The Diamond High Council, Antwerp, Belgium—the promotional group best known by the Flemish initials HRD—is in crisis, forced to undergo a major restructuring after board members split over the group’s policy toward De Beers.

According to informed sources and press accounts, the turmoil began in late January when managing director Peter Meeus resigned after more than six years at the top of the organization. His position is now being filled by a trio of HRD veterans. HRD watchers said he grew frustrated over his inability to get what he wanted done, including opening HRD lab satellite offices in Mumbai, India, and New York.

Meeus’s departure seemed to lay bare open wounds that had been festering for some time. This was demonstrated during the board elections shortly afterward, which dramatically displayed the anti–De Beers feeling among the rank and file of HRD member groups. Chaim Pluczenik of sightholder Pluczenik, who had been board vice chairman, was not re-elected by his member group. Among the new board members is Daniel Horowitz, an ex-sightholder–turned–De Beers critic who filed a formal complaint with the European Commission against Supplier of Choice. Daniel van Dievoet, president of the Belgian Association of Polished Diamond Dealers (BVGD), which in the past has sued HRD (and lost) in an attempt to limit the influence of big companies, was subsequently elected board vice chairman.

The upshot is that a board that used to have quite a few sightholders now has hardly any (although current chairman Jacky Roth is one). Dilip Mehta, of Indian megasightholder Rosy Blue, resigned from the board, complaining that “large players are apparently not welcome anymore.” In addition, four local politicians, including Antwerp’s mayor, reportedly resigned— although some knowledgeable sources suggested that they haven’t formally proffered their resignations.

But the biggest earthquake came when Belgian Prime Minister Guy Verhofstadt met with Roth to warn that the group’s current structure is “not lawful”—since the number of board members currently exceeds the number of organizations, something that is illegal under a law passed last year. The prime minister gave the organization four weeks to make itself legally compliant, effectively voiding the recent board elections and making it impossible to appoint a replacement for Meeus until HRD is legally reorganized.

At press time teams of government and HRD lawyers had worked out a deal for a new structure for HRD: The new board will have 12 members, with slots for all strata of the industry, including companies with over $100 million in turnover, between $30 million and $100 million, and under $30 million. The banks, local bourses, and worker unions will also be represented. Politicians are no longer on the board but will be “observers.”

In addition, HRD’s “commercial” functions—including its lab and diamond office—will be split off into a separate function. This will let management do what it considers to be in their commercial interest—such as opening overseas labs—without board interference.

The proposal still has to be approved by the board and the HRD general assembly. But with politicians threatening to impose their own solution if HRD is not legally compliant, most are betting on approval. “The first objective is to make sure HRD is not paralyzed completely, because at the end of the day, that is bad for everyone, particularly the small companies,” says spokesman Youri Steverlynck.

Big Vs. Small

While some of the current problems, including Meeus’s departure, have been traced to some extent to personality clashes, serious issues underlie the turmoil: namely, the growing gap between small and large companies and whether the Antwerp industry should work with—or confront—De Beers. This is an issue that has also split other diamond groups, including America’s Diamond Manufacturers and Importers Association. A few years back, members clashed with its former sightholder president, whom they felt wasn’t taking a tough enough line toward De Beers.

DTC critics say the company has only itself to blame.

“De Beers’ Supplier of Choice policy pits some diamantaires against others,” complains André Gumuchdjian, former BVGD president. “Now sightholders are fighting for themselves rather than for everyone else.”

The Antwerp industry also has had to contend with a continuing decline in its polishing industry and a threat from Dubai, United Arab Emirates, to its status as the world’s leading trading center (though some think the latter has receded somewhat).

All the turmoil has been quite a spectacle, but it is not without precedent: The last time HRD drew the world’s attention, in the late 1990s, Antwerp dealers and bourse officials had gotten fed up with what was then a far more bureaucratic organization and founded the Antwerp Action Group to make it more responsive. Eventually, one of HRD’s critics made it to the group itself. His name: Peter Meeus.