by Scott Selby
The story didn’t end as the rabbi had hoped. The detectives were not so accepting of the accomplices’ change of heart, and they were entirely unmoved by the rabbi’s insistence that the matter was closed because the men had repented and he had forgiven them. He was browbeaten and interrogated for hours more, as police tried to extract the names of the accomplices from him. “The rabbi was about to get his nails pulled out,” as Oliver put it. Finally, he identified the men. They were arrested and eventually confessed to everything. Aviv and his accomplices were also arrested.
That situation was played as a huge win for the police despite that the crime was solved only because two of the perpetrators had a crisis of conscience. In the halls of justice, that didn’t matter because heists don’t usually end so cleanly, with the loot recovered and the perpetrators jailed. The police were happy to take their victories where they could.
Tales of such criminal derring-do flowed like water through the offices on the fourteenth floor of the federal police building located on the outskirts of Antwerp. Home to a special unit of federal detectives who investigated only crimes involving diamonds, its shelves were filled with books about diamonds and its walls with mug shots of men who were wanted for stealing them.
In the office shared by unit commander Agim De Bruycker and detective Patrick Peys, one wall was filled with Polaroid snapshots of the unit’s men conducting investigations in various cities around the globe, from the seedy to the ritzy. These six “diamond detectives,” as they were known, traveled to the corners of the earth following the trails of Lebanese financiers, Israeli rip-off artists, and Belgian middlemen working for Al Qaeda cells. They ran down diamantaires who smuggled goods in and out of the country to avoid taxes. They investigated allegations of money laundering and trafficking in conflict goods used to finance African wars. Because diamonds are used to pay spies, gunrunners, and soldiers of fortune, the detectives also functioned as a de facto organized crime and counterterrorism squad, and they worked closely with the U.S. Federal Bureau of Investigation, Europol, Interpol, and the International Criminal Court. Both De Bruycker and Peys looked the part, although from different genres—De Bruycker had a passing resemblance to Patrick Swayze and looked like an action hero; Peys, with his thick salt-and-pepper hair and walrus mustache, looked like Peter Sellers’s famous Pink Panther detective Jacques Clouseau.
Despite the prestige of their jobs, the men felt underappreciated—and often openly resented—particularly in the narrow confines of the Diamond Square Mile. While the detectives were the first ones diamantaires turned to in the event of a theft, they were also often the last ones the diamantaires wanted to see at any other time. The diamond industry was tightly insulated and highly protective of its reputation. From the industry’s point of view, the diamond detectives were tolerated because they were necessary to investigate crimes against it, but whenever they made headlines by looking into crimes within it, they were a threat to the reputation of the whole industry.
The diamond industry had already withstood some sizable blows to its reputation. In 2000, news of conflict or blood diamonds made buyers aware of the very real connections between diamonds and war. Industry titan De Beers quit buying diamonds on the open market in order to quell criticism that it was funding wars in Africa, particularly in Sierra Leone, Angola, and the Democratic Republic of Congo. As of 2000, the diamonds De Beers sold were certified by the company to be conflict free. It vowed that, in the future, its cache of rough goods would come only from mines it controlled or from companies or governments it partnered with.
As if that weren’t bad enough, a Washington Post investigation in late 2001 tied Sierra Leonean rebels to Al Qaeda, which was buying diamonds from the African guerillas in preparation for its September 11, 2001, attacks on the United States. Osama bin Laden’s group needed a major cache of highly liquid assets, since it anticipated one of the first responses from the United States and its allies would be a freeze on its international bank accounts. According to the Post, the scheme worked, and Al Qaeda had in its possession tens or even hundreds of millions of dollars’ worth of diamonds that could be easily converted to cash as it launched its attacks.
For the diamond industry, this was a nightmare. There could be no worse possible association for the products it sold than Al Qaeda. The diamond industry wanted to distance itself as much as possible from any ties its products might have with terrorism, but, unfortunately for Antwerp, two of the men alleged to have acted as middlemen for the Al Qaeda diamond transactions were found right in the middle of the Diamond District.
