Difficulties of the Diamond King

Will the owner of Africa Israel Investments Lev Leviev save his business?
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The troubles of the co-owner of Africa Israel Investments Lev Leviev are becoming more and more numerous. Net loss of its development company AFI Developmen grew more than 2.5 times: from $20.7 million in 2015 to 55.7 million in 2016. Even the shopping mall Afimol City, which is considered the flagship project, provided $48.2 of revenue for the nine months, reducing the figure by 12% compared to the previous year. Lev Leviev tries as he can to save the business. But there is no certainty that he will manage to do it.

On the verge of bankruptcy

In March last year, VTB was going to demand from AFI Developmen to repay loans for a total of more than $608 million ahead of schedule. As a result, the parties nevertheless managed to agree on debt restructuring. And VTB did not take away from Lev Leviev his "Afimol City" and "Aquamarine-3." The media drew attention to the fact that the head company of Africa Israel Investments is also far from being in a good position. As of March 31, 2016, the total debt of the company for three bonded loans with repayment in 2023-2025 was about $750 million. There are big doubts that Leviev's business can cope with such debts. There is a high probability that Africa Israel Investments can simply go bankrupt.

To be chosen

Everything began life-affirming. Lev Leviev was born in Tashkent. Later, the family emigrated to Israel, and came there not with empty hands: Lev's father Avner smuggled diamonds worth $1 million. Probably, the buyers of diamonds, taking into account the desperate position of the Levievs, decided to bring down the price of the jewels. As a result, $200,000 was offered for diamonds. Fifteen-year-old Lev Leviev vowed then to take revenge on diamond merchants.

We can say that he fulfilled his oath. Leviev began to facet the diamonds. In the late 1970s he opened a faceting plant in Israel. Prices for diamonds grew, and cutters began to invest in jewels. But soon the market collapsed, the banks refused to lend to cutters and many of them went bankrupt. And Lev Leviev showed wisdom: he did not yield to general optimism. He did not take loans on bail, and at the time of panic in the ranks of diamond producers, he managed to expand his production. Lev Leviev began to use new types of processing, including laser technologies. And then success came, Leviev became one of the largest diamond producers. De Beers invited him to become the chosen buyer of the company's diamonds. And in the late 1980s, the Soviet government, seeking to modernize the faceting industry, turned to Lev Leviev. So in 1990 in Moscow, a joint venture "Ruiz Diamonds" was established.

In the late 1990s, the holding company Africa Israel Investments, owned by Lev Leviev, acquired the shares of the Russian investment group CentreInvest. In 1997, Leviev International Diamonds (LID) became one of the founders of the Permian Russian-Israeli faceting plant Kama-Kristall. The company had bonuses: for three years the right to buy 20% of Perm jewels from Gokhran was retained. The media also reported on Lev Leviev's connection with the diamond business in Yakutia. It is known that his company Ruiz Diamonds became the largest and almost exclusive buyer of ALROSA. Lev Leviev was reproached for allegedly contributing to the ruin of Russian faceting plants. This, in all likelihood, was done to sell the raw materials created by Levievv himself instead of them, and since most of them were Russian-Israeli ones, they bought diamonds with a 15 percent discount. There is a suggestion that this allowed Leviev to legalize smuggling of diamonds to Israel.

Experts pay tribute to Lev Leviev's enterprise, but believe that the basis of his business was still ties in Roskomdagmet, Gokhran and other state structures. In particular, it is rumored that Leviev may owe much to the plenipotentiary representative in the Far Eastern Federal District, Yuri Trutnev. After all, when Yuri Trutnev was in charge of the Perm region, Leviev managed to privatize the Perm diamond-mining company and exported Ural diamonds abroad.

Just business 

However, the interests of Lev Leviev were present not only in Russia. He did not disdain to deal with people who, as they say, are "elbow-deep in the mud." For example, in 1996, the UN imposed sanctions on the purchase of diamonds from the Angolan rebels. And Lev Leviev, having used the civil war in Angola for his own benefit, bought 16 percent of one of the country's largest diamond mines. Then the company of Lev Leviev received from the Angolan authorities the exclusive right fpr the mined diamonds. And then Leviev decided to start a business in Namibia. He acquired a 37% stake in Namibian Minerals Corp. (Namco).

There were no negative consequences for Leviev in these transactions in Africa. The scandal happened later, in 2006. And he was involved in the smuggling of diamonds. Lev Leviev was suspected of exceeding the quota with the help of frontmen. However, all ended wll for the diamond king. The media suspect that high-ranked officials contributed to this. Interesting, the Lev Leviev's problems started in Israel. It looks like in 2008 he could be connected to such infamous persons as the busenessmen Arkady Gaidamak, Zeeva Rosenstein and Mikhail Cherny. There were suspiciouns, that Gaidamak, Cherny and Rosenstein might have purchases and sold the real estate on favorable conditions and get tax exemptions. But there were no consequences that time, either. 

Some experts believe that the power structures of Israel and Russia might manifest their interest if Afrika Israel Investments collapses. However, there are chances that Lev Leviev will again escape from a difficult situation. The diamond king still has many persons to support him in times of need.