Money laundering and other fraudulent activities in the diamond trade have been on rise. HSBC leaks not just confirms this but also reveals the amplitude of black money and blood diamond business. In a massive expose of HSBC’s swiss private banking arm, account details amounting to more than USD 100 billion have been leaked, led by an international team of journalists. Shocking is the fact that around 2,000 of these account holders are connected with the diamond trade.
Emmanuel Shallop, who was convicted of dealing in blood diamonds, prominently featured on this list. Trade of conflict diamonds fueled civil wars in several African countries including Angola, Cote d’Ivoire, DRC, Liberia, Sierra Leone etc. and killed more than a million people. Emmanuel was under investigation by Belgian authorities.
Another entity that was being investigated by Belgium and listed among HSBC account holders is Omega Diamonds. Though a settlement was reached between the company and Belgium regarding USD 195 million tax evasion, Omega diamonds supposedly dealt in blood diamonds, incorrectly valuing them from mines in Congo and Angola and shifting profits to Dubai.
Belgian-Israeli diamond businessman – Erez Daleyot is also alleged to be involved in a USD 135 million laundering scam, by defrauding a NY diamond firm and diverting the diamond proceeds through HSBC accounts.
Among the HSBC’s list, 77 names are of Indian origin diamond merchants and traders, who may have used the offshore accounts as tax havens. At least, 3 of the biggest names are of De Beers Sightholders – Rosy Blue group (USD 53.63 million in HSBC accounts), Mahendra Brothers Exports group (USD 30.13 million in HSBC accounts) and Shairu Gems group (USD 0.12 million in HSBC accounts). Other big players in the list include Mohit Diamonds group, Gembel group, Sheetal group et al.
Diamonds as a commodity are lucrative for illicit trade and tax frauds, as they are currently untraceable. Responsible Jewellery Council’s (RJC) recommendation of ‘Chain of Custody’ to trace diamonds from origin itself has not been accepted by the industry for the obvious reason that it may hinder the modus operandi of using diamonds for fraudulent activities. Besides, the deep links of trade with Blood diamonds reveal that it is not a shiny, sparkling and scintillating but rather a dirty, bloody and black-money ridden world of diamonds.