Zimbabwe president Robert Mugabe has been under fire ever since he justified last week the closure and nationalization of the country's diamond mines by claiming that the state has earned about $2 billion from the gems while about $15 billion was generated by the industry, thereby depriving the impoverished state $13 billion in direly needed revenue. The news media want to know why the government failed to act for years when now - after the fact - they claim to know that the companies had been siphoning off revenues for years.
The former top Belgian-Israeli diamond dealer and former De Beers sightholder, Erez Daleyot, who cleared out his Antwerp business leaving behind debts totalling nearly $230 million (€208 million), has thus far eluded his creditors by allegedly hiding out in Israel or South Africa - where he also used to run one of the largest diamond factories, reports Belgian daily De Tijd. Last week, the Antwerp Court of Appeals finally put the case to rest, declaring his former company D.D.
In a follow-up article to Chaim Even-Zohar's bombshell about CVD synthetic diamonds being sold on Alibaba with GIA natural diamond certificates, the Diamond Intelligence Briefing (DIB) identifies the name behind the fraud: Diwakar Dhyani.
"The Government of India should set up a regulatory authority to monitor the gemological laboratory business in India. The gemological laboratories issue only grading reports and no certificates. These laboratories have their own set of rules and regulations and even if consumers are cheated they have limited or no role to play. If a consumer has purchased a lab-grown diamond on natural diamond grading report, where will he go on being cheated? Who is responsible?
Alibaba, the leading e-commerce portal for global wholesale trade blacklisted and removed a New Delhi-based supplier of synthetic diamonds and gem simulants after it tried to sell lab-grown diamonds with fake Gemological Institute of America (GIA) natural diamond certificates. The New Delhi-based seller identified as International Trading Corporation (ITC) had put up the wholesale offer to supply 10,000 carats of CVD diamonds a week with the GIA certifi
By Chaim Even-Zohar. Reprinted from Diamond Intelligence Briefs by special arrangement.
JCK reports that six more people have been arrested by the Indian authorities in the investigation into unauthorized access (hacking) of the GIA database, according to an Institute announcement. GIA declined to release their names. GIA previously identified the submitting companies, who are no longer permitted to submit stones to its lab pending an investigation.
Israel's Channel 10 has aired a hard-hitting investigative program on the Israel Diamond Exchange, particularly the methods used by a so-called underground bank which operated from 2005 to 2011 until police raided its offices. Although many details of the case had previously been reported, Channel 10's use of CCTV footage from cameras secretly installed by the police before officers carried out the raid and details from a Red Book showing the names of some of the diamantaires said to have used the bank's services are likely to have made a particularly strong impression on viewers.
When Leonardo DiCaprio, who starred in the movie Blood Diamond, says he’s backing a start-up company to produce synthetic diamonds because this will ensure that the product is “ethically produced”, the whole world listens to him. And they think we are an industry that cannot be trusted. We have to prove him wrong.
- Sanjay Kothari addresses three major issues facing diamond industry: undisclosed synthetics, businesses taking on debt while knowing they are heading for bankruptcy, and illegal tampering with diamond certificates.
Rami Baron, president of the Diamond Dealers Club of Australia and CEO of jewelry insurer Q Report, warns about the proliferation of cybercrime in the jewelry industry. "There isn’t anyone I know who hasn’t had some sort of cyber fraud inflicted on them, or at least knows someone close to them who hasn’t suffered a loss," he writes. "The diamond and jewelry industry is easy pickings", adding that, "We all recently saw the GIA get hacked. Is your security better than theirs?
The Indian government is working to curb domestic flow of black money by plugging gaps in regulations. The Central Board of Direct Taxes (CBDT) is looking to rationalise income-tax rules; the move includes widening of coverage for mandatory quoting of permanent account number (PAN) for specified transactions.
According to a statement released by the Antwerp World Diamond Centre (AWDC), the Correctional Court in Antwerp has sentenced five people, including four diamond traders, to mandatory prisons sentences and imposed "significant" fines for certificate fraud.
The Gems and Jewellery Export Promotion Council (GJEPC) and the Bharat Diamond Boure (BDB) have jointly formed a committee to investigate the fraud committed by the Surat and Mumbai based firms and diamond traders by illegally upgrading diamond grading reports issued by the Gemological Institute of America (GIA).
As JCK's Rob Bates reports, the shipment with the fake jewelry arrived from China. If genuine, the jewelry would equal $2.85 million. The seizure took place on Sept. 22, when U.S. Customs and Border Protection (CBP) officers discovered 1,200 inferior-quality counterfeit Tiffany & Co. bracelets at Miami International Airport. The bracelets aroused inspectors’ suspicions because they “did not appear to be of the quality consistent with the products normally manufactured by the trademark holders,” according to a CBP release issued on Oct. 27. A further look confirmed they were fakes.
