RAPAPORT… Citibank Notifies Zale of Shortfall
Citibank notified Zale Corporation that it failed to achieve the minimum re-quired volume of credit card sales for June and July. As a result, Zale must pay Citibank approximately $335,000 prior to August 18, 2010 to avoid the termination of its contract on January 15, 2011. The first such notice to Zale covered the 12 months that concluded at the end of February 2010. Zale paid Citibank approximately $5.4 million in June to cover that period and was refunded $1.3 million based on a recalculation of the amount due. The bank’s second notice to Zale covered the months of March, April and May, for which the retailer paid approximately $1.1 million on July 16, 2010.
Angola Approves IGE Contract
IGE Resources received government approval for its Luxinge diamond project in Angola, which is based on estimated resources of 1.1 million carats and allows for the sale of 8,000 carats that are already in stock. IGE signed a mining contract with ENDIAMA, the national diamond company of Angola, and is moving forward with diamond production.
The mining contract stated that IGE will be the major shareholder of a new company for the Luxinge operations, which will recover initial prospecting investments over the next two years.
De Beers Antitrust Suit Settlement Delayed
A U.S. federal appeals court ruled that the lower district court that handled the antitrust class action suit brought against De Beers had “abused its discretion in certifying the settlement classes.” The federal court sent the case back to the lower court for clarification of the claims classes, potentially delaying settlement payments to the wholesale diamond industry for months, if not longer.
The lower court had certified two classes: the direct purchaser class, representing the trade, and the indirect purchaser class, divided into classes comprised of consumers and resellers. In the federal court’s opinion, the lower court improperly certified the suit’s indirect purchaser class, despite recognizing that some plaintiffs would be allowed to carry indirect claims forward under state laws. Accordingly, the court ruled that there could not be a nationwide, certified class of state indirect purchaser plaintiffs “because there is no common question of law or material fact.”
De Beers has established a $250 million fund to be paid to class members once all appeals are heard.
Calculating the Diamond District’s Contribution
Empire State Development has agreed to sponsor an economic impact survey of New York City’s 47th Street Diamond District. The announcement was made at the annual meeting of the 47th Street Business Improvement District (BID), held in New York City’s Diamond Dealers Club on July 19.
Michael Grumet, executive director for the 47th Street BID, said the agreement, inked by BID and the state agency just days before the annual meeting, would launch the first survey since 1992 to calculate the economic impact of the Diamond District on the city and the state. The survey will be conducted by Adam Friedman and the results will be used to attract money for training, marketing and capital improvements to the block-long BID.
Noting that one of his first acts as a New York City councilman was to create a BID in his home base of Flushing, Queens, John Liu, New York City Comptroller, told the annual meeting that “BIDs add a great deal of value to the overall economy. Technically, you are just one block but 25,000 people work here in 3,000 businesses, contributing an outsize amount to the city’s economy.” Citing the fact that “95 percent of the diamonds coming through the U.S. comes through this one block,” Liu told the BID members, “You have so much strength yet to be unlocked.”
U.S. Representative Anthony Weiner announced that legislation he is sponsoring “will affect the way the gold and diamond industry is run.” His proposal, dubbed the Gold Act, would place new restrictions on companies offering to buy gold from consumers via internet and television promotions. Weiner says the companies are the subject of numerous complaints from consumers who were paid far less than the market value of their gold or whose jewelry was never returned when they rejected the company’s offer. Weiner said the promotions “are leading consumers down a path they should be avoiding when they should be walking down this street” to conduct their jewelry business.
BID president Harvey Nagin named Ken Kahn of KenArt Realty the first inductee into the Diamond District Hall of Fame and presented awards recognizing service to the city’s diamond industry to Liu, Weiner, Bill De Blasio, NYC Public Advocate and Leon Fonfa of NYC Small Business Services.
