Editor’s Note
This article offers a rare glimpse into the high-stakes, secretive world of industrial diamond trading, where immense value is concealed in unassuming packages.
Packets filled with transparent gravel pile up, almost carelessly, in a cramped office near Cointrin airport. Under their plastic sleeves, small irregular stones make a soft tinkling sound, and their unusually bright sparkle hints at their value.
calculates the master of the premises, an expatriate employed by company J., a major player in the global rough diamond market.
Around him, specialists equipped with magnifying glasses and triple neon lamps sort the stones on large grid sheets, according to their weight, color, and shape. The largest crystal stored here, an 85-carat (17-gram) polyhedron, is worth about $669,000 – and will cost much more once it has been cut.
This is the first time a journalist has entered these highly protected premises. For security reasons, company J. has requested that its full name not be published. In this milieu, absolute discretion is the norm, making the diamond trade the most secretive part of Switzerland’s commodities industry. It concentrates some of its most acute moral dilemmas: tax artifices, political connivance, and the extraction of some stones under terrible conditions, in the heart of African darkness.
Long accustomed to obscurity, this tiny world is now in turmoil: this Thursday, the trial of Omega Diamonds opens in Antwerp, with Belgian customs demanding the extravagant sum of 4.6 billion euros from the company. A previous procedure concluded last spring with a settlement, Omega having agreed to pay 145 million euros to the Belgian tax authorities. Its directors Ehud Laniado and Robert Liling, who are also the owners of the Geneva-based company J., are implicated in both cases.
On November 7, 2006, Belgian customs intercepted rough diamonds from Geneva in Brussels. More precisely, from two Costa Rican companies, controlled by an Israeli diamond dealer who operates from free ports and resides in Geneva hotels. According to Belgian authorities, three lots destined for Omega allegedly underwent
as summarized in a Federal Criminal Court ruling dated July 10, 2010.
The alleged purpose of this operation was to reduce taxes owed to the Belgian treasury. The sums involved are considerable: from 2004 to 2007, the two Costa Rican companies allegedly resold some $600 million worth of diamonds to Omega from Geneva, according to a source with access to the Belgian investigation file. The total taxes claimed by the authorities between 2003 and 2006 amount to about 2.5 billion euros.
This first procedure was closed without a trial, thanks to the payment of 145 million euros, so the directors of Omega were not tried and were not found guilty of anything. Facing the customs trial opening this week, the diamond dealers say they are calm: the case would be purely formal, based on errors in the stones’ certificates of origin, and no customs duty would have been evaded.
In Switzerland, searches were conducted, bank accounts blocked, and documentation seized at the request of Belgian authorities. But Swiss justice has been cautious regarding the accusations against Omega.
writes the Federal Criminal Court in its July 2010 ruling.
The Belgian request being deemed incomplete, the requested documents were never transmitted – which led an Antwerp prosecutor to denounce the
Traumatized by their legal troubles in Belgium, Omega’s shareholders have moved part of their activities to Geneva. Among the ten defendants in the Belgian proceedings, two have recently taken up residence in Switzerland and one holds Swiss nationality. The former financier of the group, Sylvain Goldberg, living in a luxurious residence in the Geneva suburbs, is said to live there benefiting from a lump-sum tax agreement, without any lucrative activity in Switzerland. Ehud Laniado and Robert Liling have started a new activity there with company J., whose employees trade rough diamonds near the airport. The company aims to be fiscally impeccable: it has obtained from the canton of Geneva the status of an “auxiliary company,” reserved for trading companies, which sets its tax rate at about 11% of profits.