Tel Aviv: Israeli police said on Wednesday they had arrested a diamond dealer on suspicion of embezzlement after a complaint was filed by members of the Israel Diamond Exchange (IDE).
A police spokeswoman identified the suspect as Hanan Abramovici, head of Hanan Abramovici Diamonds Ltd., saying: "The suspect is under arrest and we are currently questioning him on suspicion of embezzlement." She gave no further details.
The IDE said several of its members alleged the Abramovici firm owed them "tens of millions of dollars" for gems that it purchased but never paid for.
Adi Carmeli, a lawyer for Abramovici, confirmed his client was under arrest and said he denied any connection to criminal activity. He added that Abramovici filed for bankruptcy in late 2015.
The exchange's board of directors "will show zero tolerance to any who bring harm to other bourse members," IDE managing director Eli Avidar said in a statement.
Israel is a world centre for diamond cutting and polishing. Its diamond industry has traditionally been secretive but Avidar said a new board at the exchange has adopted a policy of full disclosure and transparency.
"The Israeli diamond industry has been undergoing difficulties in the past several years and unfortunately we have seen cases where some factors have exploited this situation," he said.
Israel's net polished diamond exports fell 20 per cent in 2015 to $5 billion due to weaker demand in Europe, Hong Kong and the United States and as prices for rough diamonds rose while polished diamond prices dropped.
Manufacturers who cut and polish diamonds have found themselves caught between giant mining companies charging high prices for rough stones, and big retail chains that demand gems at low margins to keep sales moving.