Investigations following a raid on a leading Antwerp bank with close links with the diamond industry last year have caused anxiety among diamond merchants from India in the Belgian city.
Antwerp, the worlds key diamond centre, has some 255 Indian merchants in the trade of the precious stone. Merchants fear that the much-courted diamond trade in Belgium could well lose grace with authorities as a result of the case and some are even speaking of an exodus from Antwerp.
Belgian authorities had raided Bank Max Fischer after investigating the case of Fouad Abbas, a diamond trader of Pakistani origin, who allegedly engaged in money laundering.
The Antwerp prosecutors office has alleged that Abbas, who was arrested in London and is facing extradition to Belgium, allegedly laundered six billion Belgian francs (roughly $167 million) in drug money and used his Antwerp diamond company as a front. Part of the money was allegedly channelled through Bank Max Fischer. Abbas is believed to have strong business links with the Middle East.
The doors of Bank Max Fischer have meanwhile been closed under orders from Belgian authorities who allege that an examination of the banks account books confirmed that there had been illegal dealings and tax evasion by some diamond merchants.
In the past few months, Belgian authorities have arrested six diamond merchants and charged them with money laundering, a connotation which has a wide application under Belgian law ranging from drug money to income not declared.
The police net was further spread for a closer scrutiny of some Belgian customs officials, the State Bank of India (SBI) branch at Antwerp and a Russian national suspected of having smuggled in diamonds worth $42 million from the US. However, the raid on the SBI has so far not produced any evidence of money laundering.
T M N Singh, the chief executive officer of SBIs Antwerp branch, acknowledged that his bank had come under scrutiny by the Belgian authorities but said he suspected that somebody had filed a false complaint against the branch. Our records were clean when the authorities checked them, he maintained. Singh said he was confident that the case would be closed soon although such matters take their own course of time.
While the raid has not directly affected the community of Indian diamond merchants, one can sense the nervousness among some traders who fear that the scandal could adversely affect their business.
Prices of diamonds, in particular, react sensitively to such developments and can go haywire, according to one Belgian diamantair, as diamond traders are called in the local parlance. Merchants privately admit that some of their colleagues are planning to leave Antwerp, which alone generated business worth $22.87 billion last year, a substantial part of which passed through the hands of diamantairs of Indian origin. Some however deny that there would be an exodus from Antwerp and describe the recent turmoil as a temporary setback.
According to the local diamond merchants association, Antwerp accounts for nearly 90 per cent of the worlds trade in uncut diamonds and 50 per cent of all polished stones sold worldwide. Nearly two million stone cutters and polishers in India, Thailand and other Asian countries earn their livelihood from the diamond and stone trade. Other important centres of the diamond business are Tel Aviv, accounting for trade worth $9.55 billion, New York with $8.01 billion and Mumbai with $7.8 billion.
An Indian diamond merchant in Antwerp told IANS on condition of anonymity that the current problems in Antwerp could be traced to a history of the one-eye-closed policy of the Belgian government towards diamond trading practices in the aftermath of the Second World War when it tried to attract Jewish merchants fleeing Hitlers tyranny that was spreading all over Europe. In doing so, the Belgian policy overlooked some accounting, foreign exchange and trade practices that are standard requirements in other businesses. Diamond merchants from India started to arrive in Antwerp in the early and mid 1970s, and Antwerp advanced to become the worlds most important centre for the trade.
But during the late 1980s, many member countries in the European Community began to crack down on money-laundering, tax evasion and other dubious practices as borders between them began to fall.
However, the diamond industry in Antwerp was unperturbed by the crackdown and remained confident that Belgium would continue its courtship of the diamond trade. The belief was shattered with the raids on Bank Max Fischer. The raid sent shock waves through Antwerps diamond districts.
The raid on Bank Max Fischer had a brushfire affect...there was nervousness among all the diamantairs, regardless of their ethnic origin, the Indian merchant said. However, Indian diamond merchants say that they have nothing to fear because they have been operating, by and large, by the book.
Dilip Mehta of Mumbai, who operates Antwerps largest diamond company Rosy Blue N V, said: There may have been one or two bad apples in the industry, but on the whole the industry has remained a clean one.
Mehta, 50, who has been in Antwerp since 1973, said that to the best of my knowledge no Indians have so far been involved in the scandals.
There are an estimated 1,000 Indians in Antwerp and between 9,000 and 10,000 in all of Belgium.