Cartel at Diamond House smashed

What has been described as a cartel, operating at the Diamond House in Accra and believed to be the source of huge losses in earnings to Ghana, has been dismantled.

The cartel was broken last Thursday at a tender by Balaji Diamonds, an Indian company that was caught in a recent controversy between Ghana Consolidated Diamond Company (GCDC) and DWS Diamonds, an Israeli company over the sale of GCDC's diamonds on the open market.

Balaji won the tender which took place on 28 August 2003 when it offered to buy GCDC's rough diamonds at a floor price of $30.24 per carat as against $28.10 offered by DWS Diamonds.

Winning the tender gives Balaji the sole right to purchase GCDC rough diamonds for a period of three months, a privilege DWS had enjoyed for well over a year. Insiders say some of the leading brokers at Diamond House that had formed the cartel had been buying the GCDC's precious stones in turns at a cheaper price than their real market value.

The Chronicle learnt that the cartel's operation has contributed immensely to the cash-strap status of GCDC, which is now facing the threat of divestiture. Working within such a network environment GCDC could hardly raise the funds to sustain its operations.

A source said DWS attempted breaking the cartel when the company won her first tender to purchase GCD's rough stones. Now with the recent tender being won by Balaji Diamonds, GCDC accepts $30.24 per carat as the price for the 'standard parcel' (quality or high grade diamonds).

The float parcel (low grade diamonds) will be delivered together with the standard parcel to Balaji. The price for the float will be negotiated with the buyer on or prior to delivery.

As part of the agreement Balaji Diamonds have made a payment of $500,000 to offset a revolving loan the GCDC took from DWS Ltd, last year. "The offer by the Indian company is the highest ever to have emerged at the GCD tender', insiders told The Chronicle.