of a book about the diamond invention began in a casual
meeting with Ben Bonas in June of 1978 at a resort in
St. Tropez. Bonas was an intermediary between De Beers’
diamond trading company in London and diamond dealers
all over the world. Brokers were necessary to maintain
the fig leaf that De Beers did not directly deal with
US diamond companies, and therefore did not come under
the purview of its anti-monopoly laws. Bonas, in this
capacity, handled about one-third of the world's uncut
diamonds. When I heard that he was in the diamond business
my initial response was to assume that it all was part
of a very ancient trade. "Not at all," he said. "The
diamond business was only really invented in the last
hundred years." He pointed out that although the diamonds
had been precious gems for centuries, the business of
mass-marketing them as engagement rings, and controlling
the price, was a comparatively recent phenomenon. The
"invention" was the system for restricting the supply
of diamonds and maintaining the price in the world market.
It was, in brief, a complete monopoly. The possibility
that the value of diamonds was artificially, sustained'
by a conspiracy intrigued me, and I decided to look
further into this mechanism. My investigation took two
and a half years.
The success that the diamond cartel
had in creating a market in Japan was explained to me
by Hugh Dagnell, one of the chief marketing strategists
for the Diamond Trading Company in London. The statistics
on the Japanese and other markets come from a private
study done by the Diamond Trading Company ,called The
Retail Diamond Market for Nine Marketing Countries (1978).
1 also interviewed advertising personnel at N. W. Aver
and J. Walter Thompson who were working on a diamond
account. The series of full-color advertisements were
supplied to me by the Diamond Trading Company in London.
The Rise and Fall of Diamonds began as
a project for the German magazine, Geo, which in 1978
was planning an American edition. The editor, Harold
Kaplan, wanted a long report on the mining of diamonds,
and he offered to finance a trip to the world's diamond
mines. I first went to the offices of the De Beers Diamond
Trading Corporation in London at Number 2 Charterhouse
Street on November 28, 1978. After receiving an initial
briefing on diamond production from Richard Dickson,
the public relations officer in charge of visiting journalists,
I flew directly to Johannesburg, South Africa. From
there I proceeded to diamond mines in Botswana, Lesotho,
Namibia and Kimberley. Then I went to the diamond cutting
centers in Antwerp and Israel, and back to De Beers'
headquarters in London. The trip took eight weeks.
The section on New York was logistically the easiest,
since I live in New York and have many friends in the
diamond business. The magazine Jewish Living (which
lasted only three issues) arranged many of the interviews
that I had with Jewish diamond dealers on the New York
Exchange. I interviewed the president of the Diamond
Dealers Club, William Goldberg, in his office in the
Diamond Exchange. Fred Knobloch described his trips
to Moscow to buy Soviet diamonds. The articles in the
Jewelers' Circular Keystone that detailed the concern
for the diamond market were written by David Federman.
In Johannesburg, I spent a good deal of my time at the
offices of the Anglo-American Corporation at 44 Main
Street. I was especially struck by the genteel and very
English atmosphere that prevails here in this part of
South Africa. At lunch, for example, the service begins
with an English butler serving drinks. Then everyone
is ushered to a long table with fine china and crystal
glasses. A wine steward pours French claret while a
chef, standing at a side board, carves roast beef to
each guest's taste. After the meal Cuban cigars are
passed around the table. It is much more like dining
in a private club in England than at a South African
Anglo-American executives who explained
De Beers' diamond mining strategy included Peter J.
R. Leyden, the manager of Diamond Services, L. G. Murray,
the chief geologist for De Beers, Barry R. Mortimer,
the chief public relations consultant for De Beers,
and Ivor Sanders, the public affairs officer at Anglo-American.
