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Home > Diamond News Center > Features > Articles > Diamonds

Carrying the Banner of Transparency

/ Israel

 

 

Kobi Fux  Enlarge
Israel Diamond Manufacturers Association President Kobi Korn during the official opening of the International Diamond Week in Israel

Transparency is the key - that's the message of IsDMA president - Kobi Korn, as expressed in his address to the prime minister - Mr. Benjamin Netanyahu, who hosted a delegation of Exchange and Manufacturers Association presidents in his office in Jerusalem.

 

About 6 months ago I heard De Beers' head of commercial development - Howard Davies, who had come to Israel for discussions with our organization on financing of the world diamond industry. He spoke about the demands for financial transparency that De Beers makes of its clients, and the rough producer's strict requirements regarding its sightholders' financial reports and balance sheets. In adopting these measures, De Beers had one goal in mind: compliance with the most prominent and most important demand regarding the conduct of businesses in the 21st century - transparency.

 

De Beers Rough Diamonds
De Beers  Enlarge
De Beers Rough Diamonds

Transparency is the key. De Beers is not the only firm tightening its demands. The other major rough producers and the large retail chains are doing the same. Any self-respecting company in the diamond or jewelry industry today, wherever they may be, is demanding maximum transparency of its customers. The diamond industry still has a long way to go before it meets the current demands for transparency and that is keeping a lot of potential financing away from the industry.

Six years ago, at the height of the unpleasant - to put it mildly - affair known as the "underground bank," the Bank of Israel governor at the time - Mr. Stanley Fischer - visited us. What he said is etched in my memory: "you have a wonderful, clean and beautiful industry," he told us. "But you have one problem - lack of transparency. In the 21st century, an industry that isn't transparent arouses suspicion and mistrust, and becomes an easy target for others to throw mud. I suggest," the governor said, "that you regain your reputation by becoming a highly transparent industry."

Diamonds and gold
Martin Konopka | Dreamstime.com  Enlarge
 

Therefore, I bless De Beers, and all those who act accordingly, because it is a shame that so much money destined for investment doesn't end up in the world diamond industry. We have to clear the cloudy glass that is keeping us from thriving.

The duty of transparency is not the diamantaires' alone. It is also the duty of the rough producers, those who make price lists, the gemological laboratories and the retailers. The entire diamond pipeline must be transparent. That is the key to a better future for us. Therefore, I call upon all parties in the world diamond industry -rough producers, marketing centers and all the countries involved in diamonds - to adopt transparency. Only when we comply with these demands will we be able to increase our trade and attract a significant portion of the money available for investment. The banks will be able to extend credit with greater confidence and it will be easier for investment funds to put money into the diamond industry. This is the only way for our industry to set out on a healthy path of development.

In light of the importance I ascribe to this issue, this was the topic I chose for my address during our visit with the prime minister - Mr. Benjamin Netanyahu. I told Mr. Netanyahu that the Exchange president and I carry the banner of ushering our industry into the transparent business world, conducting itself like all the industries in the Israeli economy, in full transparency.

For the past three years, the Israeli diamond industry has been involved in complex, significant negotiations with the tax authorities. We are now in a process that will ultimately make the diamond industry transparent, by means of full bookkeeping. I am confident that we will conclude the talks soon, changing the activities of the industry dramatically.

Such an agreement will clearly be a win-win, benefiting the state and the diamond industry alike. I stressed that we are not asking the government to intervene in the process itself, but do expect it to support these measures, which will represent an achievement of the tax authorities in transforming the financial management of the industry from one that was suitable 40 years ago to one fitting modern times, which is accepted in the economy as a whole.

I also noted that we in the Israeli diamond industry were among the first in Israel to adopt the anti-money-laundering regulations, and assisted the government in formulating the section regarding our industry.

We believe that we are on the right track, which will lead us to better times.

This article originally appeared in HaYahalom 218

 

 

By: Kobi Korn - President, Israel Diamond Manufacturers Association
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