." Ideally, the male reader should be enabled "to project himself into the situation and . . . play the role of the giver and anticipate the rewards associated with a gift of diamonds." For example, an advertisement might depict a beautiful woman, gushing with love and admiration, as she is surprised by the diamond gift while the male giver stands smugly by. No matter how uninterested men might be in diamonds themselves, these advertisements should convey "the extraordinary reaction that can be expected from the gift." The artwork in these advertisements should, N. W. Ayer further recommended, play to "a known positive attitude in women that a gift of this sort is preferred as a surprise."

  Finally, "A significant male appeal implicit in the surprise situation is the strong implication that the gift will be a success." N. W. Ayer concluded that such a campaign would provide "an emotional appeal that is highly motivating to men."

  For the continued shaping of the diamond mind, the implications of this psychological research were clear. To induce men to buy women diamonds, advertising should focus not on the qualities and beauty of the diamond itself, but on the emotional impact of the "surprise" gift transaction. In the final analysis, men were not moved to part with their earnings by the value, aesthetics or tradition of diamonds, but by the expectation that a "gift of love" would enhance their standing in the eyes of their beloved. On the other hand, women accepted the gift as a tangible symbol of their status and achievement. Playing off the duality of the male-female relationship, N. W. Ayer helped De Beers expand its sales of diamonds in the United States from a mere $23 million in 1939 to over $2 billion, at the wholesale level by 1980. In two-score years, the value of its sales had increased nearly a hundred-fold. In comparison, the expenditure on advertisements, which began at a level of only $200,000 a year and gradually increased to $10 million, seemed a prudent investment by De Beers. It had, after all, helped evolve an American diamond mind capable of absorbing the abundance of diamonds from both Africa and Siberia.

  PART THREE THE DIAMOND WARS

  [14]

  The Smugglers

  Through the brilliant financial maneuvers of Sir Ernest Oppenheimer, the diamond cartel had succeeded in gaining control of virtually all the diamond mines in the world by the early 1950s. It had made its arrangements with the government of South Africa, the colonial administrations in Angola, the Congo and Sierra Leone, and with Dr. Williamson in Tanganyika. It was fully backed by the British, Belgian and the French governments, and it was recognized by every other government concerned as the official channel for the diamond trade. There were still unofficial channels, however, that the diamond cartel did not control: the smuggling routes that led from the diamond mines and diggings in southern and western Africa to entrepots such as Monrovia and Beirut. Since the African governments did not have either the techniques or resources at their disposal to interdict the diamond smugglers, Sir Ernest decided to recruit his own diamond soldiers. In December of 1953, he instructed his London office to track down and contact Sir Percy Sillitoe.

  Sillitoe had been, until November of 1953, the head of the British counterespionage service known as MI-5. During the Second World War, he had organized one of the most ingenious spy operations in the history of espionage. It was called the double-cross system, and it involved converting all the German spies in England into British double agents. Since the Germans accepted the reports of these spies as bona fide intelligence, Sillitoe and his double committee, which included Harry Oppenheimer's tutor at Oxford, Sir John Masterman, were able to feed the Germans a false picture of British activities. After the war, Sillitoe worked closely with American and French intelligence. In 1950, however, the British government was severely embarrassed by the defection of two of its diplomats from Washington "Donald Maclean and Guy Burgess" to Moscow, and the British security services came under increasing criticism. Sillitoe, who had reached the age of sixty-five, was allowed to retire in the midst of the scandal. Since retired intelligence chiefs are expected to fade quietly away, Sillitoe moved to the seaside town of Eastbourne in southern Engla
nd and worked in a local sweet shop owned by relatives, selling chocolates and other confectioneries.

  When Sillitoe received the invitation from Oppenheimer, he was behind the counter of his sweet shop. Within a matter of days, he had abandoned the confectionery and was on a plane flying to Africa.

