HRD crisis shows Antwerp split over De Beers

Antwerp’s Diamond High Council—the city’s promotional group best known by the Flemish initials HRD—is in a crisis, forced to undergo a major restructuring after board members split over the group’s policy towards De Beers.

According to informed sources (almost all of whom didn’t want to be quoted on the record) and press accounts, the group’s current turmoil began in late January, when managing director Peter Meeus resigned after more than six years at the top of the organization. His position is currently being filled by a trio of HRD veterans. HRD watchers said he grew frustrated over his inability to get what he wanted done, and some said his departure laid bare some open wounds that have been festering for some time.

This was shown during the board elections shortly afterwards, which dramatically displayed the anti-De Beers feeling among the rank and file of HRD member groups. Chaim Pluczenik of sightholder Pluczenik was voted off the board. One of his replacements is Daniel Horowitz, an ex-sightholder turned De Beers critic who filed a formal complaint with the European Commission against Supplier of Choice. Daniel van Dievoet, president of the Belgian Association of Polished Diamond Dealers (BVGD), which in the past has sued HRD (and lost) in an attempt to limit the influence of big companies, was subsequently elected board vice chairman.

The upshot is that a board that used to have quite a few sightholders now hardly has any (although current chairman Jacky Roth is one). Soon, Dilip Mehta, of Indian mega-sightholder Rosy Blue, resigned from the board, complaining “large players are apparently not welcome anymore” in the group. In addition, four local politicians, including Antwerp’s mayor, reportedly resigned—although some knowledgeable sources suggested that they haven’t formally proffered their resignations.

But the biggest earthquake came when Belgian prime minister Guy Verhofstadt held a meeting with Roth, to warn that the group’s current structure is “not lawful”—since the number of board members currently exceeds the number of organizations. According to the Belgian financial newspaper Tijd, Verhofstadt complained the current board was “not representative” of the industry and needed more “balance.” The prime minister—who, the dissidents grumble, had been influenced by sightholders—gave the organization four weeks to make itself legally compliant.

All this means that the recent Board elections are effectively null and void, as the HRD must be legally restructured, with teams of government and HRD lawyers hammering out a new structure. As a result, current board members are in a state of limbo, and unable to appoint a replacement for Meeus.

Big Vs. Small. While some of the current problems—including Meeus’ departure—have been traced to some extent to personality clashes, beneath it all there are serious issues: namely, the growing gap between small and large companies, and whether the Antwerp industry should work with—or confront—De Beers. This is an issue which has also split other diamond groups, including America’s Diamond Manufacturers and Importers Association. A few years back, members clashed with its former sightholder president, who they felt wasn’t taking a tough enough line towards De Beers.

DTC critics say the company has only itself to blame.

“De Beers’ Supplier of Choice policy pits some diamantaires against others,” complains André Gumuchdjian, former president of the BVGB. “Now sightholders are fighting for themselves rather than for everyone else.” 

The Antwerp industry has also had to contend with continued decline in its polishing industry, and the threat from Dubai to its status of the world’s leading trading center (though some think this has receded somewhat.)

Many sources tried to look on the bright side, saying all the turmoil had gotten the organization—and the Antwerp industry — to focus on issues that have festering.  Most expect big changes to the HRD. Mehta has even  mused about a parallel organization, which would conceivably be more open to bigger players.

Most observers don’t take this option seriously, but it is not without precedent: The last time HRD drew the world’s attention, in the late 1990s, Antwerp dealers and bourse officials got fed up with the then-far more bureaucratic organization, and founded an “Antwerp Action Group” to make it more responsive. Eventually, one of the HRD’s critics made it to the group itself. His name: Peter Meeus.