Conflict diamonds came to the attention of the world media during the extremely brutal conflict in Sierra Leone in the 1990s. The UN, governments, the diamond industry and non-governmental organizations (such as Global Witness, Amnesty International and Partnership Africa Canada), recognized the need for a global system to prevent conflict diamonds from entering the legitimate diamond supply chain and thus helping to fund conflict.

They developed an agreement called the Kimberley Process, which requires participating governments to ensure that each shipment of rough diamonds be exported/imported in a secure container, accompanied by a uniquely numbered, government-validated certificate stating that the diamonds are from sources free of conflict.

Under the Kimberley Process, diamond shipments can only be exported and imported within co-participant countries in the Kimberley Process. No uncertified shipments of rough diamonds will be permitted to enter or leave a participant's country. This ring-fences conflict diamonds and as such ensures they are unable to enter the legitimate diamond supply chain and thus, cannot be used for illegitimate purposes.

In November 2002, 52 governments ratified and adopted the Kimberley Process Certification System, which was fully implemented in August of 2003.

Today, 71 governments, in partnership with the diamond industry and NGOs, are committed and legally bound to the UN-mandated process. Kimberley Process participants currently account for well over 99% of the global production of rough diamonds.

Kimberley Process participants undergo periodic reviews, along with peer monitoring to ensure compliance. Furthermore, all rough diamond sales are independently audited, and are also subject to separate governmental regulations. Any country that is found not to be in compliance can be sanctioned by the Kimberley Process.

All countries that are participants of the Kimberley Process are closely monitored. A recent Kimberley Process Review Mission to Brazil noted anomalies and weaknesses within the country's procedures. The Brazilian Government took definitive action by suspending its official exports of rough diamonds and is in the process of working with the Kimberley Process to remedy the situation as soon as possible.

Kimberley Process Requirements

• Each shipment of rough diamonds crossing an international border must be:
• Transported in a tamper-resistant container
• Accompanied by a government-validated Kimberley Process Certificate
• Each certificate must be resistant to forgery, uniquely numbered and describe the shipment's contents
• The shipment can only be exported to another Kimberley Process participant country
• It is illegal for uncertified shipments of rough diamonds to either be imported or exported by a Kimberley Process participant country
• Failure to comply with these procedures can lead to confiscation or rejection of parcels and/or criminal sanctions
• If any concerns arise regarding a country's adherence to the Kimberley Process, they are investigated and dealt with at an intergovernmental level

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System of Warranties

Under this system, which has been endorsed by all Kimberley Process participants, all buyers and sellers of both rough and polished diamonds must make the following affirmative statement on all invoices:

"The diamonds herein invoiced have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations Resolutions. The undersigned hereby guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds."

All members of the trade who provide such assurances should keep records of both their customer warranties and their System of Warranties statements from their suppliers. This flow of warranties in and out must be audited and reconciled on an annual basis by the company's own auditors. If asked for by a duly authorized government agency, these records must be able to prove that the supplier is in compliance with the Kimberley Process.

Failure to abide by the aforementioned principles exposes the member to expulsion from industry organizations. Under the terms of the Kimberley Process, it will be considered a violation to issue a warranty declaration on a sales invoice unless it can be corroborated by warranty invoices received for purchases. Failure to adhere to these principles will prompt investigation and could result in expulsion from the various diamond industry institutions.

Fred Meyer Jewelers Commitment

April 6, 2004

Dear Concerned Customers:

Fred Meyer Jewelers, Inc. and its associated stores are committed to legal compliance and ethical practices in all our activities and we demand the same from all of our suppliers. We have been very diligent in the selection of all our suppliers. We feel that our suppliers have the utmost integrity and have required them to adhere to the following warranties in furtherance of implementing the Kimberley Process. "All diamonds purchased prior to January 1, 2003 from sources that, to the best of our knowledge, are reliable. The seller hereby guarantees that they have no personal knowledge or reason to believe that these diamonds are involved in funding conflict and/or have been traded in violation of any United Nations Resolution." "All diamonds purchased after January 1, 2003 that are offered for sale have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations resolutions. The seller hereby guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by supplier of these diamonds."

Very truly yours,
Pete Engel
President & CEO
Fred Meyer Jewelers