The interview cited in the chapter with Harry Oppenheimer
took place December 4, 1978, in his office. It lasted
for about an hour. I was greatly impressed by the ease
with which Oppenheimer could discuss the geopolitics
One journalistic advantage
I had in flying to the diamond mines on De Beers' airplanes
was that I had the opportunity to meet en route a number
of consulting engineers. Kenneth J. Trueman was, for
example, seated next to me on the flight to Botswana,
and his insights into the diamond mine there proved
very helpful. In all, I flew on a dozen of these mining
flights. I was shown around the Orapa mine by Jim Gibson,
the chief geologist at the mine.
section on the Lesotho mine is based entirely on interviews
that I had on December 6, 1978, during my tour of the
mine. Keith Whitelock, the general manager of the mine
and Rogan MacLean from the Diamond Trading Company in
Lesotho helped me understand the problems.
FOUR Because Namibia was in the throes of a political
crisis, I arranged to have briefings with the South
African General Staff on the guerrilla war with SWAPO
in Namibia and with a number of prominent businessmen
in Windhoek, the capital of Namibia and Olga Levinson,
who writes on politics there. I also read the internal
reports of Anglo-American were, which helped illuminate
the unique mining operation.
I did see the entire history of the diamond cartel laid
out before my eyes. There was the original open pit
"Big Hole" filled with water. On one side of it, there
was the Mining Museum in which De Beers had put together
much of the original equipment and buildings used in
the mining rush of the nineteenth century. Then there
was the De Beers headquarters, which had originally
been the headquarters of Barney Barnato, and the De
Beers club, where many of the big deals had been struck.
"De Beers is Kimberley, Kimberley is De Beers," George
Loew, the public relations man for De Beers in Kimberley,
De Beers generally controls
the diamond trade through indirect levers. The most
notable exception where a De Beers subsidiary, the Diamond
Trading Company, directly exerts pressure on diamond
wholesalers and manufacturers is at the London sights.
I was in London for two of these occasions: in December
of 1978 and September of 1980. Most of the information
for this chapter comes from dealers and manufacturers
who are regular customers of De Beers. For obvious reasons
they requested anonymity.
While the Diamond Trading
Company was extremely cooperative in showing me through
their headquarters in London and explaining the sorting
and distribution procedures, I did not have an opportunity
to interview a number of key executives there, including
Monty Charles. The policy of De Beers, and the Diamond
Trading Company, is to allow journalists access to their
public relations department but not to the actual executives
outside of that department. The description of Monty
Charles comes from interviews with diamond dealers who
attended sights regularly and knew him well for a long
time. A number of major diamond brokers proved extremely
helpful to me in articulating the rules of the game,
including Ben Bonas and Richard Hambro and Vivian Prince
of I. Hennig.
The section on Cecil Rhodes
is drawn from a number of biographies, including J.
G. Macdonald, Rhodes: A Life, published by Chatto and
Windus London 1940; Andre Maurois, Cecil Rhodes, Collins,
London (1953) Much of the detail of Rhodes' competition
with the other diamond magnates in South Africa during
this period is taken from Brian Roberts, The Diamond
Magnates, Charles Scribner's, New York (1972). The quote
from Rhodes comes from the book, Old Kimberley, by Anthony
Hecking, published by the Kimberley Museum in South
Africa. The section on Barney Barnato is drawn from
Thurley Jackson, The Great Barnato, published by Heinemann,
London (1970), and Brian Roberts, The Diamond Magnates.
The primary source on the life of Sir
Ernest Oppenheimer is the book by Theodore Gregory,
Ernest Oppenheimer and the Economic Development of Southern
Africa, Oxford University Press, Capetown (1962). This
biography was commissioned by the Anglo-American Corporation,
and the author had access to the letters of Sir Ernest
and the records of De Beers and the Anglo-American Corporation
The letters quoted from Sir Ernest Oppenheimer in this
chapter are taken from this book. Other sources Oppenheimer
and Son, McGraw-Hill, New York 0973); Edward Jessup,
Ernest Oppenheimer: A Study in Power, Rex Collings,
London 0979); and Godeherd Lenzen, The History of Diamond
Production and the Diamond Trade, London (1970) The
section about the Jews in the diamond trade comes from
the Jewish Encyclopedia. The section about Oppenheimer's
plan to jettison several tons of diamonds into the North
Sea comes from documents I obtained under the Freedom
of Information Act, which pertained to the United States
government's antitrust suit against De Beers. This historical
research was supplemented with interviews with a number
of officials at De Beers, including Harry Oppenheimer.
