Rough&Polished Investigation: World of Diamonds Group and its Phantom Mine

Mining and Exploration
28/04/2017 14:51

Elena Levina of Rough&Polished has dropped a bombshell in the form of an investigative report entitled, "The virtual miner - investigation", documenting the incredible scam that goes by the name of the World of Diamonds Group (WOD). Following up on an interview (by Aruna Gaitonde, Editor-in-Chief of Rough&Polished's Asian Bureau, entitled "A diamond surprise - Russia comes to know it has a brand-new diamond mine, Tarskaya"), conducted (at WOD's request) with Mr. Boris Voronov, the Group’s claimed Chairman, Managing Director & CEO, Levina exposes how WOD has created an elborate scam to lure potential customers to purchase its "fine jewelry, rough and polished diamonds" in all colors of the rainbow mined from its fully-owned Tarskaya Diamond Mine located in a remote region of Northeastern Russia.

The Tarskaya Diamond Mine is impressive indeed: according to the WOD website, the mine was discovered in 2006 and became operational in 2010. It has 38 kimberlite pipes of which 6 are in active production, with open pits dug to the depth of 100-490 meters, from which the company has already extracted 18.7 million tons of ore yielding more than 35 million carats of diamonds for an average yield of 1.891 carats per ton of ore. The average size diamond recoved from this mine is 8.68 carats(!), and it has a potential life of 40 years. It even looks just like the Diavik Mine (Rio Tinto/Dominion Diamond) in Canada. There is just one catch: it doesn't exist.

The Phantom Mine

R&P's Elena Levina: "We were lucky to discover a completely new kind of diamond mining company, and we are proud to present it to you. Ladies and gentlemen, meet a virtual miner. World of Diamonds led by Mr. Karan Tilani is the owner of a very large, but, unfortunately, non-existent diamond field in Russia. We first discovered the website of this company last year, but at the time did not pay much attention to it, considering it an inept joke. However, it was sheer underestimation on our part: as it turns out the ‘joke’ has acquired an unprecedented sway in recent months. In April, several trading companies received 'business propositions' from World of Diamonds - obviously, they were offered 'stones' from that non-existent diamond field. And the company itself has given a dozen interviews in recent months, including the proposal to give an interview to Rough&Polished.

We consider it our duty to warn the market about this questionable activity. It's terrible to think how many illegal deals can be pulled off under the cover of a website describing non-existent projects and hiding behind a large number of laudatory publications in the media."

Photoshop & the Virtual CEO

Levina and R&P detail their examination of the photographs of WOD's "Tarskaya Diamond Mine", discovering that the main photo of their 'mine' is actually a photo of the Diavik Mine in Canada. Their 'factory' is actually a stock photo from a Russian photobank, while another photo of their mining operations belongs to a Canadian-based land surveying company. Another mine photo depicts ALROSA's Mir (Mirny) Mine, while yet another is an inept Photoshop job (pictured above). Of course, images on a website are not a substitute for evidence, so Levina looks further: "Let's start with a simple thing, typing in Russian “полезные ископаемые Магаданской области” (which stands for "minerals of the Magadan Oblast") in the search bar. This is a truly resource-rich area. According to the official information on the website of the Magadan Oblast government, there are "reserves of gold, silver, tin, coal, molybdenum, cobalt, tungsten, lead and zinc along with significant manifestations of copper and iron." There is not a word about diamonds in this long list.

"In their interviews, the representatives of World of Diamonds often repeat that typical of Russian companies, the Group has not sought public exposure. This is an excellent argument for throwing dust in the eyes of foreigners, but, unfortunately, it does not correspond to reality. Despite the fact that many people abroad consider the Russian market closed and not completely civilized, in practice it is quite transparent. Under Russian laws, it is impossible to conduct any kind of business activity in this country without being registered with appropriate official agencies and without disclosing information about such activity. If, of course, we are talking about legal activity, and not about a criminal group.

