FYI -- From the Financial Times of London:
SPECIAL REPORT: Upstart dealer muscles into market: Leviev has taken De Beers' business in Angola; now the Israeli entrepreneur has his sights on its huge Russian concession
Financial Times ; 11-Jul-2000 12:00:00 am
By JUDY DEMPSEY
In the glossy magazines of the diamond industry, one advertisement stands out from the rest: LLD Diamonds.
Unlike other advertisements, the colours are sombre. The text is brief. "The World's Only Diamond Manufacturer that Owns its Own Mines." Lev Leviev owns those mines.
Son of a prominent Jewish family from Tashkent who emigrated to Israel in 1972 when he was 16, Leviev always wanted his own mines. "I don't want to be dependent on other suppliers," he says.
That was why, last February, he formed Ascorp, the Angola Selling Corporation, a joint venture with the Angolan government and the sole buyer of Angolan rough diamonds. With his cutting and polishing outlets in Russia,
approaching an annual Dollars 1bn, Leviev is now one of the world's leading diamond players.
But like the colours of LLD's ads, some Israelis say the Angola deal is full of grey areas. It created resentment in the industry. Existing contracts were
rescinded. An Israeli dealer said Leviev was doing what De Beers did in the past - creating a monopoly.
Another dealer who quit Angola asked how Leviev could guarantee he would deal only in clean diamonds. "How is he going to protect his mines? Can he deal with the corruption from all sides?"
Betraying no emotion over such questions, Leviev said he never bought diamonds from Unita, the rebel movement that has been fighting the Angolan
government for more than two decades. "You can put it in big letters. When it comes to diamonds, I am 100 per cent clean."
He is critical of former dealers in Angola. "They cared little about organising the system or investing. There was so much smuggling and disorder."
Ascorp, Leviev says, provides the best solution to conflict diamonds. "At long last, one professional and independent organisation is now running the
diamond business." He intends to invest up to Dollars 100m in the mines. By next year, he expects Ascorp to have a turnover of Dollars 1bn.
Yet for all the emphasis on independence, former Mossad intelligence agents suggest that Leviev needed the help of some Russians to clinch the Angolan deal. After all, for years the country was awash with Russian military, KGB and economic personnel. One Russian was Arkady Gaydamak.
Leviev, calm and soft-spoken, said he needed no help from any Russian. "I know Gaydamak. He is an economics adviser to the Angolan government."
But there is a business relationship between them. Gaydamak, a multi-millionaire of Russian and Ukrainian descent who lives in Paris, recently bought 15 per cent of Africa Israel, the Tel Aviv based investment company
Leviev acquired in 1997 and turned around.
There is also a religious relationship. Gaydamak, awarded the Legion d'Honneur by France for rescuing two French pilots shot down in Bosnia, is a "born again" Jew. "Leviev was fascinated by Gaydamak's background," said a former Mossad officer. "By his return to Judaism. By his involvement in Africa.
He is a kind of gatekeeper in Angola."
Leviev is a committed Chabab Lubavitch believer, a global ultra-Orthodox movement that aims to bring Jews back to their religion. "He is extraordinary,"
said an Israeli official. "Through his Federation of Jewish Communities in the former Soviet Union (FJC), Leviev has poured money into new Jewish schools,synagogues, summer camps and soup kitchens for the poor. He is rebuilding the Jewish communities." "Gaydamak was fascinated by Leviev. What he was doing for Russia's Jews," said the former Mossad officer.
Such is the meteoric influence of Leviev's FJC that it successfully campaigned to have its chief rabbi, Berl Lazar, elected last month as Russia's chief rabbi.
It was a bitter blow to Vladimir Gusinsky, owner of the powerful Media Most group and leader of the rival Russian Jewish Congress. He wanted his own
candidate elected.
"The FJC got support from some of the oligarchs," said an Israeli official. One was Boris Berezovsky, the media tycoon who runs ORT, the television
channel, and who has good contacts with Vladimir Putin, Russia's president.
Berezovsky and Gusinsky are bitter rivals, as much as Leviev and Gusinsky are rivals over whose Jewish organisation should prevail politically.
"ORT gave Lazar publicity. Berezovsky lobbied Putin for him," said the official - despite Leviev's insistence he is independent of any political lobby.
"The interests of Putin and Leviev coincide," he added. "In the new order of things in Russia, Putin wants to deal with one minority, not several splinter
groups. Leviev wants his FJC to be the one recognised by the government."
Recognition would increase its economic influence.
It could also make Leviev a strong candidate to replace De Beers when its contract in Russia expires next year.
Copyright © The Financial Times Limited |
