One year on, diamond deal still not done

On EDGE: Opinion

Jack Danylchuk

Summer passes swiftly: wild roses have bloomed and faded; Tree Swallows, welcome harbingers of spring, have taken wing, and headed southward. But as the second anniversary of the government’s original request for a proposal on two former diamond factories approaches, there is still no sign of Deepak Kumar’s Ducks.

Those are the ducks the somewhat mysterious diamond dealer said he lined up before he offered to buy the two empty buildings on Archibald Street just past the Yellowknife Airport. Tied to the RFP that closed October 7, 2011 was a commitment to return the former factories to their intended purpose.

It’s not clear when Kumar made his bid. But the deal was still not done last January when Dave Ramsay, Minister of Industry, Tourism and Investment, revealed that Deepak International Ltd. (DIL) would pay the full asking price of $1.9 million for the buildings, just before the minister left on a diamond junket that took him to London, Antwerp, and Botswana.

When I first enquired about the sale of the diamond properties, the RFP closing date had moved to September 30, 2012. That was extended another two months, and then in January, Ramsay revealed the mystery buyer. The sale was then described as pending, which allowed DIL access to the site before any money changed hands.

Although Ramsay didn’t say so at the time, DIL was the only company to respond to the RFP, which is why the government continues to wait – long after several closing dates for consummation of the deal have come and gone, and Kumar has yet to produce any evidence that he has ever run a diamond factory, anywhere.

Questioned about the seemingly endless delay and the government’s limitless patience with DIL, Ramsay said “it’s a big deal, from the proponent’s perspective – $40 or $50 million; the equipment alone is probably $18 to $20 million. It’s not a small undertaking.

“There’s been a number of other factories there that for a number of reasons couldn’t make a go of it. My belief is that he wants to make sure he gets it right. It’s his money, so you want to be sure you’re covering all your bases. And you’re going to give yourself the best chance of success. I think that’s where this at, now. Our hope is that we’ll have the factories up and running soon.

Did Kumar have the financing in place before he came to the government?

“As minister I wouldn’t be privy to business plans. Financials and the like that are vetted through the department – the people he’ll be doing business with; he’ll have to purchase diamonds from them. They would be well aware of his financial standing. I wouldn’t be aware of that.

“We had assurances from the department; he would have had to go through due diligence to become an approved manufacturer. We’re not going to hand that out to just anybody. We still don’t have people banging our door in to be approved manufacturers. We had no one willing to purchase the building. So if we could recoup our costs on the buildings and get some factories open, and 30 to 50 people employed in those factories, that’s a good thing for the government to be doing.

“Why wouldn’t we approve somebody like that? We need to take some chances, and our belief is he will get those factories open. Very soon.

“At the end of the day, it’s going to be on Deepak International and their ability to make this work. My belief is that it’s going to happen. I wish him every success. We’re getting very close to seeing that happen. The proof will be in his ability to deliver.”

There has been another subtle change in the language around the pending sale, which is still listed on the Coldwell Banker website. The formal offer Kumar made is considered to be in good standing and will remain so until it is withdrawn, or the government reconsiders. Since no other buyer has expressed interest, the situation will continue, presumably until Kumar’s ducks are in proper alignment.

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