When the Post story broke, the diamond detectives asked Belgium’s major banks to scour their records for unusual transactions. Artesia Bank noticed that one company had done very little business in the late 1990s, and then suddenly turned over $14 million in 2000 and more than $1 billion in the portion of 2001 preceding the September 11 attacks. The company had then stopped recording diamond sales in Antwerp—the opposite of what would be expected with such a sudden surge of money through its account. The ensuing investigation linked the company to Lebanese diamond dealer Aziz Nassour and his cousin Samih Osailly. Osailly and Nassour were convicted of dealing with conflict diamonds and belonging to a criminal organization and were sentenced to three and six years, respectively.
Since Antwerp had a policy of zero tolerance for trafficking in blood diamonds, there was nothing to do but grit its teeth that one of its own businesses was involved in it and assure anyone who asked that it was an isolated incident.
To be sure, there’s no evidence that most of Antwerp’s 1,500 diamond businesses were anything but perfectly aboveboard. But just as in any industry, there were those for whom that definition was flexible. It’s not unlikely that a diamantaire who considered himself to be perfectly scrupulous still had a stash of “black diamonds”—diamonds bought and sold off the books, on the black market—hidden in a safe somewhere. This was sometimes done to avoid value-added taxes or sometimes because a diamond’s pedigree wouldn’t survive close scrutiny. Maybe they had been stolen or maybe they’d been smuggled. Regardless, trading in black diamonds was hardly uncommon; it was a means of padding the bottom line. It’s not unlike claiming the maximum amount of charitable donations on one’s tax return up to the point at which the IRS requires proof: if the value of the donations is inflated, while it’s still illegal, the penalties are minute, and it’s almost impossible to get caught.
If a diamantaire were to be caught trading in black diamonds, however, it would be the diamond detectives who would catch him. That’s why, unless they’re the victims of a theft, few diamond merchants would welcome a call from the fourteenth floor of the federal police building. Even if they were the victims of a crime, some would rather say nothing than open their books to these detectives. Peys summed it up even more succinctly when he said, “Some of them wish we’d all drop dead.”
Be that as it may, there’s little question that the diamond industry requires policing both internally and externally. As a form of currency, diamonds have no equal. They are untraceable, are easily concealed, and retain their value anywhere on the globe. It’s well known by law enforcement and thieves alike that you cannot trace a diamond backward. Serial numbers inscribed by lasers can also be removed with lasers. Certificates detailing cut and weight are rendered meaningless if a stone is recut to shave off a tenth of a carat. A thief can simply submit the altered stone for grading and get a new certificate. These are among the reasons thieves have plotted to steal diamonds since practically the moment that humans decided they were valuable.
Diamonds are precious for both the characteristics nature has bestowed upon them and the mystique humans have attributed to them. They are the hardest substance found in nature, formed over the course of almost a billion years to 4.25 billion years deep beneath the earth’s surface in what geologists call the “diamond stability field.” At that dark and violent subterranean level, about 90 to 120 miles deep, the extreme pressure and
heat of the upper mantle combine in the correct proportions to fuse carbon molecules together in the strongest elemental combination possible.
Other carbon materials aren’t nearly as strong. For example, graphite has strong carbon bonds in layers, but these layers have very weak connections between each other. That’s why graphite transfers so easily to a sheet of paper from the tip of a pencil. But the carbon in diamonds is linked in a three-dimensional structure, with each atom bonded in the strongest way possible. As a result, they have a unique octahedral crystalline structure. The bonds between the atoms of a diamond can only be broken by another diamond. That’s why diamond polishers use saws and grinders dusted with diamond powder to cut and shape rough diamonds.
Even before the 1400s, when Belgian craftsmen invented the techniques for cutting diamonds into the shapes that are well known and treasured today, the stones were considered priceless and powerful. Because of their hardness and their ability to refract light, they were often considered to have mystical powers, such as invisibility and immortality.
