Israeli police arrest diamond dealer in connection with $65m fraud inquiry

Members of the Israel Diamond Exchange claim Hanan Abramovich’s company owes them ‘tens of millions of dollars’ for gems that it purchased but did not pay for

A trader inspects a diamond during a show at the IDE in Ramat Gan near Tel Aviv (Reuters)

Israeli police are questioning a diamond dealer on suspicion of embezzlement as part of a fraud investigation that could involve sums of up to $65 million (£45m).

Announcing the arrest on Wednesday, police identified the suspect as Hanan Abramovich. Mr Abramovich was arrested the previous day, following a complaint from members of the Israel Diamond Exchange (IDE).

A police spokeswoman said: "The suspect is under arrest and we are currently questioning him on suspicion of embezzlement."

The IDE, based in the city of Ramat Gan, said several of its members alleged that Mr Abramovich’s company owed them "tens of millions of dollars" for gems that it purchased but did not pay for. Israeli media has reported that around 12 leading firms are involved in the case, with sums involved of up to $65m.

There are fears that a number of the firms could face bankruptcy in relation to the affair.

The diamond exchange in Ramat Gan is one of the world’s largest, with around 1,000 firms now based within its buildings.

Mr Abramovich appeared in court on Wednesday with his arrest being extended by two days. Adi Carmeli, a lawyer for Mr Abramovich said that his clinet denied any connection to criminal activity. He added that Mr Abramovich filed for bankruptcy in late 2015.

Mr Carmeli told Israel’s Channel 2: “My client acted within the framework of regular business practices... A simple investigation will validate this.”

Eli Avidar, the managing director of the IDE said in a statement that the exchange’s board of directors "will show zero tolerance to any who bring harm to other members of the exchange."

“The diamond exchange management will work resolutely to clarify the case including working with the enforcement authorities,” he added. Members of the IDE have also been asked to come forward with any information

Mr Avidar said that Israel’s diamond industry had “been undergoing difficulties in the past several years” and “unfortunately we have seen cases where some… have exploited this situation".