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DNC Donor With an Eye On Diamonds

By Susan Schmidt
Washington Post Staff Writer
Saturday, August 2, 1997; Page A01

International diamond dealer Maurice Tempelsman, a generous contributor to the Democratic Party, has won unusual support from high Clinton administration officials for a business proposal that could position him as a key marketer of billions of dollars worth of Angolan diamonds, interviews and classified government cables show.

A frequent White House visitor, Tempelsman last year won help from a senior State Department official and then-national security adviser Anthony Lake for his Angola plan. And despite a prohibition on lending in Angola by the U.S. Export-Import Bank, the records and interviews show, National Security Council and State Department officials discussed such financing for mining equipment to be purchased in connection with the Tempelsman proposal.

Of all the major campaign contributors whose names have surfaced in the Democratic fund-raising controversy, Tempelsman appears to be unique. Others – like investor Roger Tamraz, Indonesian businessman James T. Riady and Thai businesswoman Pauline Kanchanalak – obtained unusual access to high government officials after making substantial donations to the Democratic National Committee. But Tempelsman succeeded where the others appear to have failed, in persuading senior Clinton administration aides to go to bat for his business plan, which calls for the establishment of a consortium to mine and sell diamonds from Angola.

Tempelsman has not won complete support in Angola yet for his proposed deal. But the access and action he has gotten in Washington have recently set off a campaign of quiet complaints from some foreign policy officials who say Tempelsman's Angola deal would draw the United States more deeply into diplomatic and financial commitments in the war-torn southern African nation.

Last October, then-national security adviser Lake had his deputy for African affairs take the unusual step of calling the U.S. Export-Import Bank – an independent federal agency – about financing Tempelsman is seeking for diamond mining equipment, even though Ex-Im has been closed for business in Angola for two decades.

At the time of the call, Tempelsman had in hand a letter of praise for his plan from Assistant Secretary of State George E. Moose, a document Tempelsman was able to use to help try to sell his deal to the Angolan government and the rival UNITA party led by Jonas Savimbi.

Then in May of this year, in back-to-back meetings with Savimbi and Angolan President Jose Edwardo dos Santos, U.S. Ambassador to Angola Donald Steinberg and NSC adviser Shawn McCormick discussed Tempelsman's proposal and suggested that the United States would help seal the deal with Ex-Im financing, State Department cables show.

Tempelsman's diamond consortium plan was not just potentially a good business deal. It was attractive to some U.S. officials because it offered a framework for resolving a battle over Angola's lucrative diamond trade, a battle that has been a stumbling block to peace. "Maurice Tempelsman has been willing to do whatever he could to secure completion of the peace process," said Tempelsman's attorney, Theodore Sorensen.

An account of the U.S. government's involvement with Tempelsman's diamond proposal was pieced together from government cables and from interviews with officials from the State Department, the NSC, political advisers to UNITA and to the government of Angola and people involved in the diamond industry. Some of those interviewed requested anonymity.

Though Tempelsman and his companies gave $145,000 to Democratic Party committees for the 1996 campaigns, he had access to senior Clinton administration officials for other reasons.

A longtime companion to Jacqueline Kennedy Onassis, Tempelsman has been a guest at the Clinton White House nearly a dozen times, enjoying two private chats with Hillary Rodham Clinton. He flew to Moscow and back with President Clinton on Air Force One in 1995, and has accompanied the president and first lady sailing on Martha's Vinyard during their vacation trips.

White House special counsel Lanny J. Davis said he has been unable to learn whether Tempelsman ever discussed his diamond proposal with the president, an assertion made by some State Department aides.

Experts say Angolan diamonds, among the highest quality gems in Africa, could sustain a billion-dollar-a-year business for the next 50 or 60 years, but only if they can be mined and marketed, propositions greatly complicated by the deep distrust and sporadic hostilities between the government and UNITA.

Tempelsman's plan would bring the government and UNITA together in a jointly held consortium. Tempelsman hopes to obtain financing from the Ex-Im Bank and the Overseas Private Investment Corp. (OPIC) to bring U.S.-made deep-mining equipment to Angola in order to get the diamonds buried in the country's ancient volcanic rock. Tempelsman is involved in a similar enterprise in Russia that has won financing from Ex-Im. He has met with officials at the Ex-Im Bank and OPIC about Angola but has made no formal loan proposal for the project.

Tempelsman's company would have no investment or ownership in the diamond consortium, but would seek to market the stones.

Tempelsman met with the State Department's Moose last summer and asked for a letter endorsing his idea and holding out the prospect of U.S.-backed funding. The request caused concern among some State Department officials. Africa division aides "were told to support Tempelsman," said one official, who added that Tempelsman's Angola proposal was handled with "unusual intensity." Tempelsman's status as a friend of the Clintons and major Democratic donor were widely known, this official said.

