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De Beers and Ethics

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  • Category: Ethics

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De Beers has a marketing mix that addresses the problems and opportunities the organization is facing and will encounter in the near future. This includes: The product offered by De Beers is of superb quality, so there is no need for the organization to change the basic product. Nevertheless, with the availability of the new diamond laser engraving technology, De Beers could mark a miniature logo into the diamonds that is only visible with the help of an eyeglass. This would be a faint but successful plan in branding De Beers diamonds.

Customers/clients who buy a diamond from De Beers will know their diamond producer and sooner or later they will relate the imprinted logo with the superb product quality only offered by De Beers. Pricing Since the De Beers diamonds are targeted at the elite group, they are a bit pricey and currently the organization does not aim to alter the price of their products because diamond prices are subject to changes with market situations and agreements. Price changes will be determined by market situations and agreements both presently and in future.

Placement The present state of affairs is very profitable for De Beers and is the most risk adverse supply channel since every buyer of diamonds is bound by an agreement to carry on buying De Beers diamonds at any cost and for a set time period. Therefore there is no need to change the supply channel. On the other hand, De Beers should increase the number of retail jewelry stores it owns in the word especially in the main fashion capitals. This should be done to enable their products to reach a larger part of the wealthy and stylish group of people.

De Beers’ sales would soar, and would also be able to get free promotion in celebrity publications more especially if they are spotted buying DeBeers jewelry from these retail shops. Promotion DeBeers has been in existence for many decades and prior to advertisements and promotions not many people knew about the company. The Diamond is forever slogan that the company uses coupled with celebrity endorsements has helped to put it out there. An arm of the De Beers Group, The Diamond Trading Company sells nearly 40% of the world’s unpolished diamond by value.

The corporation accounts to 80% of the world’s industrial diamonds and has over the years with its legendary slogan “A Diamond is forever” emerged extremely successful in augmenting the demand for diamonds among consumers. Advertising Age magazine has in 2000 dubbed the slogan the preeminent of the 20th century. Having had it easy for years in the industry, when change came it proved atrocious and merciless. Insights that De Beers was involved in some ethical issues some of which discussed below, even if mislaid created a backlash. Diamond sales dropped. (Rob, 2001)

As of 2001 and beyond a number of claims were brought forward against the De Beers Corporation in the United States of America (USA) federal and state courts. The corporation was suspected of illicitly monopolizing or rather cornering the market for the supply of diamonds and plotting to move up, control and fix the prices of gem diamonds. De Beers refused the entire assertions that it contravened the bylaw, nevertheless in November 2005, the corporation proclaimed that it had reached an agreement to resolve civil action suits brought against it in the US.

It substantiated in April 2008 that the New Jersey Federal District Court judge Chelser had entered a court order endorsing the reimbursement amounting $295 million. De Beers did not own up liability. Any person who between the start of January 1994 and March 31, 2006 bought gem diamonds was as part of the defrayal entitled for a probable refund. In regard to its Industrial diamonds, De Beers in 2004 pleaded guilty to the 1994 allegations of yet again conspiring with General Electric Corporation to fix the rate of industrial diamonds. As penalty the corporation was ordered to pay a fine of $10 million to the US Department of Justice.

The issue of whose duty is it to ascertain whether or not a diamond regularly examined for Clarity, Colour and Cut ought to be checked up for a further “c” for Conflict came to play subsequent to the release of a motion picture dubbed “Blood Diamonds”. The film starring one of the world’s renowned actors, Leonardo Dicaprio is a fictionalized version of the acts of violence as well as the enforced child labour that essentially occurred throughout the 1990s in Sierra Leone, a small country in Africa. De Beers Corporation preceding the action taken in 2000 by the United Nations Security Council (UNSC) was trading in conflict or blood diamonds.

The diamonds were purchased from guerilla pressure groups in war torn African states including Angola and Liberia, in that way backing regional clashes. The proceeds obtained from these valued stones were used to sponsor armed forces conflicts, one of the reasons why the Angolan civil war extended even unto 1998 amid the sanctions the country was facing is in fact because Jonas Savimbi’s movement was actively selling uncut diamonds to De Beers and using the money obtained to purchase ammunition and other weapons.

Revolts, raped, thrashed and mutilated fellow Africans as well as minors and compelled them to dig up for the stones in riverbeds. De Beers Corporation in 1999 under demands from the UN (United Nations) came to a decision to discontinue all the external purchasing of diamonds as a way of ensuring the firmly conflict free condition of its diamonds, preliminary to 26 March 2000 the Kimberley Process Certification Scheme came to existence in November 2002 resulting from talks between countries, the civil society organization and the international diamond industry.

The scheme has since helped out De Beers re-establish its reputation and now the company claims that an incredible 100% of its diamonds are conflict free. DeBeers has in the past treated its workforce in a really bad manner especially the poor blacks of South Africa working in the mines. In his article Duncan Innes gives details on how Rhodes and others came up with ways to exploit the poor blacks in order to get a lot of cheap labour that was needed by the mining operations.

