by Scott Selby
The diamonds traded here and at the three other members-only bourses in the Diamond District were often sold in packages of hundreds of carats at a time in values that would blow the mind of anyone not accustomed to making transactions involving true wealth.
Diamonds are the most valuable commodities by weight known to man. A pocketful of ten single-carat brilliant-cut diamonds with exceptionally good color, cut, and clarity—altogether weighing only two grams, about the same heft as a pencil—is worth as much as $200,000 at retail. A kilogram of the same type of diamonds, weighing the equivalent of a liter of water and taking up as much space as a jar of peanuts, would retail for $200 million. Because of their small size, their enormous value, and their liquidity, diamonds are among the most coveted forms of wealth in the world.
They may be a girl’s best friend, but because of their return on investment—of time and planning—they’re also a thief’s. Because the diamond merchants in Antwerp were aware that, at any given moment, a plot was in the works to rob someone, there was a cautionary saying all along the diamond pipeline, from mine owners to diamond traders to the mom-and-pop jewelry store: “If they can touch it, they can steal it.”
Considering that, it was remarkable that the men gathered at the tables in the bourse could be so relaxed when dealing them from hand to admiring hand. It was common practice to temporarily part with your goods—whether to have them analyzed for cutting or to entrust them to a broker to sell for a specific price—and, therefore, merchants were often in possession of stones they didn’t own, perhaps from several different sources. These stones could easily be worth hundreds of thousands or even millions of dollars. There weren’t even formal records of who had exactly what in their safe deposit boxes from one day to the next. Of course, this would only happen between people who trusted each other. Trust was the cornerstone of the diamond industry, and it acted as an antitheft device more powerful than the most advanced surveillance system or biometric lock.
This was one of the enduring paradoxes of the industry. Those who worked with diamonds were thoroughly paranoid about theft and yet, in order to do any business, they had to take one another at their word. It was an ancient and powerful tradition in the diamond industry that deals hinged on the weight of one’s reputation. Generally, this practice worked well, in large part because the industry was tightly cloistered. The ownership of many diamond companies spanned generations, and memory in the Diamond District went back just as far. Anyone tempted to run a scam on a fellow diamantaire risked not only his own reputation, but also his extended family’s.
This wasn’t to say that scams didn’t happen. Quite the contrary, they happened regularly enough that Antwerp had a dedicated unit of federal police detectives solely devoted to investigating crimes involving diamonds. They looked into everything from allegations of smuggling and money laundering to bait-and-switch schemes and other rip-offs. By and large, the latter con occurred when diamond merchants weren’t as vigilant as usual about with whom they did business.
Sleight-of-hand cons were common, in which someone examined a stone of a particular size and shape and deftly swapped it with a diamond of lesser value or a cubic zirconia, making off with the original before anyone noticed. In one particularly crafty switch, a man posed as a buyer for several meetings with a merchant selling a small parcel of stones. They came to an agreement on price and, as was typical, the merchant sealed the diamonds in a small envelope, scrawled the buyer’s name and the details of the stones on the outside, and placed it in his safe. When the buyer returned within twenty-four hours with the money, as had been agreed, he asked to take one more look at the goods. He was handed the envelope, but before he opened it, he patted his pockets as if he’d forgotten something. Looking embarrassed and apologetic, he handed the envelope back and said that he’d left his loupe in the car and that he would return momentarily. No one ever saw him or the diamonds again; in the brief moment he’d held the envelope, he’d switched it with one that was identical, except in one respect: it was filled with gravel, while the one he took had the diamonds.
Diamonds purloined like that were traded quickly, often before the end of the day just across the street from where they’d been stolen. By the time a ruse was reported to the police, the likelihood of ever getting them back was between slim and none. The new buyer most likely had no idea the diamonds were stolen from their previous owner; even if he did, it would not necessarily prevent a sale. It just meant an unscrupulous merchant was then in a position to negotiate a handsome discount for not asking too many probing questions. As always, there were people in the diamond business willing to make an easy profit by turning a blind eye.
Because of both tradition and the high volume of quick trades, diamond transactions involved no lawyers and no contracts and almost never any lawsuits if a deal went south. Two men simply agreed on a price for a certain parcel of stones, signed the envelope containing the stones, and shook hands. The Yiddish phrase mazel und broche—luck and blessing—sealed the deal no matter what one’s ethnicity. Even an Indian and a Chinese trader doing a deal in Dubai would use this expression.
After that point, backing out or changing the terms was as good as packing one’s office and getting into the cubic zirconia business, because one’s reputation as a diamond dealer would be sorely blighted. In the event of legitimate disagreements or misunderstandings, the bourse served as arbiter. This system was established by Antwerp’s first bourse, the Diamantclub van Antwerpen, which was founded in 1893, and it worked so well that as few as two disputes in its first thirty years had to be settled in civil court.