The question of how nations at war acquire
the strategic materials they need from their enemies
remains an especially difficult one to research. Throughout
the Second World War, Germany was entirely dependent
for its supply of industrial diamonds on its British
enemy. There were no synthetic diamonds in those days,
and the only source for many important types of diamonds
were the mines and fields in the British Empire under
the control of the diamond cartel. Despite embargoes
and intensive policing by intelligence services, Hitler
managed to acquire his diamonds.
The source of research
for this chapter is a document I acquired under a Freedom
of Information request. I had initially learned of the
United States government's interest in the strategic
smuggling of diamonds through a former attorney general
named Bruno Schachner. When he had originally joined
the Justice Department in 1939, he had been assigned
to one of the least interesting tasks it had to offer:
investigating private competition to the United States
postal service. If such a case was brought against any
offender, the maximum fine was fifty dollars. For months
he labored in the legal doldrums, searching for an escape.
Then, early in 1940, the Coast Guard arrested a German
soldier whom they suspected of being a spy. The only
grounds that could be found for detaining him was that
he was carrying a letter, and this could be construed
as violating the prohibition against competing with
the post office.
Schachner found that the letter the
German sailor was carrying was encoded. Calling in a
team of code-breakers from the Treasury Department,
Schachner set about deciphering it. The message concerned
a shipment of gem diamonds consigned to a firm in New
York. The diamonds, moreover, came from European areas
that had been recently overrun in the Nazi blitzkrieg.
Schachner, himself a refugee from the Nazi pogroms in
Austria, suspected that these diamonds had been seized
from interned Jewish diamond cutters. For this reason
he took "a very personal interest in the case." He began
his investigation by visiting the various diamond cutting
factories in New York and learning the style or "signature"
of the different diamond cutters. It turned out that
the diamonds that the firm in question was importing
had the "signature" of Dutch and Belgian cutters who
had been shipped off to concentration camps by the Nazis.
Schachner then began tracing the provenance of these
diamonds through import licenses and records of money
transfer. By 1941, he had established that they had
all come from Germany. As a result of this investigation,
an owner of the import firm was prosecuted for trafficking
in stolen diamonds and sent to prison.
further learned that the Nazis were involved in a triangular
diamond trade whereby the records of the diamonds sold
in New York were used to buy industrial diamonds in
Brazil, which, in turn, were shipped to Germany through
Switzerland. The category of industrial diamonds that
the Germans seemed most interested in was boart (which
is a form of powdered diamond dust used for diamond
grinding wheels). Even as early as 1941, Germany had
a critical shortage of this boart.
recalled being consulted during this period about the
status of the De Beers stockpile in London, by the FBI
and Justice Department officials, he suggested that
somewhere in the justice Department archives there existed
a file on the diamond investigation.
I called an assistant
attorney general at the Justice Department who told
me that most of the government's files on the diamond
monopoly were in the antitrust dossier on De Beers,
and suggested that I file a request under the Freedom
of Information Act for the entire antitrust action against
the diamond monopoly.
Within a matter of weeks, batches
of formerly classified files began arriving. They soon
totaled more than 2,000 pages of legal memoranda, FBI
reports, embassy cablegrams, intelligence briefings,
economic analyses, financial records, interviews with
individuals in the diamond industry, and mail intercepts
of correspondence between members of the diamond cartel,
including Otto Oppenheimer (which were apparently read
by military censors in Bermuda).
The file obtained
under Freedom of Information contained only a few references
to any actual investigation of the smuggling of diamonds
by the cartel to the Nazis. There was, however, one
reference to an OSS investigation. This led to the summer
report, cited in the chapter, which strongly implied
that De Beers was impeding Allied intelligence investigations-if
not actually engaged in smuggling itself. To find the
field reports I went to the National Archives and consulted
the military historian, John E. Taylor.
to these field reports, it was not possible to assess
the quality of evidence on which the OSS predicated
its almost incredible charge that the diamond syndicate
dealt with the enemy. In an attempt to find agent Teton,
I placed advertisements in the journal of the retired
officers of the OSS and the New York Times Book Review,
but I had no success.