No one is certain when diamonds were first discovered. The first mention of them is found in the Arthashastra, an economics manual from India believed to have been written around the fourth century BCE. For thousands of years, India was believed to be the sole source of diamonds. Then they were discovered in Brazil in 1725. Even as early as the late nineteenth century, these two countries were considered the only places to look for diamonds.
Diamonds, in fact, can be found the world over. Back when life on Earth consisted of single-celled organisms, diamonds were propelled from their subterranean birthplace during the volcanic throes of a young planet’s growing pains. As the earth ventilated itself, volcanic eruptions spewed through the earth’s crust, showering ash, magma, and rocks for dozens, and even hundreds, of miles. The deepest of these explosive events originated far below the diamond stability field and punched through successive layers as they rose to the top. Anything intercepted along the way, including diamonds, was mixed together and went along for the ride.
Not all diamonds survived the trip up a river of magma. It was a precarious journey that required everything to go right for them to make it to the earth’s surface intact. Eventually, these former magma flows developed into kimberlite or lamproite pipes. Shaped like carrots, these diamond pipes tended to be much younger than the diamonds they carried, anywhere from 50 million to 1.6 billion years old. If the magma did not travel upward fast enough, the diamonds turned into graphite by the time they finished their journey.
These ancient volcanoes are gone, but the pipes they created are still there, lined with the long-ago cooled and hardened miasmic stew of geological debris of kimberlite. Not all volcanoes contained kimberlite, and not all kimberlite contains diamonds—but plenty does.
Centuries of erosion have loosened these eight-sided super-hard crystals, allowing them to migrate across spans of hundreds of miles. The resulting alluvial deposits produce diamonds from just under the ground, sometimes from beneath just a foot or two of dirt over broad areas. The diamond-bearing kimberlite pipes themselves can contain the stones as far down as men can dig.
Diamond pipes are found in countries all over the world, including Australia, Canada, the United States, Brazil, India, Russia, and throughout Africa, but geologists didn’t learn how to start actively looking for them until diamonds were discovered in abundance in South Africa in the 1860s. By that time, the diamond industry was well established, particularly in Antwerp. There was lingering disagreement over where, exactly, the practice of cutting and polishing diamonds into gemstones had first taken root, in Brugge or Antwerp. There were partisans on both sides of the issue, but Antwerp seems to have won the right to claim that it was the birthplace of modern diamond manufacturing. Its merchants in the late nineteenth century sold expensive diamond rings to captains of American commerce to give to their spouses, but they also sold low-quality diamonds suited for industrial uses, particularly to manufacturing companies.
Now as then, diamonds’ hardness makes them valuable as tools. The Chunnel between London and Paris, for example, was created with a bore drill the size of a house that was studded with thousands of diamonds, making it strong enough to chew through solid rock like a spade through soil. These were not, however, the sort of diamonds that would ever have been found around Elizabeth Taylor’s neck—they were low-quality stones whose characteristics weren’t conducive to being fashioned into gemstones. In fact, 80 percent of all diamonds pulled out of the ground are not bound for jewelry companies, but for equipment manufacturers.
The price for industrial diamonds is not high compared to that of gemstones. Because of their rarity, for a long time gem-quality diamonds commanded prices that few outside royalty could afford. It wasn’t until 1866, when a young Boer shepherd found a large diamond in South Africa, a fortuitous discovery that led to a diamond-mining boom there, that they became far more common than anyone expected. As any student of economics knows, the first thing that happens when a market is flooded with goods is that the price plummets.
But one Englishman, and one company, prevented that from happening.
Cecil Rhodes established the famous Rhodes Scholarship at his alma mater, Oxford University, and expanded the British Empire in Africa with the formation of a country that also bore his name, Rhodesia. But for diamond merchants the world over, his most important accomplishment was the foundation of De Beers Mining Company in 1880. De Beers maintained price stability in the global diamond market for more than a hundred years and laid the foundation for the modern diamond industry.
