Diamond center tries to reassert its influence

ANTWERP, Belgium - Though this Belgian port has had a love affair with diamonds for centuries, of late it seems to be losing some of its passion. For years, much of the lucrative but labor-intensive business of cutting and polishing stones has been drifting to low-wage centers in the developing world, like Mumbai, Dubai and Shanghai.

More ominously, in recent years, diamond traders have been accused of violations including tax fraud, money laundering and cheating on customs payments when buying and selling stones.

Recognizing the threat, the World Diamond Center, a trade-promotion group, outlined plans to draw business back to Antwerp by simplifying and accelerating trading via online systems. That, the industry hopes, will win back some of the polishing business lost to Asian countries with new technology, like fully automated diamond polishers, and generally burnish the industry image.

"This is our strength," said Ari Epstein, 36, a lawyer who is chief executive of the World Diamond Center and the son of a diamond trader. "We have the critical mass so that every diamond finds a buyer and seller."

The market here employs 8,000 people and creates work indirectly for 26,000 others. Last year, turnover in the local diamond business amounted to $56 billion, Mr. Epstein said, its best year ever.

Hoveniersstraat, or Gardner's Street, leads through the heart of the market, where almost 85 percent of the world's uncut diamonds are still traded.

"I come here once a month," said Sheh Kamliss, a trader in his 30s, who travels from India to buy uncut stones and sell polished diamonds. "This is the international market."

Hoveniersstraat is liberally sprinkled with Orthodox Jewish traders, many of them Hasidim.

But their once dominant presence has been squeezed. Now people from about 70 nations, including Indians, Israelis, Lebanese, Russians and Chinese, are there too. In the Jewish quarter, for instance, Patel's Cash & Carry recently installed itself next to Moszkowitz, the butcher. Some say this globalization has opened the door to abuse.

Omega Diamonds came under investigation and its executives fled Belgium when an employee revealed in 2006 how Omega had traded diamonds out of Africa for years, avoiding taxes by transacting deals through Dubai, Tel Aviv and Geneva, then moving the profits back to Belgium.

"Because of global changes, the trade routes have changed," said David Renous, 47, the whistle blower. "New hubs, like Dubai, the Singapore of the Middle East, sometimes close their eyes to criminality."

In 2005, an Antwerp-based courier business, Monstrey Worldwide Services, was accused of misusing customs-free zones in places like Geneva to smuggle stones. In 2009, investigations into possible tax evasion were begun regarding hundreds of diamond dealers, including many in Antwerp, named on lists of account holders at the Swiss branch of the British HSBC bank.

Danny Meylemans, 39, a fourth-generation diamond polisher, battles on the front most vulnerable to foreign encroachment. "In Antwerp we have a few hundred polishers," he said. "In the late '60s there were over 20,000."

The New York Times