$140 Million Demand for Lost Diamonds

MANHATTAN (CN) - Companies that trade Angolan rough diamonds say four insurers refuse to pay for $140 million in losses. Pinnacle Ltd. and its subsidiaries Serenity 2 and Lazare Kaplan International sued Swiss Re, Lloyd's of London, the Marine Insurance Co., and GE Specialty Insurance, in Federal Court.

The plaintiffs say they entered into business with Dubai-based Gulfdiam in 2006.

Gulfdiam delivered approximately $60 million worth of diamonds to Gemport, which never paid them for the sale, according to the complaint.

Gulfdiam lost another $34 million in stones to A.D. Middle East FZE and Overseas Hong Kong Ltd., the plaintiffs say.

"Gulfdiam does not have control over the diamonds ... and does not know the current whereabouts of the diamonds despite its extensive efforts to locate them and obtain payment," the complaint states.

Other diamonds allegedly were destroyed or damaged in "the cutting and polishing operations in the Namibia manufacturing facility, Rough Diamond Trading China operations, and the DTC Sight operations," the complaint states.

"The total amount of the physical losses sustained by Plaintiffs is in excess of $140 million."

The diamond merchants say that the insurers refused coverage, despite contracts that cover up to $10 million per loss.

The plaintiffs seek declaratory judgment and money.

They are represented by Elliot M. Kroll with Herrick & Feinstein.

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