The letters on the Belgian Congo
cited in this chapter came from Sir Theodore Gregory's
book on Oppenheimer, previously cited.
The description of the cartel's attempt to suppress
the production of South American diamonds, cited in
this chapter, comes from the autobiography of Sir Patrick
Hastings, Cases in Court, Pan Books, London (1949),
especially part three, "A Case for the Diamond Syndicate."
Sir Patrick had the unusual opportunity to cross-examine
Otto Oppenheimer and to take testimony in pretrial motions.
The section on John Thornburn Williamson is drawn from
a two-part series in Indiaqua magazine (9:10-21 and
10:15-17) which provides a biography. The material on
the British Colonial Office comes from the public record
and documents obtained under the Freedom of Information
Act. Financial details are given in Edward Jessup's
book,, previously cited. Ronald Winston, whose father
Harry Winston dealt with Williamson, also provided personal
recollections of Williamson. At one point Harry Winston
had contemplated taking over Williamson's mine, and
negotiated with him, but decided against it out of concern
for jeopardizing his relations with De Beers.
on Harry Winston comes from interviews with Ronald Winston,
now president of Harry Winston Inc., and Nick Axelrod,
the chief diamond buyer for Harry Winston Inc.
The International Diamond Annual, a review of
the world's diamond industry and trade, published by
De Beers in two volumes in 1971 and 1972, furnishes
a comprehensive picture of a diamond pipeline from the
diamond mines to the cutting center to the retail business.
They were published by De Beers as a service to the
diamond industry. The quotation about keeping track
of the market in this chapter comes from volume two
of these books. Other trade publications, including
Indiaqua, Jewelers' Circular Keystone and Diamant, illuminate
the diamond trade.
I was shown around Antwerp by Ivor
Sanders, who flew over from London to take me to various
diamond cutters. Most of the diamond dealers I visited,
therefore, had a close relationship with De Beers. Raoul
Delveaux, the director general of the Diamond High Council
in Antwerp, was also helpful in arranging interviews
in Antwerp. The history provided in this chapter is
drawn in part from the 1978 Year Book of the Diamond
In Israel, I was assisted in making contact
with diamond dealers by James J. Angleton, the former
CIA counterintelligence chief, who had served as a liaison
between American and Israeli intelligence. I met Angleton
in the course of researching my book, Legend: The Secret
World of Lee Harvey Oswald, and he put me in touch with
a number of his contacts in Israel. During a week in
Tel Aviv, I was able to see independent diamond dealers,
diamond dealers with a sight at De Beers in London,
former diamond smugglers, diamond bankers and even diamond
speculators. They all shared a conspiratorial view of
De Beers. They believed that De Beers was artificially
restricting the flow of diamonds, both by stockpiling
diamonds in their vault in London and by manipulating
the open market so as to drive up the price. Most of
these dealers and individuals in the diamond business
also believed that the De Beers cartel was attempting
to undercut Israel's preeminent position in the business
of cutting small diamonds.
