Tuesday June 13, 9:43 am Eastern Time
FEATURE-Canada fears mafia infiltrating new diamond mines
By David Ljunggren
YELLOWKNIFE, Northwest Territories (Reuters) - While you may not know that Canada's remote sub-Arctic region is rapidly becoming home to one of the world's most important diamond mining industries, the Russian mafia certainly does.
By 2003, just two mines in the sparsely populated Northwest Territories are expected to account for a staggering 15 percent of the world's diamond production by value, thanks largely to the exceptionally high quality of the stones.
The mines are hundreds of miles from territorial capital Yellowknife and can be reached only by plane, but gangsters are already sniffing around, much to the alarm of the tiny, sparsely equipped local police force.
``There has certainly been interest in the diamond industry from Russian organised crime, Asian organised crime, outlawed motorcycle gang groups and others,'' said Superintendent Terry Elliott, in charge of criminal operations at the Royal Canadian Mounted Police headquarters in Yellowknife.
The Mounties do have a special unit dealing with the diamond industry, but it consists of just three people. Indeed, there are only 162 police officers to maintain order in a vast expanse of land that is larger than western Europe.
``Other countries in the world with diamond industries -- for instance South Africa and Australia -- have diamond squads employing hundreds of investigators,'' Elliott told Reuters.
``I'm not suggesting we're asking for anything like that, but we certainly need some resources to develop an intelligence base and try to prevent what we know is going to happen from happening,'' he said.
In December 1998 nearly 40 Russian nationals were arrested in Canada in connection with offences including bringing fake diamonds in from the United States. And documents obtained by the Vancouver Sun newspaper show Canadian immigration officials in Moscow warned Ottawa last year they did not have the resources to stop suspected mobsters moving to Canada.
DIAMONDS ARE THE MOB'S BEST FRIEND
Diamonds are irresistible to organised crime: A fortune in stones can be hidden in a pocket and they are suitably anonymous. This spells trouble for Canada, which will soon become the world's third most important diamond producer.
``Because of their remoteness, the Northwest Territories do provide criminal organisations with an excellent opportunity,'' said Superintendent Ben Soave, head of the Special Enforcement Unit, which includes officers from several law enforcement bodies and is charged with fighting international gangsters.
``East European criminals have had the time to develop expertise, especially in jewelry and diamonds. They pose a serious threat,'' he told Reuters. ``If we're not prepared or anticipating organised criminals to see an interest or an opportunity there, then we will have serious problems.''
For the historically impoverished Northwest Territories government, the diamond industry's relatively rapid development has come as a welcome surprise. The Ekati mine -- jointly owned by Australia's Broken Hill Pty Co. Ltd. with 51 percent and Canada's Dia Met Minerals Ltd. with 29 percent -- opened in 1998 and is producing 3 million high-quality carats a year.
Broken Hill officials say new equipment will lift production at Ekati by up to 50 percent within 18 months and eventually double capacity by 2008.
The giant Diavik mine owned by Canada's Aber Resources Ltd. and Britain's Rio Tinto Plc. will start operations in 2003 and at least one more mine looks set to open in a few years.
Joseph Handley, the Northwest Territories' minister of resources, wildlife and economic development, expects several other mines to be opened over the next two decades.
``We have very serious concerns about the potential (of the diamond industry) for bringing the wrong elements into the territory. We have made very strong recommendations to the government,'' he said.
These include doubling the Mounties' diamond squad to six people. ``It isn't a lot. We don't need the level of security that South Africa has because our diamond mines are isolated, the diamond mining process is very mechanized so very few human hands touch it,'' Handley told Reuters.
The mining firms are quietly confident they can fend off unwanted attention, pointing out their diamonds are buried deep in kimberlite deposits, which have to be dug out of the ground and then separated mechanically. In contrast, many African deposits are alluvial, which means the diamonds are much closer to the surface and have to be recovered individually by hand.
'STATE-OF-THE-ART SECURITY'
``We use the latest available technology to ensure the minimum opportunity for anyone to handle the diamonds. We have a state-of-the-art security system. We know our people. We think we have a pretty secure network,'' said Graham Nicholls, vice president of external affairs at Broken Hill.
``When the security system is in place, you always have to be vigilant to the possibility of collusion at any point in the pipeline. We constantly rotate the mix of people working on a shift,'' he added.
But federal security officials say the unique situation in the Northwest Territories, which has a many young unemployed native Indians, could make the mines more vulnerable than they think. Before they could extract any diamonds, the two firms had to promise to employ a certain percentage of Indians.
``This is going to be a huge problem. Here you have a large number of local youth -- naive and undereducated, and susceptible to drug abuse -- who will have to be offered jobs in the mines. These people will be sitting ducks for organised crime,'' said one security source.
Given the topic's political and racial sensitivity, few in the mining industry are prepared to discuss it on the record, but one mining concern official expressed little concern.
``A person who wants to steal diamonds has to have a sophisticated ability, has to understand the systems involved in the extraction and final processing of diamonds. There are not a lot of aboriginals with that knowledge,'' he said.
``I'd be more concerned with hiring people from the south whose backgrounds weren't so easy to check,'' he added, focusing attention on another problem: the lack of qualified workers in a region with a population of only about 38,000.
Territorial Premier Stephen Kakfwi said last month that many hundreds of people from the south would have to fill jobs created by booming diamond and natural gas projects. This can only mean more opportunities for organised crime.
``Even in the United States there are not that many people in law enforcement focusing on diamond smugglers. That makes it ideal (for criminals),'' said Frank Cilluffo, director of the Russian organised crime task force at the Centre for Strategic and International Studies in Washington.
``I imagine if someone can survive in a harsh police state like Russia they'll be like kids in candy store in the United States and Canada.''
PHIL |
