The Antwerp prosecutor has started an investigation into the mysterious bankruptcy of the company that formerly stood in first place among the city’s diamond dealers.
Eurostar Diamond Traders, owned by the family of 71-year-old Kaushik Mehta, was at one point the diamond city’s major trader in both rough and cut diamonds. Then suddenly in 2019 the business was declared bankrupt, despite having posted recent results of €1.6 and €2.5 billion.
It turned out the company had a mountain of debt in the hundreds of millions, in particular to the banks ABN AMRO and Standard Chartered. The only assets left were some rough and cut diamonds, and the company’s prestigious headquarters in the heart of the Antwerp diamond district.
Those assets will be sold off by the administrators, who hope to get just over €1.5 million for the corporate HQ.
In the meantime an investigation has been started into possible mismanagement surrounding the bankruptcy, in particular the role of ABN AMRO.
In a development which may or may not be of interest to investigators, the bank this week agreed to pay a settlement of €480 million for malpractice in the fight against money-laundering.
In 2008, ABN AMRO set up a post-box construction for Eurostar Diamond Traders in Jersey. The company, United Vision Limited, had a starting capital of £2, and shared its address with thousands of other phantom companies.
Then, according to the lawyer for the Mehta family, ABN AMRO in 2012 decided to pull out of diamond financing, leaving Eurostar with a debt of about half a billion euros. In order to build down that debt, the bank installed a CEO of its own, with the result that the debt had come down by some €350 million by 2018.
That alone is in question, since such a rapid paying off of debt should have led the bank to doubt the stability of the company. Investigators will also look into possible infractions on the laws on banks taking part in inventory financing of diamonds, as well as trading in diamonds, which requires a licence from the economy ministry.