It is especially true for diamonds. In Russia, it is impossible to own diamond deposits (the more so, large ones) without anyone knowing about it. The Russian Federal Agency for Subsoil Use (Rosnedra) regularly publishes and updates the list of subsoil plots of federal significance (which include all diamond deposits). In the list containing 373 items, there is not a single deposit, site or anomaly named "Tarskaya" (“Тарская” in Russian) or any of its variations. Moreover, there are only 5 sites in the Magadan Oblast having the status of "federal subsoil plots" and all of them are gold bearing. The list of Rosnedra does not contain a single diamond manifestation in the territory of the Magadan Oblast." If that was not enough, Rough&Polished turned to Google Maps, which shows zero evidence of the “6 kimberlite pipes” of the Tarskaya diamond field.

The deception, however, does not end with the mine. R&P received a photo of Boris Voronov, CEO of World of Diamonds, accompanying their e-mail interview. Doing some reverse-engineering on the photo, they discovered that it is actually someone else: "If you turn to the already familiar search for the original source of photo in Google, you can find the man himself. Meet Patrick Mathiew, CEO of Armacell. (see attachments below). So, for the publication of their interview World of Diamonds provided a photograph of a non-existent person, saying it was their CEO. I have exactly two options: either Chief Executive Officer Boris Voronov is hiding and does not want to be photographed, or Boris Voronov, CEO of World of Diamonds does not exist in this world at all." 

"This caused big questions about the management of World of Diamonds. We checked all the people listed on the company's website in the sections "Senior Management" and "Board of Directors". None of them has profiles in social networks or LinkedIn. Which is strange in itself ... We also checked all these people through the SPARK system (Russia's integrated data base on legal entities and their management) and did not find any of them mentioned on the WOD website ... Eventually, we could find neither any real legal entity, nor almost anyone of the World of Diamonds’ management. Almost nobody, except one person. This person is called Karan Tilani." So someone at WOD does exist, but what does he do? (spoiler alert: he does not run a diamond mining company).

A Recipe for Fraud

Here's what WOD told R&P about their business activities: “We streamline operations with some of our affiliate companies where the lower value diamonds we mine get manufactured and traded through them, while the higher value diamonds evolving from their mines passes through us. … World of Diamonds Group specializes in supplying polished diamonds as we have the capacity and expertise to cut, polish and distribute finished stones. … Polishing diamonds are a value added service to our clients, and so we do not have plans to offer rough diamonds.” As Levina points out, "It is really very convenient to trade polished diamonds, because unlike rough diamonds, polished diamonds do not require a bunch of documents and KP certificates." Still, if they claim to polish their own rough, they must be able to show rough to some clients sometimes. In which case it is convenient to have a company like ALROSA in the neighborhood. But that is only the good option (and there is nothing illegal about buying rough and polishing it). 

As Levina writes, "WOD has time and again repeated that it has "interests in Africa" - and it means that under the guise of diamonds from their Tarskaya mine they can sell, for example, rough coming from Zimbabwe, or some other country that does not comply with the KP requirements at all. And Karan Tilani in his recent interviews spoke very warmly about synthetic diamonds and confirmed that World of Diamonds was producing them as well, although in small volumes. I wonder if the diamond set into the mentioned $2 million ring is natural?" 

Quite honestly, we have to question whether the dealings of a company that has gone to such lengths to misrepresent its operations is in any way legitimate - though we are not in a position to claim they are not. But thanks to R&P's questioning and investigative work, we are able to pass on the results of their research and say to the diamond traders and consumers out there: forewarned is forearmed.  

Levina concludes: Frankly, the current situation turns me into bewilderment and mild horror.

Wake up Call

Levina: "Requesting an interview, World of Diamonds sent a list of publications about their company to Rough&Polished. Among others, this list also mentions large and usually trustworthy media, like Forbes, Mining Global and even some diamond industry portals. According to these media, World of Diamonds is "one of the world’s largest privately held diamond corporations." Dear journalists, what's the matter with you? Why did it not occur to anyone to check the information on this company? Okay, you do not have correspondents in Russia. But why not send a request to those who work in Russia? Russian media, or at least to the press service of ALROSA, which, perhaps, could give you some answer. It is this journalistic negligence - posting press releases without paying attention to their content or publishing articles for money – that helps people like World of Diamonds to conduct their dishonest business."