As long as you knew the person you were dealing with, there wasn’t much concern about lending someone a parcel with eighty carats of polished diamonds while he looked for a buyer for it. Few legitimate diamond dealers would give in to the temptation to swindle someone out of a mere $300,000 worth of diamonds when there was so much more to be had over the course of a lifetime.
Of course, that wasn’t true with everyone, which was why such robust security measures were deployed throughout the district. Trust would be exponentially harder to extend if it weren’t conducted within a web of security that included electronic surveillance, a platoon of police officers, and a fleet of armored cars.
Before technology allowed such a comforting dome to be placed over the Diamond District, confidence, trust, and a certain degree of courage were all a diamantaire had to rely on, and it resulted in practices that would be seen as ridiculous—even suicidal—today. At the turn of the twentieth century, long before the Diamond District contracted within its current borders, Jewish diamantaires and visiting traders from outside Antwerp simply set up shop at the cafés, diamond clubs, and restaurants on Pelikaanstraat just across from the train station. They would drink tea and wait for customers to arrive from Brussels or Amsterdam. Diamonds were bought and sold across the lunch table without a police officer in sight.
“I remember times when there was absolutely no security,” said Fay Vidal, an employee of IDH Diamonds, which had its offices in the Diamond Center. Vidal’s father and grandfather had also been in the diamond business, dealing stones on Antwerp’s streets long before there were surveillance cameras and specialized police forces. She was respectfully referred to as “Madame Vidal” by anyone who knew her, and she was something of an institution in the Diamond District, an old hand who knew the industry inside and out. She carried herself with an imperial flair and, although proudly Belgian by birth, could be mistaken by her accent and her demeanor for having royal French blood in her veins. “You’d put [the goods] in your drawer, or you had a little safe in the office, but we went on the street with millions of dollars’ worth of diamonds.”
After a sale, customers would jump back on a train with their pockets filled with diamonds, and the diamantaires would bicycle home at the end of the day with their goods in a briefcase jiggling in the front basket. The thought of such an open and trusting system would make today’s th
ieves go cross-eyed at the possibilities. Indeed, the threat of pickpockets, muggers, and scams by unsavory traders eventually imparted some common sense to the trade. The bourses formed in the late 1800s and early 1900s as clubs where diamantaires could wheel and deal with people who had been vetted by a membership committee.
The men in the Beurs voor Diamanthandel—as well as the three other bourses in the district: the Antwerpsche Diamantkring, the Diamantclub van Antwerpen, and the Vrije Diamanthandel—could be as casual as their Pelikaanstraat forebears because membership in the bourse was as reassuring as a Brinks truck. Someone walking in the front doors of any of the bourses would not get through the turnstiles in the lobby unless he was either a member or the guest of a member. Once inside the building, an invited guest could visit a private office but could not enter the trading hall itself unless he was a member of another bourse. The World Federation of Diamond Bourses represented twenty-eight of these members-only establishments worldwide.
Bourse memberships were not granted easily; one couldn’t even apply without two current members willing to vouch for them as sponsors. When a new application was received by a bourse, it was posted along with the applicant’s photograph on a cork bulletin board on the main trading floor of every bourse in the world. The members browsed these boards not out of curiosity but for security. They looked to see if they recognized anyone who might have screwed them in the past. If they did, they detailed their unsavory experience in a memo to the bourse membership committee. The allegation was investigated, and if substantiated, the application was denied. A record of the denial was entered into a database accessible to all bourses, along with the reason.
If an applicant survived two months on the bulletin board without any complaints, he was granted a provisional membership, which was susceptible to revocation. Even after he passed the trial period, he had to continue to operate aboveboard; if he was ever caught so much as failing to pay his taxes he could get kicked out of the bourse. And if a diamantaire was canned at one bourse, he would never get into another. It was a system that encouraged honest dealings; the trust displayed on the trading floors was well earned.
And indeed it must have been, if only for the sheer volume of goods that flowed through its door. It wasn’t only diamonds that were on hand, but also millions of dollars in cash. In keeping with the old traditions, diamonds were paid for with cold hard cash, usually American dollars.
To accommodate this concentrated crush of wealth, the bourses all had underground security vaults with giant safe doors. Like the Diamond Center, the Beurs voor Diamanthandel had a LIPS door, but the other major brands were also represented. The Diamantkring kept its wealth behind a Tann door, while the Diamantclub van Antwerpen and the Vrije Diamanthandel, which were in the same building, entrusted their goods to the security of a Fichet. Considering the number of businesses in the Diamond District, vaults were surprisingly rare. Aside from the bourses and the Diamond Center, at the time that Notarbartolo was operational, the only other building within the secure zone with a vault for its customers was the CBS-Brachfeld Building, which had both a LIPS and a Fichet.
All of the vaults were highly secure, with multiple redundant security measures to prevent theft, but the highlights were the doors themselves. The LIPS door that protected the Diamond Center’s vault, for example, could only be opened with its long key and the four-number code with 100 million possible combinations. No bomb could blow it out of its moorings without bringing the whole building down.