  At the airport in Capetown, he was met by Oppenheimer's chauffeur and immediately driven to the village of Mulzenberg on the Indian Ocean. He arrived at a beautifully landscaped estate where Oppenheimer and his family were spending their Christmas vacation. In their initial meeting, Oppenheimer briefed Sillitoe on the smuggling problem. He explained that the smuggling of diamonds not only deprived De Beers of the value of the stolen diamonds, but far more serious, it threatened to undermine the monopoly prices for diamonds that De Beers had established. He estimated that somewhere between 10 and 20 percent of all the diamonds reaching cutting centers were smuggled goods. These illicit diamonds were undercutting De Beers' prices. Moreover, if diamond dealers and cutters had an alternate source from which to buy their diamonds, they would be less willing to accept De Beers' rigid conditions for doing business in the diamond trade. Oppenheimer was emphatic: He wanted the smugglers stopped.

  Sillitoe admittedly had no knowledge about the diamond business, but he suggested that the techniques of counterintelligence that he had employed during the war against the Germans could effectively be used against smugglers. If some of the Individuals who illegally bought and sold diamonds could be identified, they could be "turned" into double agents for the cartel. These agents then could be used to manipulate the diamond smugglers higher up in the chain. To accomplish this feat for De Beers, Sillitoe suggested that he hire a half dozen top intelligence officers from the British secret service. These men would form the nucleus of a private intelligence service for the cartel.

  After giving the matter some consideration, Oppenheimer accepted Sillitoe's proposal. De Beers would provide the financial support, and Sillitoe would have carte blanche to recruit an elite core of agents for the "International Diamond Security Organization," as it was eventually called.

  Sillitoe's education in the diamond business began in 1954 with a tour of the mines. At the Kimberley mines, De Beers security officers briefed him on the various ways in which employees had smuggled diamonds out of the mining areas in the past. The methods ranged from using rubber band catapults to fling the diamonds over the barbwire fences to having a surgeon hollow out a niche in an ankle bone in which diamonds could be concealed under a bandage. The most common means was for individuals to simply swallow diamonds and then recover them once outside the compound. Because of the minute size of diamonds, it was virtually impossible to detect them except by X-raying the entire body. However, employees could not be subjected to constant X-rays without exposing them to lethal doses of gamma rays and thereby endangering their lives. X-ray examinations, therefore, could only be given to a small proportion of randomly selected workers each day. At best, the X-rav machine was a psychological deterrent to theft. Like the closed-circuit television cameras that conspicuously scanned back and forth at the mines, X-rays were another demonstration to black workers of the white man's magic. But once the employees understood that these electronic devices had only a relatively small chance of detecting smuggled diamonds, their value as deterrents was seriously impaired.

  Sillitoe found that these security procedures were far too passive to prevent sophisticated thefts. He suggested instead that De Beers employ more aggressive and imaginative methods; for example, radioactive paints had been successfully used for the surveillance of enemy agents in England. (In one case, this paint had been applied to the shoes of a Soviet diplomat in London, and then his trail had been followed by means of a Geiger counter.) Sillitoe proposed that a few diamonds be radioactively "labeled" with an invisible paint and then be conspicuously left around in areas where employees were likely to steal them. Assuming that the radioactive bait would be snatched up, a Geiger counter would click the moment the diamond passed through the gates of the compound. The thief then would not be arrested but followed, and in time the radioactive diamond would be sold to an intermediary. The intermediary could then be followed with the Geiger counter. Once located, he could be turned into an informer.

  Such exotic security measures resulted in the recovery of only a few diamonds, however. Sillitoe next learned that the cartel's problem was not the trickle of diamonds being stolen from its South African mines but the flood of diamonds that were smuggled out of west and central Africa every year. With two of his staff assistants, Sillitoe traveled to areas outside South Africa from which most of the diamonds seemed to come. He went to Aquatia in Ghana, Freetown and Yengema in Sierra Leone, Bakwanga and Luluaburg in the Belgian Congo, and Dar-es-Salaam and Mwadui in Tanganyika. In each of these countries, he was able to make contact with the intelligence officers whom he had previously worked with in his capacity as head of British counterintelligence. Most of these countries were still British colonies in 1954, and his former comrades in arms were willing to extend him a good deal of unofficial cooperation. The first objective, as Sillitoe's deputy explained, was "to set up an intelligence network which would penetrate this underground railroad round the world."

