FSB says prevented diamond deposit fraud

MOSCOW, June 23 (RIA Novosti) - Russia's Federal Security Service (FSB) said on Monday it had prevented an attempt by an Israeli national to gain control by fraudulent means of a large diamond deposit in the country's northwestern Arkhangelsk Region.

"The threat of the large Russian diamond deposit Verkhotina being withdrawn from Russian jurisdiction has been contained. Criminal charges against an Israeli national who illegally tried to have the license reissued have been brought," the local FSB department said.

No other details were given.

The Israeli Foreign Ministry has not commented on the information.

The Russian oil company LUKoil said in April that it would sell a large stake to diamond multinational De Beers in one of Europe's biggest diamond deposits.

LUKoil and De Beers signed in April in Moscow an agreement on the ownership and development of the Verkhotina diamond project.

Under the agreement, Archangel Diamond Corporation (ADC), a Canadian-based subsidiary of De Beers, will acquire up to 49.99% of shares held by LUKoil in the Arkhangelsk geologic production enterprise (Arkhangelskoye Geologodobychnoye Predpriyatiye, or AGD), a company wholly owned by LUKoil and licensed to develop the Verkhotina field, believed to contain diamonds worth over $5 billion.

LUKoil will retain the remaining controlling stake in the project.

Once the $225 million deal is completed, litigation and arbitration proceedings related to the ownership of the license to develop the Verkhotina diamond field, which was discovered in 1996 by an exploration venture set up by ADC and AGD, will be terminated, LUKoil said in April.

In late May, ADC said the deal completion will be postponed from June 1 to December 31 because the Russian law on restricted foreign investment in strategic branches entered into force on May 7, which means the Russian government has to give its consent for the deal to be completed.

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