For Leviev, All That Glitters Isn’t Gold

Perhaps he should have stayed behind the scenes.

Ever since billionaire diamond and real estate magnate Lev Leviev began to raise his profile and personalize his brand with the opening of deluxe diamond shops in London in 2006 and here in 2007, the 51-year-old Uzbekistan-born tycoon has run into a sustained string of bad news and adverse publicity. Even a hagiographic profile in The New York Times Magazine last September — in which he revealed a secret desire to become prime minister of Israel within 10 years — seems not to have helped.

Among the raspberries aimed Leviev’s way in recent months:

A much-reported snub by President Vladimir Putin of the Leviev-supported Chabadnik chief rabbi of Russia;Unflattering stories in the Israeli media about Leviev’s decision to move his base of operations from Tel Aviv to London;

The unprecedented step taken Monday by the Israel Securities Authority of banning Leviev’s main firm, Africa-Israel Investments Ltd., from offering any securities to the public until April 15. The Authority took the step following comments by Leviev at a diamond convention last week that Africa-Israel “is the best bargain on the market,” which caused the company’s shares on the Tel Aviv Stock Market to soar 10 percent in two days;

And ongoing demonstrations outside his diamond shop here in protest of the building of Jewish settlements in the West Bank by Leviev-owned construction companies.

So far, the adverse news reports have had little impact on the financial bottom line of Leviev’s far-flung financial empire. Leviev’s personal fortune was estimated by Forbes Magazine last March at $4.1 billion, and soared significantly higher later in 2007 after AFI Development, the Russian property unit of Africa-Israel, raised $1.4 billion in the biggest IPO (initial public offering) ever by a European real estate developer.

Nevertheless, the negative press has certainly pricked the aura of globe-straddling invincibility Leviev had carefully built up over the past 20 years. That aura began to be formed with his legendary 1989 meeting with the Lubavitcher rebbe, Menachem Mendel Schneerson, who blessed his decision to do business in Russia, asking only “Don’t forget to help the Jews.”

It continued as the penniless immigrant from Uzbekistan eventually managed to crack the decades-old diamond monopoly by the South Africa-based De Beers Group and, with the addition of diamond mines in the African nation of Angola, become the world’s largest cutter and polisher of diamonds and more recently, a major retailer as well.

The recent Putin snub dealt a blow to Chabad’s dominance in Russia (though the billionaire gives the outreach group some $30 million a year) and could impact Leviev in a country where closeness to power regularly trumps the rule of law. And the Israeli media’s speculation that the billionaire moved to London to avoid paying Israeli income taxes on the $1.4 billion raised on the London stock market in the 2007 IPO deal has certainly tarnished his reputation among many Israelis as a patriotic, devout man. Leviev said the move — from a modest home in B’nei Brak to a $70 million residence in London’s glitzy Hampstead district — was based on wanting to be closer to the center of his worldwide business operations.

But the persistent weekly protests outside his sumptuous Leviev diamond store on Madison Avenue have been the most visible sign of his run of bad luck.

They began last November at the lavish reception marking the store’s opening. “A-list” actresses Susan Sarandon and Isabella Rosellini graced the event, as did heiress Denise Rich. But the opening became something of a PR nightmare when a pro-Palestinian group called Adalah set up pickets outside the store.

The demonstrations have continued regularly, and they have garnered widespread mention not only in the tabloid press but also in diamond industry trade publications. They are focused on the work of two Leviev-owned construction companies in the building of new Jewish settlements of Matityahu East and Zufim on agricultural land that, according to Adalah, belonged for generations to the residents of two Palestinian villages, Bil’in and Jayyous.

Adalah also trumpets charges by the Business and Human Rights Resource Group, an international NGO, that security firms used by Leviev to guard his diamond-mining operations in Angola have committed “systematic violations of human rights … including the use of torture” against Angolan diamond miners; and condemned alleged “abusive real estate development schemes” in New York by Leviev and former partner Shaya Boymelgreen.

Adalah cites complaints from groups like the Laborer’s International Union and ACORN that Leviev and Boymelgreen “employed underpaid non-union workers in hazardous conditions and violated housing codes to construct luxury apartments that displace low-income and moderate-income residents in Brooklyn.”

Leviev has invested $1 billion in real estate in New York City over the last year, including cherished Manhattan landmarks like the old New York Times building.

Leviev, who declined a request for an interview, has limited his response to a brief statement that says the varied charges against him are “politically motivated” and “deliberately neglect” his “extensive humanitarian and philanthropic work.”

Adalah’s New York chapter, which seems to be composed about equally of Arabs and Jews, and which works in tandem with groups like Jews Against the Occupation, has chosen a creative, if often heavy-handed, “guerilla theater” approach to transmitting its anti-Leviev message.

During a recent pre-Valentine’s Day gathering outside Leviev’s Manhattan diamond store, the approximately 40 demonstrators carried placards with slogans like “Have a Heart, Leviev” and “Leviev Breaks Palestinian Hearts.”

Facing the shop’s front window, which was emblazoned with the slogan urging passersby to “Celebrate Love with Leviev,” several of the protestors belted out a mocking version of “Diamonds Are a Girl’s Best Friend,” which included such lyrics as: “Lev grows bold, With billions sold, And Palestine starves while you spend … Lev’s diamonds are a crime’s best friend.”

According to El-Kadi, an IT professional, “We are trying to copy the strategy of the residents of Bil’in who have been holding nonviolent demonstrations for three years protesting the seizure of their land for settlement-building. Leviev is targeting the villagers of Bil’in and Jayyous, and we are committed to targeting him in return.”

Ethan Heitner, a leader of Adalah whose parents are Israelis, said, “We are pleased with the energy of these demonstrations and believe we have found a creative way to deliver our message. We plan to keep these demonstrations going on a regular basis until Leviev stops building settlements and abusing human rights.”

Asked whether the group’s skits do not trade in anti-Semitic imagery, with their focus on greedy diamond merchants and real estate magnates, Heitner replied: “No, we are careful not to do that. Don’t forget that half the people in Adalah are Jewish. Still, when dealing with someone like Leviev, it is difficult not to trigger those concerns, because he is, after all, a diamond merchant.”

Pedestrians passing by the Leviev store seemed split on the demonstration.

David Sonnenberg, an Upper East Side resident whose Israeli wife Shoshanna demonstratively tore up a leaflet as the couple passed by the Leviev store, remarked, “This is outrageous. Hamas tries to destroy Israel and sends missiles crashing into Sderot, but these people only blame Israel. Lev Leviev has done many good things, including helping Jews in Russia.”

Yet Dogan Karandiz, a visiting industrialist from Turkey, remarked, “It is nice to see people protesting in a peaceful manner, which is not always the case in Turkey. We in Turkey have close ties to both Israelis and Palestinians, but I do feel for the Palestinians as underdogs.”

Kristina Newman, a sales associate at Domenico Vacco, a high-end clothing store located alongside the Leviev store, was less charitable to the demonstrators. “I find it incredibly annoying that they keep on holding these protests. They rant on about blood diamonds, but I guess they are just [upset] that they can’t afford a Leviev diamond themselves.”