  In South Africa, most diamond mines were volcanic pipes, which could be isolated behind electrified ten-foot high barbwire fences. In central and west Africa, however, most diamonds were "mined" from stream beds that meandered over tens of thousands of miles of jungle. To recover these diamonds, natives needed only a shovel and a pan. Even though the governments had granted concessions to various diamond mining companies associated with De Beers, and had in theory banned anyone else from digging for diamonds, it was in practice impossible to enforce these regulations.

  The problem was particularly difficult in Sierra Leone, where the river banks were littered with diamonds. Not only was the government unwilling to police this vast area to prevent illicit digging but the local authorities explained to Sillitoe that most natives believed "the soil of Sierra Leone belonged to the Sierra Leoneans," and not the diamond companies. At night, gangs of "pot-holers," as they were called, would dig up the river banks and disappear at daybreak with the diamondiferous gravel. The pot-holers would then either sell their diamonds to Lebanese traders or directly to Mandango tribesmen, who, in turn, smuggled them across the open border to Liberia. By one means or another, it was estimated that more than half of Sierra Leone's diamonds were sold in Monrovia as "Liberian" diamonds. Even though Liberia had in reality no diamond mines of any significance, fictive "mines" were created in the jungles to account for this enormous production of diamonds.

  After carefully studying the situation, Sillitoe concluded that it would be futile to attempt to end the illicit mining in Sierra Leone by pot-holers. Even if Sierra Leone's under staffed colonial police could be induced to arrest thousands of these diggers, other natives would take their place panning the rivers and mudholes. Instead, he decided to concentrate his efforts on controlling Lebanese middlemen who were behind the illicit traffic.

  Initially, Sillitoe's men recruited a number of clandestine agents in Sierra Leone and Liberia who would pretend to be independent diamond buyers. After making contact with the Lebanese, these agents offered to buy large quantities of smuggled diamonds at much higher prices than the cartel's real competitors were offering.

  The quantity of diamonds available on the illegal market staggered Sillitoe. He found he needed more than $5 million in "buy" money to maintain the intelligence operation, and to obtain such a large amount of hard currency in a British colony required the permission of the British government. Sillitoe managed, however, to persuade the British authorities that diamonds were an important factor in Britain's precarious balance of payment equation, and he was then quickly granted permission to spend hard currencies to buy up smuggled diamonds.

  By making major purchases of diamonds in black markets, Sillitoe's agents were able to ferret out the middlemen trafficking in diam
onds. Then, through surveillance and intercepted mail, they traced the traffic from the diamond fields of Sierra Leone through the entrepots of Liberia to the wholesale markets in Belgium. It turned out that reputable European merchants, who were also customers of the cartel, had been surreptitiously financing the African smugglers and one of the principal buyers of the smuggled goods was the Soviet Union, which then critically needed industrial diamonds to retool its factories.

  Sillitoe realized that the illicit diamond traffic could not be ended decisively as long as the smugglers had high rewards for their goods and only minimal risks of being captured. He therefore decided to raise the stakes for the smugglers by hiring private armies of mercenaries to ambush their diamond caravans in the jungles.

  The most resourceful of these mercenaries was Fred Kamil, a Lebanese trader then in his twenties. Kamil had for years extracted money from smugglers on the route that led through the swamps from Sierra Leone to Liberia and which was known as the "stranger's trail." With a group of gunmen, he also waylaid merchants and travelers who came down the narrow trail. In 1956, Sillitoe's organization offered Kamil a highly attractive deal. He would be supplied with information from undercover informers about the exact movements of diamond shipments from Sierra Leone to Liberia to facilitate his ambushes. In return, he would turn the diamonds over to a De Beers subsidiary, and he would receive one-third of their value in cash. Kamil agreed to the alliance, since it would also mean that he would have police protection in Sierra Leone.