De Beers Sued by Former Sightholder for $100 Million

New York based diamond company W. B. David & Co., Inc. yesterday filed suit in federal court in Manhattan against the De Beers group of Companies, Company Directors, DTC Sightholders, U.S advertising agency J. Walter Thompson, and others for some $100 million, injunctive relief and attachment of De Beers’ U.S. assets.  

The 140 page complaint contains more than thirty counts - including claims under the U.S. and New York antitrust laws, racketeering under the U.S. RICO statute, fraud, aiding and abetting fraud, misappropriation of trade secrets, unfair competition, aiding and abetting unfair competition, accounting, breach of contract, tortuous interference with business relationships, unjust enrichment, defamation, and breach of fiduciary duty.

According to the filed complaint, the company alleges that "De Beers' entire Supplier of Choice program is anticompetitive and illegal under U.S., New York State and probably European antitrust and unfair competition laws." They claim that rather than increasing competition for diamonds, it has decreased competition and effectively precluded former Sightholders, including W.B. David, from obtaining sufficient numbers of rough diamonds to remain competitive.

The complaint also claims that De Beers launders money to U.S. jewelers through its U. S. Sightholders. It states that "De Beers has gone so far as to use its market power and domination to launder money through Sightholders from De Beers to U.S. jewelers, so that De Beers' principals could avoid entering the U.S."

"To further cover-up De Beers' U.S. money laundering," the complaint continues, "the retail diamond jewelers who received marketing related financial support from De Beers invoiced the Sightholders, and not De Beers, for the monies the jewelers were promised by De Beers."

The complaint also describes J. Walter Thompson’s role as De Beers’ "U.S. agent and alter ego through which De Beers illegally conducts business in the U.S."

"The De Beers cartel and its confederates and co-conspirators have inflicted serious injury on us. We are prepared to pursue this matter vigorously to a successful conclusion," noted W.B. David in a statement on Thursday.

W.B. David was a De Beers Sightholder for over 30 years, from 1969 until 2003 when the Supplier of Choice program was officially initiated.