Gem dealers demand freedom to do as they please

Press, 1 February 1986, Page 10

Gem dealers demand freedom to do as they please

NZPA-Reuter Antwerp The city of Antwerp, the world’s diamond capital, has been rocked by a tax fraud probe into a key firm of currency brokers, which strikes at the heart of the way the secretive diamond trade is financed.

The judicial inquiry into the affaire of Roger Kirschen and Company, whose offices are next door to the Antwerp diamond exchange on the Pelikaanstraat, has led to threats by the diamond industry to quit Belgium, damaging its ailing economy.

Sources in the trade and in Belgium’s governing parties say the investigation has upset an unwritten “gentlemen’s agreement,” under which the authorities have not looked too closely into the diamond community’s financial affairs for the last 40 years. The sector provides jobs for an estimated 30,000 Belgians. Its 355-biliion-franc ($13.41 billion) turnover contributed 6 per cent of the gross national product last year. The Diamond High Council, official voice of 3500 Antwerp diamond

firms, warned the Government this week, "'The choice is between the economy and the enforcement of Ul-adapted laws.” The council’s president Mr Marc, van den Abeelen, said, “If • the authorities want to drive the trade out of Belgium, they should come right out and say so.” Judge Benoit Dejemeppe, of Brussels, is Investigating Kirschen on suspicion of - large-scale tax fraud related to money laundering and gold trading on behalf of Its diamond merchant clients. Belgian newspapers have said it could be the biggest financial fraud case in the country’s history. The crisis had depressed the market just as prices were recovering from a crash in the early 1980 s after a spectacular rise during the world political and economic turmoil of the late 19705, traders said.

Francois Leiser, one of two Kirschen directors arrested last week and freed on bail of 7.5 million francs ($283,500), said his firm had kept secret coded parallel accounts for “black” (unde-

clared) transactions by his 800 clients totalling possibly SUSI billion. He was refusing to give his clients’ real names to investigators despite being threatened with a fiveyear prison sentence and a tax bill of SUS2O million ($3B million). Many people in the diamond trade are Jews, and Mr Leiser said, “Jewish people consider a denunciator worse than a murderer.” Traders and industry experts said that Kirschen was not just some peripheral firm, as the Diamond Council initially suggested, but stood at the very centre of the trade; * “If Kirschen goes, a lot of people will leave this town, A dozen or so have already left for a while and maybe 100 other firms are thinking of closing,” one merchant said.

A diamond manufacturer said Kirschen played an intermediary role between the traders and foreign financial institutions. “It did unofficially what banks do officially. This business needs such an organisation,” he said. Judge Dejemeppe’s investigation began as a routine probe of the tax

affairs of a Brussels jewellery, wholesaler, who - turned: out to have an account with Kirschen. On January 22 the judge sent a force' of police and inspectors, some carrying guns,.to seize Kirechen’s books, sending' shudders down the Pelikaanstraat “They marched in here like the Gestapo,” said Mr Leiser, evoking anguished memories of Hitler’s secret police. “They threatened my staff. They told one girl she would be jailed for five years without seeing her child if she didn’t talk. “If they go oh like this, they’ll kill the diamond industry. Antwerp will be a second Manchester.-or Liverpool,.”. hesaid.., The Antwerp authorities had long known about the diamond community’s fin-. ancial practlces but left it alone/ “After all, we are not financing terrorists. We don’t permit heroin dealers to get their money, i in and out of the country. What we do benefits the Belgian economy.” To illustrate the alleged “hands off’ . policy towards, the diamond sector, Mr Leiser said that even

when a broker waskilted a inside the Antwerp Diamond' Club ln 1984, >e police had not searched the offices for fear |b( stumbling bn black mirket accounts. Only the; scale;, |oh “black” trading is inaspute. Official spokesmen such as Mr van qen. Abeelen, the Diamond: Council president, say it is a mere fraction of ’• diamond , business?. siit trade sources say that ;up to 75 per . cent of transactions are undeclared! Mr - Leiser said'also there was a flourishing market in ihvoices to wo- : vide an official cover Jfor “black” deals. f Dealers regard this system as essential to a > flourishing diamond, trade, in Belgium and some say they would not hesitate to move to Amsterdam, Te! Aviv, br Bombay |f it were stopped. The Diamond Council noted that the diamond trade deserted Amsterdam in; 1928 because of a similar clamp-down. - But the Belgian press, angered by the council’s allegations of a news media witch hunt; is (demanding that the probe be pursued. ” <■- c- ; <