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Antwerp
By Marc Goldstein
The preliminary $200 million-plus settlement of unpaid back taxes by Antwerp-based Omega Diamonds, negotiated during the spring of 2013, is at risk of being invalidated. That’s the report from Belgium’s major French-speaking newspaper, Le Soir, based on challenges being made by Jos Vander Velpen, attorney for one of the civil plaintiffs in the case. “Currently, there’s no such thing as an official agreement of the tax charges, at least not until the Antwerp Chamber of Council ratifies it,” Vander Velpen said. Doubt about the settlement being finalized was raised earlier, in July 2013, when Belgian Minister of Justice Annemie Turtelboom declined to confirm to the Belgian Senate that there was a settlement. “To this day, no transaction was concluded with the suspects in the Omega Diamonds case,” she said at the time.
Omega’s alleged tax fraud scheme has been challenged on two fronts: by the tax authorities who negotiated the $200 million settlement and by the customs officials who still have a court case pending against the company. The concern is that the ratification of the tax settlement — because it would settle all charges against Omega related to the fraudulent scheme — will stop the customs trial from moving forward. Le Soir characterized the settlement as a “most despicable” example of “social group justice,” a reference to different justice systems applying to the rich than to the poor. The newspaper said the fact is that, in this case, the Belgian Revenue Services is inclined to sign a settlement with Omega because of the difficulty of collecting fines from a wealthy company that moves so much money internationally. Another issue raised by Le Soir is whether any agreement would be valid if one of the civil plaintiffs in the case was not included in the agreement and thus didn’t approve it. The plaintiff the newspaper referred to is David Renous, a former employee of Omega Diamonds who was a buyer and valuator for the company in the Congo. Renous is the whistleblower who first revealed to Belgian and U.S. investigators the details of the tax fraud scheme that was estimated at $1.7 billion for the period between April 2003 and October 2008. Vander Velpen, Renous’ lawyer, explained that even beyond the missing approval by the Chamber of Council, information made public in other countries affected by the diamond trafficking could become further obstacles to the final ratification of any settlement. Switzerland and Israel, for example, have apparently shown interest in the case, which raises the possibility of prosecutions in those countries as well. “In principle, it’s still possible that new pieces will be poured into the case file, even though the Belgian prosecutor did most probably already close his file,” he said.
The Omega case was triggered in November 2006, when the Antwerp Diamond Office noticed anomalies in three parcels entering Belgium. The global declared value was approximately $20 million whereas the value established by Belgian experts was reportedly a maximum $12.5 million. Alain Lallemand, a reporter for Le Soir, wrote that within 72 hours of the discovery, the contradiction between the Swiss and Belgian estimates had revealed a large-scale fraud. The diamond trading circuit passed from Angola and Democratic Republic of Congo (DRC) through Dubai, and entered Europe via Switzerland before reaching Antwerp. The purpose of the scheme was to reduce the value of the diamonds as much as possible when the goods were leaving the producing countries — in order to reduce drastically the export duties to be paid — and to do exactly the opposite when the stones reached Antwerp, resulting in a negligible profit when reselling them and therefore almost no income tax.
When questioned about the case, Renous observed, “The problem that we’re facing now is that the settlement was supposed to close all issues between Omega Diamonds and the Belgian Revenue Services, including the undervaluation of shipments. Should the deal end up being approved by the Chamber of Council, the Customs department won’t have any case at all because no one can be tried twice for the same crime. In my opinion, and that of my lawyer, there is a very big likelihood that the chamber’s ruling will be in favor of the settlement. “Eventually, it’s all a question of timing,” concluded Renous, who lost his job with Omega when he began questioning the irregularities he discovered while working for the company. “Maybe something coming from the inquiries that are being carried out abroad will be added to the case, and hopefully, cause the settlement to be abandoned or at least amended. Not to mention the fact that, theoretically, I also should have a say in the matter, since I am a victim.”Article from the Rapaport Magazine - February 2014. To subscribe click here.
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