Middle East

Israeli diamond dealer arrested amid huge fraud probe

A trader inspects a diamond at the trading floor of Israel"s Diamond Exchange (IDE) in Ramat Gan near Tel Aviv, Israel March 19, 2013. Image copyright Reuters
Image caption A trader inspects a diamond. Israel is home to the world's largest diamond exchange

An Israeli diamond dealer has been arrested on suspicion of embezzlement amid a fraud investigation that could involve $65m (£45m).

Hanan Abramovich is accused of failing to pay for gems taken from 12 leading diamond dealers, Israeli media said.

The arrest of Mr Abramovich by Israeli police followed a complaint by the Israel Diamond Exchange (IDE), the world's largest.

There are fears several diamond firms could face bankruptcy.

Members of the exchange were encouraged to come forward with information.

'Zero tolerance'

Identifying Mr Abramovich, a police spokeswoman said: "The suspect is under arrest and we are currently questioning him on suspicion of embezzlement."

Adi Carmeli, Mr Abramovich's lawyer, confirmed his client had been arrested but denied he was involved in any criminal activity.

IDE managing director Eli Avidar accused Mr Abramovich of stringing along diamond firms to whom he owed millions of dollars.

Mr Avidar said the exchange's board of directors would "show zero-tolerance to anyone who harmed other members of the exchange".

Mr Abramovich appeared in court on Wednesday, where his arrest was reportedly extended for two days.

Israel's diamond industry dates back to the 1930s and now boasts more than 1,000 trading firms based in the city of Ramat Gan.

Diamond deals are traditionally clinched with a handshake, according to the Israel Diamond Institute, and with the two Hebrew words "mazal u'bracha," meaning may the deal be with luck and blessings.

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