RapNet, the Rapaport Diamond Trading Network, has suspended 10 members pending further investigation. The members have also been suspended by the Gemological Institute of America (GIA) for allegedly participating in a scheme that hacked into the GIA’s computer system and upgraded 1,042 GIA grading reports. GIA issued laboratory alerts invalidating the grading reports and naming the suspended members. RapNet has removed all diamonds with grading reports involved in this matter as well as all other diamonds listed by suspended members. The names of the suspended Rapnet Members are:, A.
Industry analyst Vinod Kuriyan writes on the dismal state of affairs in the Indian diamond industry today. The most recent scandal - the data breach at the Gemological Institute of America (GIA), where several Indian diamond companies got former employees of the GIA’s technology provider to hack into the system and alter color and clarity grades for 1,042 diamonds they had submitted, in an attempt to increase their value and dupe consumers - is not an isolated incident by any means, writes Kuriyan.
"De-risking", according to the Financial Action Task Force (FATF), "refers to the phenomenon of financial institutions terminating or restricting business relationships with clients or categories of clients to avoid, rather than manage, risk in line with the FATF’s risk-based approach." The issue, which the FATF wishes to avoid by means of its risk 'management' approach, is that "de-risking may drive financial transactions underground, which creates financial exclusion and reduces transparency, thereby increasing money laundering and terrorist financing risks." Yet the evidence is growing -
Alexandre Alexander, former CEO of Kimberley Diamonds (KD), whose former Ellendale mine in Australia was famous for producing approximately half of the world's supply of rare yellow diamonds, has been arrested at Sydney Airport, accused of misleading the stock market. He has been charged with four counts of making false and misleading statements to the Australian Securities Exchange (ASX) between October 2013 and March 2014. Each charge carries a maximum penalty of five years' jail and a $34,000 fine.
The Basel Anti-Money Laundering (AML) Index report developed by the Basel Institute on Governance ranks countries according to their risk of money laundering and terrorist financing. The Basel AML Index overall score is derived from 14 indicators based on publicly available sources such as the Financial Action Task Force, Transparency International, the World Bank and the World Economic Forum. Finland’s financial system is the least likely to be used for money laundering or funding terrorism, followed by Estonia. Iran and Afghanistan are rated the worst at stopping money laundering.
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.
Rob Bates of JCK lists the major stories from the diamond industry this summer, including several instances of undisclosed mixing of synthetic and treated diamonds as other dishonest practices leading to suspensions and publicly naming the companies involved. He also indicates the recent emergence of old unsightly reports of fraud and conflict diamonds, all of which are harmful to the industry.
The jewelry group in qustion has been identified as Atlas Jewellery and the missing owner as Indian businessman Atlas Ramachandran. Ramachandran and his daughter Manju have been reportedly arrested by Dubai police after a number of banks lodged complaints over bounced cheques.
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 United Nations Security Council blacklisted on Thursday 21 August the Belgian branch of Central African Republic's diamond trading company and three people linked to the country's more than three-year-old conflict. The blacklisted diamond trading house is Kardiam, which U.N. sanctions experts say is the Antwerp, Belgium-based operation of the Central African Republic's diamond-trading company Badica. Under UN sanctions, the firm's assets are to be frozen and business with it will be illegal.
The Times of India reports that for the first time in its history, the Surat Diamond Association (SDA) terminated the membership of a diamond manufacturer accused of selling undisclosed synthetic diamonds to the diamond merchants on Wednesday. SDA office-bearers, who met at the executive meeting on Wednesday, unanimously decided to terminate the membership of Chandu Sheta, a diamond manufacturer in Varachha, who had sold 110 diamond pieces weighing 1.28 carats to two diamond merchants in Varachha's Mini Bazaar diamond market in February 2015.
Luxury goods manufacturer Kering, a French conglomerate that includes Gucci and Bottega Veneta, has gone to court against Alibaba. Kering alleges that Alibaba helps fakers sell goods on its websites. The French firm is not the only one to be incensed. Alibaba insists it has extensive measures in place to crack down on counterfeits, and a bitter trial looks likely. The fight against copycats has been long and arduous. Kering’s suit is the industry’s most important in a decade—Alibaba has more than 1 billion product listings and aspires to reach consumers around the world.
The Gemological Institute of America has banned five Indian companies from further submissions to its grading lab, alleging they inscribed diamonds with GIA report numbers not associated with those gems. “We reasonably suspect that stones submitted under your client account, and other accounts for which we believe you to be partnered, have been inscribed with preexisting GIA report numbers that were not issued for the particular stones being submitted and that GIA did not inscribe,” said the letter from lab director Tom Moses to a principal of Surat-based Cristy Gems.
