THE WORLD'S DIAMONDS

Sun (Auckland), Volume IV, Issue 968, 10 May 1930, Page 30

THE WORLD'S DIAMONDS

ALLEGED GIGANTIC FRAUD TO RETAIN CONTROL DEALS IN MILLIONS T)eals in millions, the control of the •whole of the diamond output of the world, and an allegation that a company was ruined by fraud a year after it was founded, were among the points in an action heard by Mr. Justice McCardie in the King's Beach Division. The case, which is already said to have amounted in costs to about £12.000, is one in which the United Diamond Fields of British Guiana, Ltd., are suing Mr. Solomon Barnato Joel, Mr. Jack Barnato Joel and other defendants for damages for alleged fraudulent conspiracy. The others defendants are Messrs. Barnato Brothers, Mr. Walter Dunkels. Sir Ernest Oppenheimer, Mr. Louis Oppenheimer. Mr. Henry Claridge. Messrs. A. Dunkersbuhler and <'o., Mr. Otto Oppenheimer, Mr. Albert Edward Tilley, Mr. Reuben Cohen and Mr. Hugh Owen Leonard Stack. Sir Patrick Hastings, K.C., for the plaintiff company, said the action was a grave one, involving a large sum of money and serious charges against the defendants. Ruin in a Year The plaintiffs were an English company formed at the end of 1926, and within a year, it was alleged, it was ruined by fraud. The Brothers Joel and some of the other defendants formed a diamond syndicate w hich, said Sir Patrick, was an organisation of unbelievable wealth and power. “Millions,” he declared, “seemed to be of trifling moment to them. They practically controlled the whole of the diamond output in the world.” Many' of the defendants were interested in companies in Africa and elsewhere which produced diamonds. To control the output the syndicate entered into agreements with all persons who produced diamonds under which they all agreed to sell the diamonds to nobody except the syndicate, who, in turn, sold them to the world, so that it rested entirely with the syndicate how many diamonds the world got. The syndicate stood to be very seriously hit it there were an unexpected output of diamonds from an unknown source, so, in order to maintain the artificial price, it was essential that they should have control of all diamonds wherever they came from. The plaintiff company was formed lor the purpose of taking diamonds from British Guiana, immediately the Diamond Syndicate entered into such an agreement with them. Mr. Otto Oppenheimer, whose name loomed largely in the case, was apparently a brother of the other Oppenheimers mentioned as members of the Diamond Syndicate. He was an expert in diamonds. A Big Find When the plaintiff company was formed the Diamond Syndicate insisted that. Mr. Otto Oppenheimer should be the company’s expert. From that moment, Sir Patrick continued, Mr. Otto Oppenheimer set to work—fraudulently, as the plaintiff company alleged—to ruin the company for the benefit of the Diamond Syndicate. “It was necessary for the purposes of the syndicate that this company should be ruined.” Early in 1926 a large find of illuvian diamonds was unexpectedly reported at Lichtenburg, in South Africa, and in October that year the plaintiff company was formed to take over the diamond output, of British Guiana. The South African find was so immense and unexpected that the Diamond Syndicate had to buy from then’. —not for the purpose of celling, but tor the purpose of holding up—millions of pounds’ worth of these dia-. monds. Therefore it was vital for them to use their powers under the agreement to prevent anyone putting diamonds on the market. The syndicate thereupon, said Sir Patrick, fraudulently devised a method through Ml-. Otto Oppenheimer which prevented the company giving them the diamonds which they were bound to take. This helped to save the syndicate from being flooded with diamonds, but it ruined the plaintiff company. Sir Patrick said that the defendants had required that approximately 4,000 pages of correspondence should be lirought to the court. * Sir Patrick produced for inspection by the judge and jury a glass case of diamonds to illustrate the system of assortment. The case, he said, was hermetically sealed, as the diamonds were of considerable value. Mr. Justice McCardie: I don’t think Sir Patrick ought to suspect us in this court. (Laughter.) Continuing his speech. Sir Patrick Hastings said £500.000 was lost and the company was now suing thq defendants for having ruined it. “I am going to ask you to say that i here is ample evidence that tho Syndicate conspired with Mr. Otto Oppenheimer to produce this result, but whether there was a form of conspiracy or not. I shall ask you to say Ihat the syndicate is responsible for the fraud and that everything done by Mr. Oppenheimer was on their behalf.” Sir Patrick Hastings concluded a six-hours’ speech by referring to Mr. Otto Oppenheimer as a "man of mystery.” Mr. Victor Coen, of Purley, giving evidence, said that during a discussion regarding the price to be paid lor diamonds from British Guiana, Mr. Oppenheimer told him that "we were setting the best contract the Diamond Syndicate had ever given, and that he would have to go and lose £250 at poker to Solly Joel to get him in a good humour, and then he would give ; us better terms.” Dancing Expert Mr. Coen added that when the company asked for an expert to be ap- j pointed in British Guiana. Mr. Otto | Oppenheimer sent out a dancing in- j struetoi- who knew nothing about diamonds. In reply to Sir Patrick Hastings, K.C.. Mr. Coeu spoke of an interview he had with Mr. Otto Oppenheimer, who offered to show him a letter and cable books to prove that he had sent no instructions to hi 3 servants to pay lower prices for diamonds. Answering Mr. Stuart .Bevan, K.C., who appeared for the defendants constituting the diamond syndicate, Mr. Coen agreed that he was responsible tor the action being brought. He held | 17,090 .--hares in the company. Sir I Arthur Wheeler was contributing the- i bulk of the costs of the action, lie ! was a dealer in stocks and shares. Mr. Coen agreed that Sir Arthur had been buying some shares since ■he beginning of the present case. There was only a nominal market in the shares at present, he added. JiiC hearing was adjourned.