By Chaim Even-Zohar. Reprinted from Diamond Intelligence Briefs by special arrangement. Read the second part of this article here.
Standard Chartered Plc is demanding more loan protection from clients in the Indian and Belgian diamond trade as the bank seeks to tighten standards, Bloomberg reported, citing sources knowledgeable about the new policy. The London-based bank has lent around $2 billion to the industry and is requiring diamond manufacturing clients to get payment insurance or provide 100 percent collateral.
Two financial technology players are trying to entice the 1,700 Antwerp diamond companies to leave traditional banks behind and partner with them for making international payments. Some 200 diamantaires – Indian and Jewish traders alike – recently sat down together in the Antwerp Diamond Club for a seminar to introduce Uphold and FX4BIZ, two ‘fintech’ companies that would like to conduct the diamantaires’ international payments.
As reported by Vinod Kuriyan, veteran industry analyst Chaim Even-Zohar writes in his latest issue of the "Diamond Intelligence Briefing" that Belgium's KBC Bank purposefully dismantled the Antwerp Diamond Bank in order to protect its secret history of corruption, money laundering and offshore accounts from prosecutors and U.S. banking regulators.
New York-based diamond manufacturer Lazare Kaplan International has postponed the filing of its report with the U.S. Securities and Exchange Commission for fiscal year 2015. The firm has not resolved a material uncertainty concerning the collectability and recovery of certain assets, and its potential obligations under certain lines of credit and a guaranty. Lazare Kaplan reported earlier this year that it plans to file official quarterly and annual financial reports dating back to May 31, 2009.
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 Antwerp World Diamond Centre (AWDC) stated that significant progress has been made in transitioning Antwerp Diamond Bank (ADB) clients to new banking services. In April, the AWDC negotiated a two-month extension for ADB clients to transition out before June 30. With that deadline approaching, the AWDC issued a communiqué to the Antwerp diamond community, reiterating that "time is of the essence" since ADB will close all remaining accounts on that day.
In a press release, the Antwerp Diamond Bank, a fully owned subsidiary of the KBC Bank, released its results for FY 2014, stating that in line with macroeconomic trends, ADB suffered a €15.4 million loss after tax, citing various elements that contributed to the loss. Lower debtors as well as lower reinvestments on the interbank market and in securities resulted in a balance sheet total of €1.375 million (-19%), while run down provisions and extraordinary advisory costs related to the intended divestment (€17 million), caused ADB's CIR to increase to 72%.
On 18 June, the Antwerp Diamond Bank (ADB) will merge with KBC, bringing its 81-year history in the diamond world to an end. ADB has also been involved in a legal battle with the well-connected Tempelsman family, owners of the Lazare Kaplan International diamond group, which initiated criminal proceedings against ADB in Belgium (it already has legal proceedings against ADB ongoing in the US) on the grounds of breach of confidence, money laundering and fraud.
On Friday 27 March, Herman Van Rompuy paid a visit to the Antwerp diamond community, delivering the keynote speech at the Antwerp Diamond Seminar on the financial challenges facing the diamond industry. The Seminar featured a lively discussion panel of financial experts who are thoroughly tuned in to the diamond industry in general and to the situation in Antwerp in particular. The discussion covered issues such as profitability and liquidity, financial transparency, bankability, the availability of finance, sustainability and rough prices.
National Bank of Fujairah (NBF) said it would step in and meet the funding needs of diamond manufacturers and traders after the Antwerp Diamond Bank (ADB), once a leader in its field, closed its global operations last year. NBF’s move to create a specialised team to fund diamond cutters, polishers and traders comes as Dubai vies with Antwerp, Belgium, to become the world’s biggest diamond hub.
ADB today announced to AWDC that it is going to give a two-month (until June 30) extension to all clients. This extension enables ADB account holders to continue their search for a new bank. However, the closure of ADB remains a fact and AWDC cautions that time is of the essence to make all efforts necessary to open a new bank account. ADB will be sending a letter to all its clients today to inform them about the new deadline. A contract will be included along with this letter. Clients must sign this contract and return it to ADB before April 27 so that they are in order during this time.
The imminent closure of the Antwerp Diamond Bank has brought turmoil to the local diamond industry, as nearly one in three diamantaires in Antwerp have an account with the ADB. According to Arthur Flieger, a lawyer active in the Antwerp diamond industry for 30 years, "Antwerp is emptying out. Many diamantaires are emigrating to Tel Aviv, Dubai and Mumbai", says Flieger. "They are frustrated because they can no longer find financing, but the government is not doing anything about it."