Had he been able to visit a bourse, it would have been obvious to Notarbartolo that the vault door was perhaps the only thing a bourse had in common with the Diamond Center, aside from the wealth that flowed through its doors. Compared to the bourses, the Diamond Center was a virtual sieve, the security of its tenants’ diamonds and cash entrusted wholly—and foolishly—to electronics and heavy slabs of steel.
Notarbartolo didn’t know it, but someone else in the Diamond District had already reached that conclusion, someone who knew more about the various security features of its buildings than anyone else.
Insurance investigator Denice Oliver turned heads on the streets of the Diamond District, but not because of her crisp British accent, long blond hair, or distinct freckled complexion. She was well known because diamond dealers were all too aware that her reports to insurance agencies determined the price they would pay in premiums and how much of their business stock would be covered in the event of a theft. Those coverage amounts had a direct impact on how much business they could do. If they were covered up to $10 million, any amount of diamonds they had on hand above that would be gone with the wind should they be robbed.
The coverage amounts, however, were usually the least complicated aspect of typical insurance policies, which were tailored to individual diamond companies. Oliver’s job was to conduct a thorough review of a company’s security policies in order to analyze the risk. In this regard, her job was not so different from Notarbartolo’s.
The first thing she took into account was where the diamonds were physically located. If the diamond company applying for coverage was located inside the SADA, the likelihood that the underwriters would agree to cover the goods was much higher; if it was outside the SADA, it might have been tougher to get a good policy, or the company might have been required to pay a higher premium. Alternatively, the company could have been required to install its own hard-hitting security in its private offices, which was expensive.
Oliver inspected the building where the diamond company was located, checking to make sure that its security features complied with Belgian laws specific to the diamond industry. For example, laws required motion detectors to be anti-masking, meaning they couldn’t be subverted by being covered with a transparent film or gel. Magnetic alarms had to be polarized. A company’s security team had to be licensed and vetted with background checks.
Oliver examined all the entrances and exits, and noted the times the building opened and closed. She walked all the hallways and counted the video cameras. She interviewed everyone who could unlock the safes, and she quizzed the people with access to diamonds about their daily movements between home and work to assess how susceptible they were to kidnapping. She found out if they drove armored cars or “soft” cars. She visited the vault room and made a detailed list of its protection. She noted the brand of vault door and found out if there were seismic alarms to prevent tunneling from below. She examined the inventory and saw proof of how much business, in both volume and value, a company did each year. She learned every step the diamonds took from the moment they came into a company’s possession to the time they were sold.
Oliver was paid to think like a thief, because in the event of a theft, she was the one who analyzed the claim. Policyholders who were robbed had to prove both to the police and to Oliver that they weren’t complicit in the crime. If they hoped to see an insurance settlement, they also had to show that they had complied with the terms of their policy and that the theft wasn’t due to negligence on their part.
This scrutiny resulted in policies that could be extremely complicated, and no two of them were the same. It wasn’t unusual for insurance companies to decide that there were too many risks to offer coverage. Some business owners could get insurance for just a fraction of what they handled on a regular basis. Still others could get no insurance at all unless they implemented extensive upgrades to their personal security infrastructures.
Those who obtained insurance had a complex set of rules to follow for the insurance to be valid. These rules could range from employing security firms with up-to-date personnel records to upgrading an interoffice CCTV system so that images were digitally stored on a remote computer server rather than on flimsy videotape. Or even replacing a cheaply made safe with something like a Fichet or a LIPS. Policies could also dictate that the diamonds never leave the SADA. The diamantaire who went to lunch on the plaza near the train station forgetting that he had a pocketful of gems was out of luck if he go
t mugged.
An example of a typically complex policy was the one that Oliver negotiated for the Antwerp Diamond Museum, a four-story building a few blocks from the Diamond District housing a permanent exhibition of priceless jewels. The policy was so detailed that it dictated where security guards were required to stand during the day. When a visiting exhibit was stolen in a smash-and-grab in 2003, Oliver denied the museum’s claim because the guards had not been where they were supposed to be. If they had been, she argued, they would have prevented the theft or at least caught the perpetrators before they could run into the streets with a million dollars in stolen jewels.
Oliver had analyzed the security measures of most of the major buildings inside the SADA. She considered only five of them, including all the bourses, to be “acceptable” according to the standards set by the insurance underwriters she represented.
The Diamond Center at 9–11 Schupstraat was not among this group, despite being one of a handful in the Diamond District with a vault. This was primarily because Marcel Grünberger and Julie Boost never allowed Oliver to inspect the vault and analyze its security protocols. Even if they had, it’s not likely the building’s rating would have improved; just the fact that practically anyone could rent an office there and, therefore, have access to the vault, would probably have rendered it as “unacceptable” in Oliver’s book. Unlike at the bourses, no background check was required to do business from the Diamond Center, and no one asked for references. As Notarbartolo discovered, there were no requirements for prospective tenants other than the ability to pay the rent.