Once again, there has been a massive leak of confidential data from offshore jurisdictions—this time, the biggest one ever, called the Pandora Papers—and once again, we find the names of several diamond industry members in that data.
Most of the industry names leaked to the International Consortium of Investigative Journalists (ICIJ)—which include Beny Steinmetz and Nirav Modi—are known to have had offshore holdings. (Steinmetz has said any holdings were perfectly legal.)
In 2016, when the Panama Papers were released, the Belgian newspaper Knack wrote: “The Panama Papers’ list of 732 Belgian citizens and residents includes no fewer than 65 diamond dealers. After the financial sector, the diamond industry is the professional category most strongly anchored offshore.”
With the Pandora Papers, it was much the same, according to another Belgian newspaper, De Tijd:
Diamantaires…still work with tax havens.… [They] often have a company in Antwerp, but through their underlying companies in the United Arab Emirates we arrive at a tangle of opaque, exotic mailbox constructions. A classic case is a diamond group that only lists offices in Mumbai and Antwerp on its website. The group’s Antwerp company reported an official turnover of barely 25 million euros last year. The diamond dealers then paid the Belgian carat tax, worth several hundred thousand euros.
But they also have—under the same name—a P.O. Box company in the British Virgin Islands. This offshore acts as ‘a holding company for all their diamond activities, including those in Antwerp,’ worth about 90 million dollars. In the Virgin Islands, the most notorious tax haven, nothing substantial happens: it’s a mailbox construction, the paperwork is kept up in Dubai.
We should note, as the ICIJ itself says on the site for its Offshore Leaks Database, “There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any people, companies, or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly.”
However, The Indian Express notes that offshore “trusts are also used by some as secret vehicles to park ill-gotten money, hide incomes to evade taxes, protect wealth from law enforcers, insulate it from creditors to whom huge moneys are due, and at times to use it for criminal activities.”
Under the Patriot Act guidelines, financial institutions—which jewelers qualify as—that are doing business with companies that have offshore holdings must conduct “enhanced due diligence.”