Moose wanted to provide the letter requested by Tempelsman, sources said. But at the insistence of Alan P. Larson, assistant secretary for economic and business affairs, Moose toned down the language of the letter and dropped the references to possible Ex-Im Bank or OPIC financing, the sources said.

"I believe that the proposal as you have outlined it is a constructive initiative on an important issue, which must be resolved if the peace process is to move forward," Moose wrote. ". . . It is interresting and worth exploring."

The Ex-Im Bank, which makes loans to U.S. companies seeking do business abroad, is not part of the U.S. foreign policy bureaucracy. By statute, the bank is to make lending decisions based on the credit worthiness of companies and the stability of countries where they seek to do business. The White House or State Department may instruct the bank not to make a loan in specific circumstances, including loans into Communist countries or countries involved in narcotics or terrorism. In addition to those prohibitions, there is a specific statutory ban on Ex-Im lending in Angola "until the president certifies to the Congress that free and fair elections have been held." The Ex-Im Bank has done no business in Angola since the mid-1970s.

"Tempelsman wanted us to tell Ex-Im: This is a foreign policy imperative. We would like you to do it even if it is risky," said one Africa division official. "This is commercial diplomacy taken to a new place. He's using the U.S. government."

Moose declined to be interviewed about the Tempelsman proposal, but a State Department official authorized to speak for the department said the Moose letter was "a vehicle for Tempelsman to get his foot in the door." The official added: "We have been very careful to only extend services we do with other businessmen." The official said no one at the State Department has pressed the Ex-Im Bank on Tempelsman's behalf.

Tempelsman and Sorenson, his attorney, met with Lake and his deputy, Shawn McCormick, on Oct. 10, and the national security adviser expressed interest in the diamond marketing proposal. "Lake agreed with State that the underlying proposal was worth exploring," said NSC spokeswoman Anne Luzzatto.

Lake instructed McCormick to "consult with NSC's legal adviser and then to make Ex-Im and OPIC aware of Tempelsman's initiative and to inform them that the proposal included an Ex-Im and OPIC component, and that from a foreign policy prospective, the proposal had merit," Luzzatto said.

Luzzatto said Lake also instructed McCormick to "make [it] clear that the NSC was not seeking to direct Ex-Im or OPIC in any way."

Lake said he recalled telling McCormick to look into the proposal but did not remember asking him to contact the Ex-Im Bank or OPIC.

Luzzatto said Tempelsman would earn "only goodwill" from the proposed diamond consortium and that, "as we understand it, he did not regard it as a business concern."

All other parties involved in the proposal, including a representative of Tempelsman's company, Lazare Kaplan International, acknowledge that the diamond consortium is a business proposal by Tempelsman.

The account of the Tempelsman proposal offered by NSC officials is at variance with accounts offered by others on several key points. Luzzatto initially denied that McCormick and U.S. Ambassador Steinberg discussed Tempelsman's proposal in May meetings with Savimbi and dos Santos. "Shawn told me it was not raised," Luzzatto said.

An NSC official subsequently acknowledged that the topic was discussed, but it was raised by the Angolans. Classified cables recounting a May 2 meeting with dos Santos state that McCormick told the Angolan president the United States was concerned about resolution of the diamond issue. "McCormick said that UNITA must have resources to make a transition from a military force to an unarmed political party. He said the U.S. can play a positive role in this regard, noting that if American interests are involved, U.S. government agencies such as Ex-Im Bank and OPIC can be brought into play."

At a meeting with Savimbi the same day, according to the cables, Steinberg mentioned the "Lazare Kaplan project" and "stressed that the Angolan government guarantees to respect its diamond deal with UNITA will take on greater meaning if the U.S. is involved through such mechanisms as Ex-Im Bank or OPIC."

Since it signed a peace accord with UNITA in 1994, the dos Santos government has demanded that UNITA return mining tracts it appropriated during its long civil war against the government, along with revenues generated from those properties during that period. UNITA has refused, and the unresolved dispute has been an impediment to completion of the peace process.

An American official involved in monitoring the accord said the United States should be wary of getting involved in Angola's internal dispute over diamonds. "It's very difficult for an outsider, it's their national patrimony," this official said. On top of that, he added, deeper involvement in the diamond trade could enmesh the United States in a cutthroat business in a corrupt and chaotic country.

But UNITA welcomes Washington's involvement. And after initially objecting to a Washington role in the diamond dispute, the dos Santos government last month expressed interest in getting Tempelsman to help broker a settlement with UNITA. Tempelsman, as a result, was traveling to Angola this week to discuss the issue.

© Copyright 1997 The Washington Post Company

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