cited in this chapter come from Sir Theodore Gregory's
biography of Sir Ernest Oppenheimer. Oppenheimer filled
in some of the gaps and motivations in an interview
he gave me on September 4, 1978. Before I was ushered
into his office that morning, I had viewed a video tape
of a special hour-long documentary about Oppenheimer
that had been prepared by South African television to
commemorate his seventieth birthday. Throughout this
televised interview, Oppenheimer was treated with the
sort of somber respect reserved for the most exalted
royalty. In hushed tones he was asked about the economy,
the nation and the state of the world. This program
was then followed on videotape by a second program,
called "A Family Affair," that showed various aspects
of Harry Oppenheimer's personal life. There were scenes
of his arriving in Johannesburg in his own blue and
white Gulf Stream jet, followed by his aide-de-camp
and security police. Other scenes showed him at his
palatial home, surrounded by his Goya paintings and
greyhound dogs. There were also scenes of Oppenheimer
at his stud farm outside of Kimberley with his championship
Aside from Oppenheimer, I also gained some
insight into how he operated from his executives, whom
he had treated as members of "one big family" as one
of them put it. For example, Richard Wake-Walker, a
young executive with the Diamond Trading Company in
London, told me how he had been invited to Oppenheimer's
game farm during weekends in South Africa. He recalled
that Harry Oppenheimer would sit in his shirt sleeves
on the terrace surrounded by various members of his
family, executives of Anglo American and De Beers and
a few friends. Everyone would drink beer. When an elephant
or a rhinoceros would trudge up to the barrier in front
of the terrace, a servant would throw a floodlight on
it, and everyone would admire the wildlife.
of the investment firm of Arnhold and Bleichroeder helped
me through the corporate labyrinth of the Anglo-American
and De Beers. The antitrust documents obtained by me
under the Freedom of Information Act provided further
clues to the interrelations. I also received some help
from the Anglo-American corporation.
I got files of the N. W. Ayer Company, the advertising
campaign for De Beers. From my Freedom of Information
request. Prosecutors in the antitrust division, attempting
to show that De Beers had an agent in the United States,
had subpoenaed all of the Ayer records. These archives
contained the material reviewing the strategy research
and ambitions of De Beers.
N.W Ayer provided me with
volumes of campaign books. These included not only the
advertisements used by N. W. Ayer in its campaign, but
also the strategy it presented to De Beers. I also interviewed
a number of executives at the advertising agency who
preferred not to use their names.
Ian Fleming, who invented James Bond, also wrote probably
the best book on diamond smuggling, The Diamond Smugglers,
Cape, London (1957). He had extensive interviews with
Percy Sillitoe's staff, who set up De Beers' intelligence
system, and considerable access to De Beers itself.
It is his only nonfiction book. Fred Kamil, the Lebanese
mercenary who hijacked a South African aircraft in order
to extort money from Harry Oppenheimer, has also written
a book about smuggling called The Diamond Underworld,
Allen Lane, London (1979), which is of great interest
since Kamil was one of De Beers' diamond soldiers. The
section in this chapter on Percy Sillitoe and the organization
of De Beers intelligence is drawn mainly from Fleming's
account. The section on Kamil is drawn mainly from his
The section on Sierra Leone
is based on interviews I conducted with Maurice Tempelsman,
Ronald Winston and Michael Samuels, the former American
ambassador to Sierra Leone.
The section on Zaire is
based on personal interviews with a former CIA officer
stationed in Zaire who prefers that his name not be
used. Other sources include New York diamond dealers
who do business in Zaire. The section on Angola is based
on interviews with Albert Jolis, a New York diamond
The story about Sir Ernest
Oppenheimer rejecting the proposal to develop synthetic
diamonds was told by Richard Hambro, an investment banker
who worked in the industrial division of De Beers in
The section on General Electric is partly
based on documents I obtained under the Freedom of Information
Act. In its 1973 lawsuit, the Department of justice
looked into the possibility that De Beers had conspired
with General Electric to fix the price of synthetic
diamonds. The prosecutors found no substantive evidence
of such collaboration, but the documents they turned
up in their search provide a useful overview of the
economic and political considerations involved in General
Electric's development of synthetic diamonds.
The section on the origins of the Israeli diamond
industry comes from interviews I had with Ovi Ben Ami
while I was in Israel in 1978 and Vivian Prins, whose
father had been the broker for Ben Ami in the Israeli
The section on Goldfinger is based on
my interview with Israeli dealers who had known his
work before his death. Vivian Prins, whose firm had
brokered diamonds for Goldfinger, provided details about
the dealings between Goldfinger and De Beers.