The Insolvency Service (TIS) of the U.K. disqualified three directors of Cohen Stones Ltd., Imperial Assets Solutions Ltd. and Tudor Global Ltd. from a "director" role at any firm for more than a decade after investigators determined the men misled diamond investors and then filed voluntary insolvency. The TIS said that the three companies operated in a similar fashion: selling diamonds to customers with an extraordinary markup, claiming the stones would increase in value annually and recording a profit before filing for bankruptcy.
The Kimberley Process (KP) has issued an announcement informing that the European Union intercepted a fake certificate, which is supposedly from Kenya, a non-KP Participant country. An EU importer was contacted by someone who offered him to buy rough diamonds that were supposedly accompanied by this certificate. As Kenya is not a KP member, no rough diamonds may be imported from Kenya into the territory of any Kimberley Process participant.
A copy of this certificate is attached below.
In an extensive report on money laundering, "Why is Cash Still King? A Stategic Report on the Use of Cash by Criminal Groups as a Facilitator for Money Laundering", Europol recommends that diamonds should be treated as cash and that all controls on cash should be applied. Such risk reducing in terms of money laundering is already actively implemented in Belgium, with AML legislation that exceeds EU norms, for instance by requiring diamond dealers operating in the country to identify and verify their clients in all their business transactions, be it cash or bank transactions.
India TV reports Indian Enforcement Directorate investigations into an US$850 million 2G scam have revealed kickback money was illegally transferred to tax havens such as Switzerland and Dubai via Surat diamond companies using fake diamond import bills.
A new fraud detection company called Everledger is utilizing Bitcoin blockchain technology to prevent insurance fraud. How will they do it? The company focuses on 40 metadata points in addition to the 4Cs (color, cut, clarity and carat weight) that identify a diamond. Laboratory houses digitize a diamond on the basis of these parameters and Everledger then takes the digitized data and the serial number (inscribed on a diamond), and puts it all on the Bitcoin transaction ledger blockchain.
Dutch bank ABN Amro has fired a seventh employee at its Dubai private banking desk following an internal probe into irregularities. Six bankers were sacked in January for failing to comply with internal codes of conduct by enabling clients - mainly Indian private banking clients - to use their personal accounts for illicit business transactions. The Financieele Dagblad said at the time this enabled the clients to use private banking accounts to carry out transactions which should have fallen under a much stricter compliance regime.
The Enforcement Directorate (ED) has submitted its detailed report to SIT (Supreme Court-appointed Special Investigation Team on black money) including damning remarks such as "negligence by banks" and "inaction by the Mumbai Police". SIT will now probe the Rs 15,000-crore fake bill import remittance scam that hit six banks, which are said to have, "failed to act against importers involved in the scam" despite repeated notifications.
A CEO of the International Gemological Institute (IGI) took millions of dollars by using the gem authenticator as his "personal piggy bank," a major shareholder claims in court. Vazon Investments sued IGI and its co-CEOs Roland Lorié and Jerry Ehrenwald in New York County Supreme Court. "Lorié even admitted to having stolen more than $7.1 million from the IGI Group," the complaint states. Lorié repaid the money, but another owner of IGI, Marc Brauner, who owns 40 percent of IGI's shares, discovered other suspicious transfers authorized by Lorié.
The Economic Times reports India today joined the OECD global pact on exchange of information on financial accounts, a move some expect could help prevent international tax evasion and could prove instrumental in getting Indian tax authorities information on assets of Indians held abroad including through entities in which Indians are beneficial owners. India is the 61st country to sign the Multilateral competent authority agreement, following in the footsteps of a.o.
Belgian finance minister Johan Van Overtveldt has stated that Belgium is seeking to retrieve about €540m ($600m) in unpaid tax after its probe into 829 accounts in HSBC Private Suisse Bank in Geneva. The people, who were found to be holding cash illegally in Swiss accounts, include diamond merchants, lawyers, aristocrats, company heads and sports personalities, according to local media reports. The Belgian justice ministry, which charged HSBC's Swiss unit for serious organised tax fraud, is carrying out a separate investigation into the illegal accounts and may prosecute the wrongdoers.
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.
JCK reports Kering, the French luxury conglomerate that owns brands such as Gucci and Ulysse Nardin, has filed suit against Chinese e-commerce giant Alibaba, claiming it knowingly encourages and profits from the sale of counterfeits over its platform, in particular: Gucci watches.
Tiffany & Co. seeks $58.5 million in damages from an online counterfeiting ring that spans three continents. Tiffany said it traced PayPal transfers to Bank of China, ICBC and China Merchants Bank accounts, and also found that the Bank of China was processing credit card payments for one defendant, but the Bank of China refused to cooperate, U.S. court documents show.