RAPAPORT... Typically, a general assembly of the shareholders of the Antwerp Diamond Bourse, one of the city’s major diamond bourses, is no big deal. Attendance is usually between 10 and 20 people. So, when suddenly, on May 12, 2009, ten times as many people were in attendance — to such an extent that the room could not accommodate everyone — it was a sign that something important was happening.
The BeginningIn fact, the crowded meeting room was triggered by events that had taken place a few weeks earlier. A number of bourse tenants had individually approached the bourse management in recent weeks to ask them to use some of the bourse’s cash reserves to reduce their rent by 30 percent. According to the tenants, their requests to the executive board were either ignored, unanswered or, in many cases, rejected outright. The next move of the claimants was an attempt to force a vote on the rent reduction at the general assembly meeting. The idea was that if the general assembly approved the reduction, the executive board would be forced to pay attention to the request. The tenants’ threat was that if their rent request wasn’t put to a vote, they would simply refuse to approve the bourse’s budget.
In another matter, not entirely unrelated, the bourse tenants were upset at the expenditure of almost $120,000 in bourse funds to send a dozen representatives to Shanghai for a trade fair. Considering that the bourse had only $4.4 million in cash reserves, the tenants considered the Shanghai expenditure out of proportion to what was affordable for a single trip. They also suggested that the money would have been better spent on reducing their rent.
The dispute reflects a larger issue — the sense among bourse members that they should have been consulted on a travel expense of this size and, beyond that, that the bourse members should be more involved in decision-making by the executive board and that the board should be more responsive to its members.
Ayelet Lerner of Lerner Diamonds said bourse tenants are waiting “for the official general assembly notes to be released so we can examine them with our lawyers. It was said that the matter belonged before the executive board of the bourse and not the general assembly, and that’s the reason the rent request was not put to a vote. For the moment, we’re waiting to see what would be our most appropriate next move.”
One of the arguments used by the bourse general assembly in declining to consider the rent reduction request was that only 159 of the 1,121 shareholders of the bourse are tenants. That means that if the reduction were granted, 89 percent of the shareholders wouldn’t benefit from the action. Arthur Beller, the chairman of the bourse board, insisted that “There are 4,000 shares in circulation, of which 440 belong to our tenants, who represent 11 percent of the membership. We can’t give them an advantage without being unfair to the other 89 percent of our shareholders.
“As far as the expenses for our trip to Shanghai are concerned,” Beller responded, “people must remember that it isn’t our habit to send so many representatives to a fair. But this time, we judged that it was necessary to be present in significant numbers as China is very important for our future. Notice also that as a gesture of support to our members during the current economic crisis, we’ve decided to reduce our membership fee by approximately $140, which benefits every member equally.”
Being HeardIsaac Keesje of Keesje Diamonds was quite upset by the situation. “Those shares have no value at all,” he said. “They’re just a token of membership, and what the people in the street actually want is to at last be heard — that the board actually consult them once in a while. That’s the message underlying all this fuss.”
David Pienica, newly elected to the bourse board, is convinced that there is much to be done. “More and more representatives of the younger generation are now present at the board meetings, and it’s a good sign for everybody.
We’re already working on improvements, especially in the exchange of information between the shareholders and the board. Future steps may involve practical solutions to help the trade but, at this stage, we must consolidate the organization and make sure that we all make it through this crisis in as good a shape as possible. I wish to stress as well that, in spite of all the criticism, if there’s one thing that should not be overlooked, it’s that the bourse has been managed so far very responsibly.”
Article from the Rapaport Magazine - June 2009. To subscribe click here.