Israeli Trader Banned Over 'Blood Diamond' Link

An Israeli gem trader has been thrown out of the Israel Diamond Exchange on suspicion of smuggling illegal "blood diamonds" into the country.

David Vardi -- a 20-year member of the trade group -- was arrested last week in connection with $140,000 worth of rough Zimbabwean diamonds seized at Tel Aviv's Ben Gurion Airport. The precious stones were discovered Dec. 22 when customs officials stopped and searched Israeli citizen Gilad Halachmi, who was allegedly attempting to pass through the "nothing to declare" lane at the airport, Rapaport News reported.

The rough diamonds were found stashed in his pocket. Halachmi told authorities that he worked in Zimbabwe as a water consultant and had been asked by Vardi to carry the diamonds. The gem trader was subsequently brought in for questioning and confirmed Halachmi's account. Vardi added that he had bought the stones from a Lebanese diamond merchant while visiting Zimbabwe.

The Israel Diamond Exchange announced on Tuesday that it was expelling Vardi, as it would not tolerate dealing in blood diamonds.

"The expulsion is not limited by time," exchange President Avi Paz told International Diamond Exchange Online News. "There is no forum for an appeal either."

Paz, also president of the World Federation of Diamond Bourses, noted that the ruling meant Vardi was now barred from trading at any of the 29 international exchanges that make up the WFDB.

Under the Kimberley Process, an international agreement signed by 75 countries, it's illegal to trade in "conflict diamonds" that could help finance war and human rights abuses. The stones allegedly smuggled in by Halachmi were likely excavated from Zimbabwe's Marange field, which is not certified by the agreement.

Human Rights Watch reports that the Marange mines are controlled by the Zimbabwean military and President Robert Mugabe's ruling Zanu-PF party. Soldiers force local adults and children to work in the pits, and anyone who refuses -- or fails to unearth enough diamonds to satisfy the army taskmasters -- risks being beaten, tortured or murdered.

A teacher at a Marange school told Human Rights Watch last year how soldiers recruited miners from the local community.

"I was forced to work in the diamond fields together with other teachers and pupils from my school for a week in February 2009," the teacher said. "The soldiers compiled a duty roster of all teachers and some pupils, and they force us to take turns to work in the fields in accordance with their roster."

None of the workers were paid, and all were forced to surrender any stones they found.

Although the Kimberley Process has banned the trade in Marange diamonds, a leaked 2008 cable from the U.S. Embassy in Harare reveals that the Zimbabwean government continues to process and sell the "undocumented diamonds to a mix of foreign buyers, including Belgians, Israelis, Lebanese, Russians and South Africans who smuggle them out of the country for cutting and resale elsewhere."

Most of the proceeds from the sales go to 11 high-up members of the administration, including Mugabe; his big-spending wife, Grace; and his sister Sabina.