The Unresolved 14000 Cr Bank Fraud
Exactly nine months ago, PNB reported the
Rs 14,000-crore fraud on it committed by
diamantaire Nirav Modi and his uncle Mehul
Choksi, the whereabouts of both of whom are still
being deliberated. Meanwhile, the impact
this has had on the jewellery industry is
colossal to say the least. Jewellers across
India are struggling to get credit from
banks. RBI has intervened and has forbidden short
term financing in foreign currency to avoid more
financial havoc. If things continue to remain the
way they are, in all plausibility, businesses may
shift to China and Thailand and we are looking at
many job losses. While the willful defaulters have
still not been presented in court, Deloitte released
a survey recently stating that banking frauds will continue to be on the rise because banks are
underestimating their ability to prevent frauds and
this may impact the nature of anti-fraud compliance
programmes being developed.
De Beers’ Lightbox Exclusively Sells Lab-
Grown Diamond Jewellery
De Beers, the world’s largest
diamond company, which
controls around 30 per cent
of mined stones in the world,
announced the launch of
Lightbox in May, a brand of
fashion jewellery with labgrown
diamonds. Lightbox
lab-grown diamonds are retailed
US$200 for a quarter-carat stone
to US$800 for a one-carat stone.
The line was launched to bring something new and
innovative to the jewellery sector, featuring pink,
blue and white lab-grown diamonds in a selection
of accessibly-priced earring and necklace designs.
One of the products, a 1-carat pendant with white
centre stone for $900 was apparently sold out in the
initial months of its offering. The fact that Lightbox is only being retailed online and
the brand is embracing novel
marketing tools like podcasts to
reach its audience is testament to
the fact that the brand is targeting
millenials. This move has been
strategic in the sense that it has
been implemented at a time when
diamond prices are volatile, not
to mention the redundancy of
diamond mines across the world.
While natural diamond enthusiasts are still hot
headed about the issue, a handful of wholesalers
and retailers in the U.S. are not entirely opposed to
the idea of selling lab-grown diamonds. It is still
fairly early to say what kind of an impact Lightbox
might have on the sales of natural diamonds, but we
can say that the impact will be felt sooner or later.
FTC Diamond Ruling Viewed Pro-Lab
Grown by Natural Diamond Industry
The US Federal Trade Commission
(FTC), after being in talks with the
industry for six years, made a number
of changes to its jewellery
guidelines, including making
the definition of a diamond
more ‘inclusive’. As part
of its renewed jewellery guidelines,
the Federal Trade Commission (FTC)
implemented a few changes regarding man-made
diamonds. First and foremost, its new definition of
a diamond eliminates the word ‘natural’ as opposed
to its previous definition that suggests that a
diamond is a natural mineral. Also, the terminology
‘synthetic’ is no longer relevant considering the
FTC suggests that the term is often interpreted as being ‘artificial’ when in fact man-made
diamonds are not artificial. For years,
the FTC has omitted words like gem,
stone, real, genuine and gemstone
from their dictionary when referring
to man-made diamonds. However,
it said that its previous guidelines
as, ‘circular, inadequate guidance that
relied on highly subjective judgments.’
So, as a matter of fact, man-made diamonds are
gemstones and it is appropriate to call it ‘cultured’
like cultured pearls. Consumer’s understanding of
what a diamond is and the perception built around
for decades could be changed forever with these
new guidelines and that is certainly not good news
for the natural diamond industry.
Israeli Diamantaire Lev Leviev Company Accused
of Smuggling Goods Worth $80 million
Leviev’s son Zevulun and brother
Moshe were held in connection
of their involvement in a smuggling
operation that has brought about 300
million shekels’ ($80 million)
worth of diamonds illegally
into Israel since 2010. Lawyers
representing Zevulun Leviev in
a statement said the allegations against
him were “baseless” and his arrest
appeared to be a tactic to “illegitimately
pressure his father”. Moshe Leviev’s lawyer denied
in court that his client had any connection to the
allegations against him. Several employees have
been questioned in the ongoing investigation that is being termed ‘Black Diamond’.
Diamonds, properties and bank
accounts owned by Leviev have
been confiscated as part of the
investigation. Leviev has refused to
cooperate with the police stating that
he is currently based in Russia and
that he will visit Israel only if he is
allowed to come back to Russia again.
In a sudden turn of events, Mazal
Hadadi, a 42 year-old book-keeper
at LLD, fell to her death from the tenth floor of the
Diamond Exchange building in Ramat Gan. Though
the police have treated the case as suicide, some of
her relatives are alleging that it could be murder.
Swatch Group Makes an Exit from Baselworld
In July, the Swiss watch group Swatch in a
statement announced that all of its brands will
be exiting the Baselworld show, and that it will not
be participating in March 2019 fair. This came as
a big blow to Baselworld, which in 2017, witnessed
the mass departure of 600 exhibitors
including the Movado Group. As a
result of this, Baselworld was shortened
by two days this year. The Swatch
Group, which owns 18 brands including
Breguet, Blancpain, Harry Winston, Omega,
Longines, Tissot, Rado, Jaquet Droz, Glashutte
Original, Hamilton and Mido apparently, invests
approximately $50 million in Baselworld. We don’t
know what the positioning of the booths will be like
considering the group used to practically occupy
half of Hall 1 shared with Rolex and the like.
One of the main reasons for the exiting of Swatch
according to its statement is because Baselworld
is “outdated” and “old” and is not changing with
times. In its statement, the MCH Group said that the success of Baselworld 2018 and the new concept
for Baselworld 2019 which is in full swing under the
new management, the cancellation by this exhibitor
came as a surprise. Baselworld’s Comité Consultatif,
consisting of representatives of all the important
exhibitors from the watch industry, approved the
new concept at its meeting of 4 July 2018. The
MCH Group is convinced that this has laid a good
foundation for a successful trade fair.
Duty Hassles Affecting the Health of the
Indian Diamond Industry
In September, the Government had raised the import duty on cut and polished
diamonds to 7.5 per cent from 5 per cent, to narrow the current account
deficit (CAD). Increase in customs duty on cut and polished diamonds has
increased the cost of business and impacted exports and trade.
In September alone, the gems and jewellery exports witnessed a
decline of 21 per cent - devaluation of rupee against dollar along
with increased duty on import of cut and polished diamonds and
liquidity crunch have all been detrimental to the growth of one of the most
sought after diamond hubs in the world. One of the main discussions in the
recently held Gold and Jewellery Summit in New Delhi was about ease of doing
business and how excessive regulation is taking the shine off the gems and
jewellery industry. There is even the talk of India losing its position of being
one of world’s largest cutting and polishing centers.
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