In other words they contrived cheap labour and had some significant influence in the setting up of several taxes, including a poll levy in order for the majority unemployed black population to get work so that they could earn an income or cash to pay the mandated taxes. A large majority of blacks resided in villages and in order to earn cash to pay taxes were forced to seek employment in the DeBeers mines where they could expectantly earn money quickly and go back to their rural communities.

Many of these “migrant workers” became subjected to very appalling living conditions and in the DeBeers Company stores for many years were all the time thought of thieving diamonds, and for a meal they were fed with a little bread and cold tea during working hours. “I cannot be told by anyone how to live. If I said to the minister, move from your home he would think I was mad. “(survivalinternational. org). These are the words of a bushman from Botswana on the Bushmen’s relocation from The Central Kalahari Game Reserve also known as CKGR.

De Beers through a joint venture with the government of Botswana controls the country’s diamond mining. Botswana government holds 50% of the company (Debswana)’s shares with the remaining 50% owned by the De Beers Corporation. A lengthy heated debate has subsisted involving De Beer’s mining interest, Debswana and the relocation of the country’s Bushmen from their inhabitant land in order to make the most of the diamond sources. Ever since as early as the 1980’s when the diamond sources were ascertained, the Bushmen are reported to have been fronted with threats from the Botswana government policies.

As a way of trying to get them to evacuate, the Bushmen have been fined for practicing their ‘superseded’ hunting and gathering way of life, they have been agonized and beaten and their water supply brought to a halt. In order to counteract and bring to an end to what it calls genocide of an African clan, Survival International along with Iman and other numerous international supermodels that were in the past engaged in the company’s diamonds advertising are fighting hard against the move. Iman has profoundly criticized and cut ties with the De Beers Corporation over a difference of ethics.

She was quoted in one interview as saying; ‘it was clear that the Bushmen were being destroyed – you take people from their element and you end up with Aids, drugs and alcohol in the guise of advancement. ‘ (buzzle. com) De Beers Corporation has for many decades been an important component of an old organizational set-up, put into place by the British and also fronting for various US actions and interests with the objective of exerting control over global governments and populace for the gain and in favor of some powerful corporations, particularly banks.

There is also an American edition of such a global organization called the Council of Foreign Relations (CFR). CFR enlists members of the political profession, the media, academia, and the very powerful foundations since they all have significant influence on politics. To most members of its organization, the function of the organization is unknown which is to make sure that its members protect the interests of their financial sponsors by following a party line. As a means of shielding the reputation of its alliance, DeBeers sponsors CFR and its American version.

By supporting CFR, DeBeers is able to override the political proceedings of a number of nation states, including powerful nations like the United States of America. In the case of Botswana and several African countries, DeBeers has meddled in the politics of these countries through sponsoring election campaigns for political parties representing the company’s interests to win and it has also influenced the government’s choice of government negotiators when negotiating contractual agreements between it and those countries.

In order to protect its interests, the corporation has also gone to the extent of bribing head of states with millions and/or billions of dollars whilst the rest of the population or country had to request for monetary aid in the form of long term loans accruing interests from the United Nations, International Monetary Fund (IMF) and the World Bank for survival.

In a recent edition of one of Botswana’s newspapers, The Sunday Standard, one of the headline stories was about the former president of Botswana Sir Q. K. J Masire and his dealings with Debswana Company which is a company co- owned by DeBeers and the Botswana government in which DeBeers by then owned the majority company shares of 85% and the government shares only accounted to 15% of the total shares.

The article provided a detailed insight of how the company organized a financial retirement package for the former president . The package that was arranged by the company included the settlement of the former president’s bank debts which amounted to millions of dollars in a bid to encourage him to retire and pave way for the company’s much more preferred individual to replace him as president, who can better protect its interests in the country.

Following his retirement in 1999 the company cleared his debts and also provided him with additional financial assistance worth millions to run his farm. While the former president received millions worth of dollars from Debswana Company, Botswana had huge debts with the African National Development Bank and IMF, there was increasing unemployment rate and the country was being ravaged by the HIV/AIDS epidemic.

Before going further into explaining why unethical behavior takes places in organizations, a definition of the term ‘unethical behavior’ is perhaps necessary. According to Mercado (2007), unethical behaviors are deduced when the acts of employees and organizations do not conform to professional or social standards and there are quite a number of reasons why companies find themselves caught in immoral/unethical acts some of which are explained below. The Behavior is in the Best Interest of The Company or Individual;

Well Renowned for its monopolistic ways all through the 20th century, whereby the corporation utilized its overriding power to control the global market for diamonds, in its conspiracies to fix, push up and control the price of diamonds, De Beers Corporation was plainly protecting its interest. Wrong Decisions Rationalized Away; An excellent example of this in regard to the De Beer’s Corporation is the promotion of terror campaigns and civil warfare in African nations just for the sake of making money.

The decision to buy diamonds from Angola, Sierra Leone and Liberia was rationalized by the company’s need to sell and make profits. Except for the nonprofit making organizations the main motive behind every line of business is to generate as much profit as can and companies may in this quest get lost and engage in unethical acts. Some companies of course do this with their eyes wide open. De Beers Corporation took more of an egoistic view in this situation and tended to pay no attention to the actual effect of their purchasing ‘Blood diamonds’.

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