Di­a­mond smug­gling scan­dal spot­lights shad­owy Is­raeli ty­coon

The Myanmar Times - - International Business -

A shad­owy Is­raeli bil­lion­aire who made his for­tune in the in­su­lar world of di­a­monds has sud­denly found his em­pire in jeop­ardy af­ter close as­so­ciates were busted in a mas­sive smug­gling ring and an em­ployee mys­te­ri­ously plum­meted to her death from his high-rise Tel Aviv of­fice build­ing.

Lev Le­viev, known in Is­rael as the “king of di­a­monds,” has en­joyed close ties to Rus­sian Pres­i­dent Vladimir Putin and has a rep­u­ta­tion for gen­er­ous phi­lan­thropy to Jewish causes. But now, Is­raeli po­lice are de­mand­ing that he re­turn from Mos­cow for ques­tion­ing on al­le­ga­tions of smug­gling, money laun­der­ing and tax of­fenses.

It’s a stun­ning down­turn for one of Is­rael’s most well-known ty­coons. Born in the for­mer Soviet repub­lic of Uzbek­istan, the 62-year-old Le­viev im­mi­grated to Is­rael as a youth in 1971 and be­gan work­ing as an ap­pren­tice in a pol­ish­ing plant in Is­rael’s then­boom­ing di­a­mond in­dus­try. His me­te­oric rise saw him later es­tab­lish­ing a plant of his own, and strik­ing deals in An­gola and Rus­sia that briefly un­der­cut the DeBeers di­a­mond gi­ant. He later branched out to real es­tate, con­struc­tion and chem­i­cals, with his Africa-Is­rael hold­ing and in­vest­ment com­pany be­com­ing a pow­er­ful player in the Is­raeli mar­ket and es­tab­lish­ing Le­viev as a pre­cur­sor to a wave of Jewish oli­garchs from the for­mer Soviet Union who have be­come power bro­kers in Is­rael.

Though his net worth is es­ti­mated at more than $1 bil­lion, Le­viev suf­fered heavy losses in re­cent years be­cause of his mas­sive in­vest­ment in Rus­sia, where he is known to en­joy strong govern­ment sup­port. Le­viev, who moved to Lon­don a decade ago and re­cently re­lo­cated to Mos­cow, de­nies any al­le­ga­tions of im­pro­pri­ety and is cur­rently ne­go­ti­at­ing terms of his re­turn with Is­raeli po­lice. But in­sid­ers say that even if he hasn’t been for­mally charged with a crime, his mere as­so­ci­a­tion with the sus­pects ac­cused of smug­gling some $80 mil­lion worth of di­a­monds hid­den in brief­cases over sev­eral years could be dev­as­tat­ing to his brand.

“I can’t be­lieve he would put him­self in such a sit­u­a­tion. He is still a strong oli­garch, and this is not his style. A smug­gling of this scale could top­ple busi­nesses far larger than his,” said Alex Ko­gan, a jour­nal­ist who has cov­ered the oli­garchs in Is­rael for the lo­cal Rus­sian-lan­guage press. “Even if he is not in­volved, this whole af­fair will harm him greatly.”

Le­viev’s son and brother were ar­rested in early Novem­ber, along with four oth­ers, and are cur­rently out on bail in what has been dubbed the “Black Di­a­mond” af­fair.

The saga took a more tragic turn on Nov. 11, when Mazal Hadadi, a book­keeper for Le­viev’s di­a­mond firm LLD, fell to her death from a small, el­e­vated bath­room win­dow on the 10th floor of his of­fice build­ing next to Is­rael’s Di­a­mond Ex­change.

The death was ini­tially re­ported as a sui­cide, the sup­posed re­sult of a break­down fol­low­ing tough po­lice ques­tion­ing about the smug­gling af­fair. The fam­ily ac­knowl­edges Hadadi was rat­tled by the in­ves­ti­ga­tion but in­sists the mother of three would never take her own life and was on her way to meet her hus­band af­ter work when a mys­te­ri­ous call to her cell phone made her abruptly re­turn to the of­fice.

Is­rael’s reel­ing di­a­mond in­dus­try has been try­ing to dis­tance it­self from the af­fair. With tens of thou­sands of em­ploy­ees in the 1970s, Is­rael was once the world’s largest di­a­mond trad­ing cen­ter but fell on hard times in re­cent years be­cause of the pro­lif­er­a­tion of syn­thetic di­a­monds and out­sourc­ing of pol­ish­ing plants to coun­tries like In­dia, where wages are far lower. Dubai has also cut away at Is­rael’s sta­tus as the re­gional gate­way for trad­ing be­cause of tax ben­e­fits for com­pa­nies.

But Is­rael is still a leader in the pol­ish­ing of large di­a­monds and a hub for e-com­merce and tech­no­log­i­cal de­vel­op­ments. Though of­fi­cially still a mem­ber of the Is­rael Di­a­mond Ex­change, Le­viev hasn’t been seen in Is­raeli di­a­mond cir­cles in years as his busi­ness in­ter­ests fo­cused else­where and his brother took over the lead­er­ship at LLD.

An of­fi­cial in the in­dus­try, who spoke on con­di­tion of anonymity be­cause of the on­go­ing in­ves­ti­ga­tion, said the af­fair has put a strain on other Is­raeli di­a­mond deal­ers. The Is­raeli mar­ket is now con­sid­ered to be a highly reg­u­lated in­dus­try that has cleaned up its act af­ter decades of shady deal­ings and as­so­ci­a­tion with “blood di­a­monds” mined in con­flict zones that fi­nanced hu­man rights vi­o­la­tions. In 2003, Is­rael joined the Kim­ber­ley Process by which mem­bers meet an­nu­ally to dis­cuss strength­en­ing con­trols over con­flict di­a­monds.

Photo: AP

This De­cem­ber 2, 2009 photo showsLev Le­viev at a dis­trict court in Tel Aviv, Is­rael. Is­raeli po­lice are de­mand­ing his re­turn from Rus­sia to be ques­tioned of charges in­clud­ing smug­gling, money laun­der­ing and tax of­fenses.

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