In a statement, the fund said trustee Jeremy Ractliffe regretted his decision and apologized for "possible reputational risk" his action may have caused, The New York Times reported.
Earlier this month, supermodel Naomi Campbell testified at the war crimes trial of former Liberian strongman Charles Taylor she received a pouch of "dirty-looking stones" from unidentified men after a dinner hosted by Mandela and attended by Taylor. She said she turned the pouch to Ractliffe.
Taylor has denied accusations of unlawful killings, abductions, rape and conscripting children to fight and also rejected claims he traded weapons for conflict diamonds to sustain the bloody civil war in Sierra Leone.
During the trial Wednesday at The Hague, Netherlands, prosecutor Nicholas Koumjian, quoted a 1998 incident in which more than 1,800 rough diamonds were seized from the briefcase of a Sierra Leone commander by two rivals who took them to Taylor, who exchanged them for arms and ammunition.
In a statement, the fund said Ractliffe agreed to resign and "regrets his omission to inform the chairperson and the rest of the board of trustees of the Nelson Mandela Children's Fund of his receipt of the uncut diamonds until now and acknowledges that had he done so, he and the board would have found a better and lawful way to manage the situation."
The statement also said Ractliffe, chief executive from 1995 to 1999, apologized for putting the fund's reputation at risk, the Times reported.