The Israeli Diamond Industry is in an uproar over a $50 million fraud that occurred in the offices of an Israeli diamantaire in Hong Kong.

"They did a real sting operation on me in Hong Kong, the whole office was involved," Shlomo Fastag, a diamantaire who a week ago reported to the Diamond Exchange that he had amassed debt because of a sting operation, told The Marker.

Speaking for the first time about the Hong Kong scandal, Fastag said that five office workers had been involved in the heist. "The police are investigating and said that they have recordings. They sold the diamonds to stores cheaply and apparently got something 'under the table.' I don't know what the total value was, that's still being checked. I'm still in the dark. We don't know what did and didn't happen. My partner there and his partner are checking store inventories. It's a long process," Fastag added.

Industry officials added that heists in the offices of Israeli diamantaires are relatively rare, in a business based on trust between owners and their employees. For that reason, diamond dealers generally prefer to employ family members and even send them abroad to live and handle the local business. "Trust is very important and fundamental in diamond dealers' offices," the officials said.

"Diamantaires are typically very suspicious of their employees and check what they're doing carefully – including with whom they talk on the phone, where they go, whom they meet with and so on. An employee of a member of the Israeli Diamond Exchange undergoes an in-depth background check before he receives an ID tag. That's why this fraud seems a little strange to Israeli diamantaires – maybe for a good reason," the sources continued.

As soon as Fastag contacted the Diamond Exchange, President Avi Paz launched the appropriate protocol: Fastag's name and picture were posted on the bulletin board and the Bourse called in all Fastag's creditors for a meeting.

The talks revealed that although Fastag had reported debts to diamond dealers in Israel totaling $7 million, the creditors had arrived at a total debt of NIS 6 million (approx. $1.56 million). The debt-paying process is progressing according to standard procedures. 

According to Diamond Exchange assessments, Fastag's debts in Israel and abroad range $25-$50 million. However, diamond dealers are saying that everything is based on rumors, rather than on information from official sources. Some have expressed doubt that there was any sting operation in Hong Kong at all, and wonder whether Fastag's report might not be an attempt meant to avoid paying his debts.

Fastag said in response: "Why are they saying I owe 50 (million dollars)? That's nonsense. Why don't they say I owe $200 million? It's just people slinging mud. Ninety five percent of the public is behind me. There are always 3-4% who like to sling mud. Senseless hatred, that's why the Temple was destroyed. There's a committee investigating it in Hong Kong. It's not by chance that most of the public is behind me. I've been here for 30 years, I've helped a lot of people, and now there are good people who want to help me."

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