Diamantaire Defrauds Belgian Bank of 63 Million USD

Legal
29/08/2015 16:20

KBC Bank in Belgium, which decided this year to run down the loan portfolio and activities of Antwerp Diamond Bank (ADB), has inherited a $63 million hangover from its defunct subsidiary. According to De Tijd newspaper, diamantaire Erez D., who lived and did business in Antwerp since 1986, but has now supposedly gone underground in Israel, ran a network of shell companies represented by middlemen across the world, from Antwerp to Switzerland to the Virgin Islands. The banking practice that eventually led to this situation was granting millions in credit against diamond collatoral that the trader was allowed to keep in his possession. Erez D. built up a fortune on credit while retaining the stones.

Smuggling

The American diamond group Lazare Kaplan, among others, warned the ADB in 2009 about his dubious network, yet the bank decided to keep the money flowing to Erez D., whose mountain of debt had reached $45 million by 2011. His promise to repay half a million USD a month earned him another $30mil in credit. In late 2013, the bank discovered that Erez D. had smuggled the diamonds (supposed to serve as collatoral) to South Africa 'for polishing'. When the bank tried to track them down, it turns out they had already been smuggled once again to Israel. KBC has requested the Israeli authorities to intervene quickly, as the $63 million in diamonds will certainly be heading elsewhere soon.