When Rhodes arrived in South Africa in 1871, he was an asthmatic eighteen-year-old who hoped the country’s climate would be kinder to his delicate health than the damp chill of Europe. At the diamond fields, he discovered a frontier town of vagabond diggers who bored like termites into once-bucolic rolling hills and farmland, transforming the Orange and Vaal river valleys into a barely navigable series of pits and trenches that extended to the horizon.
Miners lived in tent cities and walked to their claims over wooden boards spanning deep holes, as it was an offense often punishable by violence to even walk on someone else’s claim, lest a diamond become embedded in the soles of hobnailed boots. Every inch of dirt contained a potential lifetime’s worth of wealth, and removing the soil from the pits took impressive ingenuity. Some prospectors strung parallel cables from the surface on which to balance the special wheels of jerry-rigged carts that were filled with dirt and then winched to the top. It often proved worth the effort. One of these holes, after it was expanded to include surrounding claims, eventually produced almost three metric tons of diamonds.
Rhodes saw early that there were so many diamonds to be had under the South African soil that if the disorganized mob of miners sold them all, the market would flood and prices would crash. In fact, prices per carat dropped from $14 to $3.75 by 1885. The secret of Rhodes’s success lay in his ability to buy out and consolidate the claims of the numerous miners who had preceded him to these rich diamond mines. He also established his first monopoly, one over the water pumps for three Kimberley area mines. When flooding occurred, miners had to deal with him to save their claims. As miners spent all their cash paying his rates, they eventually had no choice but to exchange shares in their claims for the use of Rhodes’s water pumps.
Between 1874 and 1875, depression hit Kimberley, with most miners thinking that their claims were depleted. Rhodes, and his main competitor Barney Barnato, though, believed the opposite—that these claims would grow richer with the removal of the soft “yellow dirt” on the surface as miners reached the hard “blue dirt” that lay underneath.
After the small players had been bought out, Rhodes then moved on to the large players and convinced his most powerful competitors to unite under the umbrella of his company, De Beers Consolidated Mines Limited, in order to control diamond production. Once he controlled the known South African mines, Rhodes drastically cut back on mini
ng. As a result, he was able to increase the price of diamonds by 50 percent.
By 1890, while still in his mid-thirties, Rhodes was the most powerful mining tycoon in the world. He controlled more than 95 percent of the world’s production of rough diamonds.
Rhodes died at the age of forty-nine, but De Beers endured as one of the most successful monopolies in the history of human commerce. Almost a century after Rhodes’s death, in March 1999, Nicky Oppenheimer said in a remarkably frank speech, “I am [the] chairman of De Beers, a company that likes to think of itself as the world’s best known and longest running monopoly. We set out, as a matter of policy to break the commandments of Mr. Sherman [the U.S. senator for whom the Sherman Antitrust Act is named]. We make no pretense that we are not seeking to manage the diamond market, to control supply, to manage prices, and to act collusively with our partners in the business.”
Thanks to its aggressive marketing, De Beers defined cultural traditions for generations of husbands and wives, who formalized their love by exchanging diamond rings. And because it aggressively pursued new acquisitions throughout the past century, it artificially kept the price of diamonds higher than they would have been under a purely market-driven supply-and-demand model.
The mechanism for controlling the price was simple. As new diamond fields were discovered throughout the world, De Beers bought the claims or developed agreements with the mining company to sell their diamonds only to De Beers. The pitch made sense economically: selling to De Beers took the diamonds off the market, meaning they were worth more in the long run. Should the mining company decide to ignore De Beers’s offer and sell directly to wholesalers, it could depress prices across the industry if too many diamonds were in the market. That would benefit no one.
In 1889, Rhodes made a deal with a buying syndicate in London to handle all of the rough diamonds that De Beers mined. Ernest Oppenheimer, with his Anglo American Corporation of South Africa, used “the syndicate,” as it was known, to eventually take over De Beers itself. Once he did, Oppenheimer abolished the syndicate and replaced it with a single-channel distribution system within De Beers itself—the Central Selling Organization (CSO). This distribution system remains intact today as the Diamond Trading Company (DTC) and Oppenheimer’s descendants still run De Beers.
