The turmoil in the diamond industry caused by collapsing demand and prices has left the future of one of DTC Sightholders DDA of Botswana, hanging in the balance.

DDA of Botswana is at the centre of a brewing storm with Standard Chartered Bank of Botswana for failure to service debt, forcing the bank to seek redress from the courts.

Reports coming through are that the bank, through the Deputy Sheriff's office armed with a High Court order, pounced on the DDA's offices last Monday and attached DDA property including diamonds stocks, which are failing to attract buyers or good market prices.

Virgil Vergeer of Collins Newman attorney confirmed having represented Standard Chartered bank in Court and acquired an interim order to attach assets belonging to DDA of Botswana in connection with the outstanding debt, although he declined to reveal the amount involved, only saying the bank was owed a substantial amount.

Market sources however told Business Week that the figure involved amounts to US$9 million (P72m).

The company that usually found itself in the news pages for its charity work and creating employment for people with hearing impairment, has succumbed to a heavy debt and has reportedly retrenched its staff.

But managing director Kim Lanny refused to shed light on the issue saying: " I am not in a position to provide any further comment as we are in negotiations with various parties and I am bound by confidentiality."

He, however, availed to Business Week a statement prepared by DDA's parent company in Antwerp, Belgium, acknowledging the debt and the confiscation of the diamonds .

"DDA of Botswana (Pty) Limited announces that it is currently in talks with Standard Chartered Bank in Botswana regarding a proposal for repayment of outstanding debt."Pending the outcome of these negotiations, Standard Chartered has obtained an interim court order from the Botswana High Court in Lobatse, authorising a valuation of inventory of diamonds belonging to DDA of Botswana.

"DDA of Botswana is fully cooperating with the valuation process and hopes to achieve a positive outcome in the negotiations with Standard Chartered as soon as possible," reads the statement.

The diamond industry has been choked by the financial crisis, which has seen demand and prices falling over the edge, with producers, dealers and polishers all feeling the heat. Locally, Diamonex is under Judiciary Management while Debswana has already stopped production at Damtshaa and Orapa No 2 Plant.

Diamond Trading Company Botswana (DTCB), which is the valuing, selling and marketing arm of De Beers, is currently in negotiations with management and unions to try to find a strategy for cutting costs and saving jobs.Although there has been no figures availed, senior management sources at DTC Botswana say the first sight of the year, which was held in January was almost a flop.

It is reported some of the sightholders did not even show up and the company is now in consultation with management and the union. "We have two options available: either we cut working hours, or we cut part of workers' bonuses," a source said. "But as things stand, we are going to have to take a few weeks' break in March because the mines are closed right now."

As reports of DTC Sightholders struggling to make ends meet begin to surface, industry specialised Antwerp Facets News Service (AFNS) last week reported that, at its January 2009 sight, the DTC offered only about one-sixth (valued at $80 million to $100 million) of the volume of rough diamonds at its January 2008 sight.

"Despite the major cut, sightholders complained they were being forced to accept rough diamonds they didn't want, the AFNS said in a report.

"Sightholders pointed out that the DTC's rough diamond prices were between 10 percent to 30 percent above prices charged by rough diamond producers Alrosa, BHP Billiton, Rio Tinto and Harry Winston."

Sightholders, on the other hand, said that the new method caused confusion regarding rough diamond prices and may have kept them artificially high.