June 16, 2012 / 8:39 AM / 7 years ago

Angola diamond battle gets London court airing

LONDON (Reuters) - A London court has been given a glimpse into the opaque world of Angolan diamonds, in a battle between a Russian-Israeli tycoon and his one-time partner that has also thrown up how modern-day buccaneers are building fortunes from Africa’s resources.

Businessman Arkady Gaydamak is seeking hundreds of millions of dollars in unpaid commissions and dividends from former partner Lev Leviev. Gaydamak says he had an agreement that entitled him to profits from trading and mining in Angola, where for years Leviev’s assets included a stake in the Catoca diamond mine, one of the world’s largest.

Leviev - a trader and luxury jeweller who made his name and fortune challenging diamond giant De Beers’ monopoly in the sale of rough diamonds - disputes the agreement and says no deal was made. He is an Uzbekistan-born Israeli with a home in London.

Both Leviev and Gaydamak are among a handful of foreign players that have made fortunes across countries like Angola, Congo and Guinea, securing positions of influence that have put their private companies or organisations in the forefront of the race for the continent’s riches, from copper to diamonds.

The case, due to close on Monday with a verdict to follow, is also the latest in a spate of high-profile disputes brought to London by billionaires from Russia and the former Soviet republics, and has illustrated the complexity facing London judges more used to traditional disputes.

“You are seeking to test this on traditional London (terms),” High Court Judge Geoffrey Vos told the defendant’s side on Friday. “The reality seems so far removed ... from what we are used to that applying the same tests is unrealistic.”

The court battle - which both sides suggest Angolan officials had sought to stop in order to avoid embarrassment in an Angolan election year - has seen Gaydamak detail his arrival in Angola at the height of the civil war in 1993, building relations through the sale of helicopters and other military equipment to the MPLA government.

He later became, by his account, instrumental in setting up the Angolan Diamond Selling Corporation (Ascorp), a company with exclusive rights to market Angolan diamonds, aimed at stemming the flow of gems to the rival faction UNITA. UNITA was eventually defeated by President Jose Eduardo dos Santos’s MPLA.

Leviev disputes Gaydamak’s role, saying it was merely to provide security in the early stages.

The case has laid bare the opacity of the flow of profits made by Ascorp - a monopoly that ended in 2003 - raising questions over whether the bulk flowed out of Angola and over what role was played by Isabel dos Santos, the highly influential daughter of the president.

DEAL OR NO DEAL

At the heart of the case is what Gaydamak says is a written and signed agreement from December 2001, under which he says Leviev agreed to hold in trust their mutual assets, in particular their share in Ascorp, and any income from those assets.

Gaydamak says he sought to make Leviev his “front man” to keep himself out of the public eye as he and erstwhile partner Pierre Falcone had become embroiled in “Angolagate”, a French inquiry into illegal arms supplies. He was later acquitted.

Leviev denies there was an agreement.

The case has also involved millions of dollars in payments, which Gaydamak says are proof of an agreement. Leviev says they were made after Gaydamak intimated that he could use his influence in Angola to make Leviev’s life difficult.

“I can never determine the veracity of invoices ... who paid them, who directed them to be paid ... The question is ‘Why were these payments made?’,” the judge said.

“Is Mr Leviev telling truth in saying (Gaydamak) could make trouble for (him) or is Mr Gaydamak telling the truth (and there was a business relationship)?”

Angola is one of the world’s most significant diamond producers and has long been attractive for traders and buyers. Its gems fetch a premium on world markets as they are mostly alluvial, meaning they are found on riverbeds or on the shoreline, and are, to a degree, polished and sorted naturally.

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