RAPAPORT… The first details of what could become Belgium’s biggest tax
fraud case ever are finally being revealed. The country’s special tax brigade
(BBI) has received a list of 800 Belgian citizens that includes approximately
170 Antwerp-based diamantaires and diamond companies. It reportedly is
investigating the top 500 clients on the list.
The people and companies on the list, which was provided by
French tax authorities, allegedly deposited funds totaling nearly $1 billion in
the Swiss subsidiary of HSBC Bank in an attempt to evade taxes.
The fraud case dates back to January 2009, when the French
home of Hervé Falciani was searched by the Nice police at the request of the
Swiss authorities. Falciani was suspected of stealing confidential information
from his former employer, the HSBC Swiss subsidiary. In the search, a compact
disc was retrieved that reportedly contained data on 127,000 bank transactions
for 79,000 clients from around the globe for fiscal years 2006 and 2007.
The French tax authorities retained the records on French
citizens for their own investigation and forwarded the names of other bank
clients to the tax authorities in several other countries.
Where’s the Evidence?
In January 2011, the BBI informed the first group of Belgian
HSBC clients that they were in possession of evidence of fraud against them,
but it refused to provide any further information to the suspects. At that
point, a wrestling match began between the BBI and the suspects over how much
evidentiary information would be released to the bank clients.
De Tijd, a Belgian newspaper, reported that the BBI asked
all of the Belgian suspects to provide the account numbers of all foreign
accounts they have held over the past seven years. With that request, the BBI
increased its chances of getting more financial and banking information on the
suspects than they already had. On the other side of the dispute, the suspects
are citing a 1994 law that requires the BBI to share with them the complete
files of evidence they are using in their prosecution because failure to do so
impedes the suspects’ ability to defend themselves properly. In response, the
BBI cited exceptions in the same law that allow it to withhold information.
The first hearing on the dispute took place in the Belgian
Council of State in early September, after which De Tijd reported that the
council’s general auditor did not appear to favor the BBI argument. An official
ruling is expected in two months.
Questions of Ethnic Bias
During the legal maneuverings in the case, an information
“leak” gave a De Tijd journalist access to the BBI files. In a September 3,
2011, article, De Tijd identified a half dozen suspects by name and described
them as “mostly members of the Jewish community, with a handful of Indian
diamantaires.” Among them, prominent Jewish members of the Antwerp diamond
industry were profiled in greater detail. The local community complained that
the newspaper’s identification of the suspects as Jewish reflected an
anti-Jewish bias, especially considering that the 79,000 names in the worldwide
HSBC case represent a wide diversity of nationalities, cultures, religions and
backgrounds.
Another Belgian newspaper offered a public apology for
publishing a similar list in which individuals were identified as Jewish. Luc
Van Der Kelen, chief editor of Het Laatste Nieuws/De Nieuwe Gazet, wrote that
“every stigmatization of any community should be suppressed.” Hans Deridder,
deputy editor in chief, added “publishing the labels ‘Jew’ or ‘Jewish’ in
justice matters” — as the newspaper had done — “is twice finger-pointing and is
unacceptable… I’ve immediately taken all necessary steps to prevent any such
situation in the future.”
The Marketplace
Polished:
- The diamond community was awaiting the results of the Hong
Kong show at press time. It was expected that industry members who have been
speculating too much and who are having liquidity problems would start selling
in Hong Kong. - Globally, prices have softened slightly in some categories
— losing 3 percent to 5 percent — but the VS-SI goods are holding firm since
the rough to manufacture them was very expensive. Manufacturers bought rough
too high and are finding it difficult to pass those prices on to the retail market. - The lowering of the Rapaport list prices in August, in
conjunction with the tensions in the financial and national debt markets, has
caused buyers to be more cautious, despite the existence of real demand. - Since the U.S. market is no longer the dominant market — a
position that’s being taken over by the Asian countries — it is seeing more
shortages of goods. - Expectations are that by the end of 2011, barring any
major financial catastrophes, prices will recover their recent losses.
Rough:
- Rough prices have declined.
- The premiums on boxes have vaporized and some boxes,
mainly Indian goods, are being sold at a loss, which is reportedly the case for
Diamond Trading Company (DTC) boxes. Russian boxes are reported to be sold at
cost or at a 3 precent to 5 percent loss. - The industry continues to fear that the high level of
speculation will cause more dealers to sell at a loss because they need the cash.
