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The global market for colored gemstones, such as emeralds and rubies, is dominated by a few major players. One of the largest is Gemfields Plc, a U.K.-registered, London Stock Exchange-listed company with significant mining operations in Zambia, Mozambique, India, Sri Lanka and, recently, Colombia.

At first glance, things appear rosy at Gemfields, but a closer look reveals questionable deals and associations. As with blood diamonds, the precious stone trade purports to offer transparency, but many of its practices are murky and dark.

In September 2015, Gemfields announced a series of acquisitions in Colombia. The main target was a 70 percent stake in the Coscuez emerald mine in the mountainous province of Boyacá, one of the world’s best sources of emeralds.

Boyacá was at the center of the infamous “green wars” between local factions of the emerald mining business. The Colombian emerald trade has long been dominated by mafia-like organizations that dabble in paramilitary activities and cocaine production and trafficking. Former guerrillas, drug lords and private armies continue to offer support for mine leaders in exchange for protection payments or even equity stakes in mining operations.

As documented by InSight Crime, a foundation that studies organized crime in Latin America, targeted assassinations within the industry have escalated in recent years. Turf squabbles erupted again after the 2013 death of longtime emerald kingpin Víctor Carranza, who fought fiercely to maintain control over about 40 percent of Colombia’s emerald production. This violence, along with declining revenues from emerald mining, has kept most international companies away, with very few venturing to invest – until now.

According to Gemfields’ regulatory filings, the company will own 70 percent of a new entity called Coscuez NewCo, whose principal asset will be the Coscuez license. The remaining 30 percent will stay with the concession’s current owner, Colombian firm Esmeraldas y Minas de Colombia SA, or Esmeracol.

Colombian authorities have said that Esmeracol mines belong to one of the nation’s largest drug trafficking organizations, the El Dorado cocaine cartel. The newspaper El Espectador published a confidential investigation by Colombia’s Anti-Laundering Unit showing the leaders of the cartel used Esmeracol and its Coscuez mine to launder $10 billion in proceeds from the sale of 900 tons of cocaine to the U.S. over a decade. These revenues far exceed Colombia’s total emerald exports, which declined from $480 million a year in the late 1980s to $147 million in 2014.

The cartel’s four leaders were arrested by U.S. authorities in 2010 and 2012. But Esmeracol shares remain in the hands of an alleged front man for the cartel bosses. This raises the prospect that the cartel will use Gemfields’ emerald investment to revive its operations while maintaining a low profile as indirect minority shareholders in the Coscuez mine.

Gemfields also acquired majority stakes in several smaller Colombian mines, but offered few details in their public filings. Colombia’s Mining Ministry data shows it has approved seven mining concessions controlled by six local subsidiaries of International Stone Asia Mine (ISAM). ISAM, which has a joint venture with Gemfields, belongs to two southern Spain scions of a prominent accounting family firm with no apparent history in the mining industry.

A Tangled History

Gemfields’ connections run deep. Founded in London in 2004 by Rajiv Gupta, the heir to an Indian emerald trading family active in the business for 50 years, the company was initially led by former De Beers executive Jeremy Clarke.

One of the early significant seed investors who helped finance Gemfields’ £8.5 million acquisition of 70 percent of Zambia’s Ndola Rural Emerald Restricted Area was Frank Timis, a controversial Romanian-Australian natural resources tycoon. Timis’ reputation has been tainted by a trail of spectacularly failed projects, irate investors and losses from London to China over the last decade.

Gemfields also attracted capital from Brian Gilbertson, former CEO of BHP Billiton Ltd. Gilbertson started Pallinghurst Resources LLP, a U.K. private equity firm investing in the mining industry with a primary listing on the Johannesburg Stock Exchange and a secondary listing on the Bermuda Stock Exchange. Pallinghurst and its subsidiaries took control of Gemfields in 2008.

Gilbertson, who serves as Pallinghurst’s chairman, formed the company in 2004 with an initial investment of $150 million from his business partner Viktor Vekselberg, a Russian billionaire with longstanding ties to Russian President Vladimir Putin.

In 2004, Gilbertson took the CEO post at Siberian-Urals Aluminium Company, or SUAL, a Russian company owned by Vekselberg. Gilbertson helped oversee SUAL’s 2007 merger with Rusal, an aluminum producer owned by Oleg Deripaska, another Kremlin-aligned oligarch. The merger resulted in what for a time was the largest aluminum company in the world.

Vekselberg and Gilbertson’s relationship soured after the latter exited from SUAL and the two ended up facing off in a Cayman Islands court over Pallinghurst’s acquisition of the famed Fabergé brand in 2007. According to Vekselberg, Gilberston’s purchase of the egg brand with ties to the Russian czars and precious stones amounted to a breach of his fiduciary duty. The Russian billionaire had helped fund Pallinghurst for the purpose of acquiring Fabergé, which he had long coveted for himself. The iconic brand operates now under the Gemfields umbrella as part of the company’s push to market colored gemstones.

White Knights or Dark Lords?

Both Pallinghurst and Gemfields present themselves as white hats. But company materials are slim on specifics.

Gemfields does not belong to any of the major mining self-regulatory organizations, such as the International Council for Metals & Mining or the Responsible Jewelry Council. The company says it attempts to adhere to these groups’ guidelines “where possible,” but its language on responsible mining leaves room for selective interpretation. How else to explain the pattern of violence in its African operations?

Similarly, Pallinghurst says it attempts to adhere to the King III Report on Corporate Governance, a South African commission that established best practices. Yet Gilbertson is Pallinghurst Chairman and also an Executive Director, which risks the board’s independence, according to King III principles.

Pallinghurst does not have an internal auditing department. In its 2015 annual report, it justifies this by saying, “The Board believe that it would not be appropriate for the Group to appoint its own internal audit function.” Its outside auditor’s chairman is a Pallinghurst board member. The 2015 report disclosed this, but dismissed any possible conflicts by describing the relationship as “arm’s length.”

To cynics, this is just another example of life in the cutthroat natural resources business. But these facts should matter to investors. More scrutiny and accountability is needed.

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