In Kimberley I was seated at lunch at the
Kimberley Club next to Barry Hawthorne, a geologist
who works for De Beers. He had recently returned from
the Soviet Union, and told me about the enigma of Soviet
The section on the history of Soviet
production is drawn from the Industrial Diamond Annual
(1971, 1972) and Indiaqua ( issue 5, pp. 1416; . 6,
p. 15; 11, p. 18;. 15, pp. 8-1 1 and 16, P. 20) and
John Massey Stewart account in the magazine Optima,
which is published by the Anglo-American Corporation
(No. 2, 1976, p. 8). The section on Aikhal comes from"Red
diamonds from Siberia." in the International Diamond
Annual 1971 (p. 79) as does the quotes from Victor Tikhonov.
The data on the Finch mine was provided by L. G. Murray.
The description of the diamond sorting was given to
me by a former diamond sorter for the Diamond Trading
Company in London who prefers that her identity be kept
secret. The section describing Sir Philip's trip to
the Siberian mines comes from Barry Hawthorne in 1978.
Dr. Henry Meyer provided the account of the Soviet synthetic
diamonds in an interview I had with him in New York
in 1980. Joseph Bonroy gave his account of Soviet synthetic
diamonds in the Belgian trade magazine Diamant (November
1970 The section on the silver bears is based on interviews
I had with dealers in Antwerp .
chapter is drawn almost entirely from the documents
I obtained under the Freedom of Information Act and
interviews with prosecutors involved with the case.
The biographical details on E. T. S. Brown are derived
from an interview with him in Indiaqua (1980) p 55.
The section on Sam Collins is based
on interviews I had with Francois Lamparetti, a geologist
who worked for the Marine Diamond Corporation. Background
information concerning the attempt to smuggle diamonds
from the forbidden zone comes from Ian Fleming's The
Diamond Smugglers and Indiaqua (nos. 12 and 13). The
account of Collins' organization of his marine diamond.
Indiaqua, no. 6 .
The section on Albert Jolis is drawn
mainly from interviews I had with him in New York..
He appeared before the grand jury investigating the
diamond cartel in 1975, and the reference to his dealings
in the Central African Empire come from documents I
obtained under Freedom of Information. I also discussed
the story about the Angolan concession with Chipanda,
the former minister of natural resources for Angola,
who confirmed Jolis's story.
The section on Harry Winston
is based mainly on interviews with his son Ronald Winston,
and Nick Axelrod.
The section on Stanley
Mark Rifkin is based on interviews with executives of
the Security Pacific National Bank in Los Angeles.
The investigations of the Dutch Consumer Association
and the London magazine, Money Which? were reported
in the gemstone section of the Jewelers' Circular Keystone
magazine in January 1977.
Susan Rosenberg, who was
commissioned by the exchange to study diamond trading,
provided me with the data and documents involved in
the earlier failure. William Goldberg, the president
of the New York Diamond Club, allowed me to witness
a diamond transaction in his office in April 1979
section on Empire Diamonds comes from interviews in
1980 with Jack Braud, its president, and some of his
diamond buyers. Diane Rossant, an assistant district
attorney in New York City, provided information about
The section on Elizabeth Taylor's
diamond is based in part on the article by Kenneth Schwartz
Are a Girl's Best Friend" which appeared in the Washingtonian
, January 1980. The section on the Bokassa diamond comes
entirely from interviews I had with Albert Jolis.
On the subject of investment diamonds, David
Birnbaum, a New York diamond dealer who writes on investment
diamonds, provided details about the investment diamond
business in America and Diana Motmans, a diamond journalist
in Antwerp, on the international diamond investment
The quote from N. W.
Ayer comes from the material provided to me under the
Freedom of Information Act. The quote from Harry Oppenheimer
is taken from a statement Oppenheimer made to Anglo-American
The section on the Israeli overhang is
drawn from David Meadow, "Checkmate," Jewelers' Circular
Keystone, September 1979 and from interviews with Israeli
diamond dealers and bankers.
This book was originally
published by Simon&Schuster in 1982 under the title
"The Rise and Fall of Diamonds." I am indebted
to June Eng for designing the cyber book and thank Rebecca
Fraser and Marjorie Kaplan for their research assistance.