Private De Beers would still be barred from U.S.

 Executives of diamond giant De Beers will not find it any easier to do business in the United States after the company is taken private next month and further tries to shed its image as a cartel, a senior company official said on Friday, Reuters reported.

De Beers’ board members face arrest if they travel to the United States, the world’s largest market for diamonds, because of a long-standing squabble with U.S. antitrust authorities.

 

The dispute dates back to the mid-1990 when the U.S. Justice Department issued a criminal indictment against General Electric Co and De Beers in a price-fixing case involving industrial diamonds. GE was later acquitted, but the indictment against De Beers is still outstanding.

 

Industry participants have asked whether going private would affect De Beers’ status under U.S. antitrust regulations.

 

A consortium led by Anglo American and the wealthy South African Oppenheimer family plans to take De Beers private on June 1 after shareholders approved an $18.7 billion takeover bid on Friday.

 

The new De Beers will become an associate company of Anglo, with Nicky Oppenheimer remaining as chairman.

 

“We believe that going private will make no difference to our position relevant to the U.S, and no change to operational activities and management,” Rory More O’Ferrall, De Beers’ director of corporate affairs, told Reuters in Toronto after a visit to the company’s Canadian operations.

The U.S. Justice Department refused to comment on De Beers going private or how that might affect the status of the indictment.

 

O’Ferrall said there had been no contact with the U.S Department of Justice nor with the Bush administration on resolving the issue, however he added: “We would be happy to resolve this with the U.S. authorities.”

 

In the past few years De Beers has tried to reduce its role as diamond industry custodian and become more of a retail player.

 

Next year, De Beers diamonds will be branded and sold retail in a joint venture with France’s luxury goods group LVMH , which will have rights to the De Beers name.

 

The company markets two-thirds of the world’s rough diamonds and produces half the total world supply from mines mainly in southern Africa.

 

Its dispute with the justice authorities has not affected De Beers’ diamond sales to U.S.-based diamond dealers and cutters. They travel to De Beers’ Central Selling Organization in London to buy its diamonds, which now come with guarantees that the stones are not from areas of conflict.

Its marketing arm, Diamond Trading Co., maintains a public relations office in New York. De Beers executives use the offices in Canada, where it recently acquired its first major diamond asset outside southern Africa, to meet with U.S bankers and other firms.