Only “an extremely small fraction of the diamonds graded by GIA over the ten-year period covered by the investigation could have been affected,” says GIA Laboratory and Research Senior Vice President Tom Moses, referring to recent events at the GIA during a recent speech.

 

In the closing comments of his address to the joint WFDB-IDMA session in Mumbai on Monday, Moses spoke about the lawsuit filed against GIA:

 

“Before I close, I would like to raise an issue that I suspect is on your minds.

 

I both realize and can fully appreciate that there have been rampant rumors and speculation swirling in the industry around GIA.  I want to briefly address this issue.  As I do, please understand, that I am constrained in what I can tell you, and importantly, you should not read anything into this restriction.

 

First – and appropriately so – neither I nor any of GIA’s senior leadership were involved in the investigation that was led by outside counsel, and I am not and was not privy to the discussions between the investigators and our Board of Governors.

 

Secondly, since we are in the midst of litigation, our lawyers have instructed me not to discuss any specifics of the litigation or related issues.  I know that most of you have some familiarity with the way the American legal system works, and can appreciate this.

 

We realize, of course, that our inability to speak more openly on the topic does not allow us to put our best foot as far forward as we would want.  But the situations is what it is, so let me tell you what I can about what the investigation found, and most importantly, what GIA is now doing to move forward.

 

As many of you know, a lawsuit was filed against GIA and three other defendants last May which allege, among a number of things, that certain members of the GIA grading staff accepted bribes to upgrade two diamonds in 2001.  As to this issue, we have told you that we intend to vigorously defend ourselves in this lawsuit and feel confident in our position.

 

Following completion of the investigation, we issued a press release on October 18th announcing:

• The Board engaged outside counsel to undertake a comprehensive four month review of GIA policies and practices.
• Based on the findings, we terminated four employees for violations in varying degrees of our Ethics Policy.
• Additionally, we announced that those few dealers who may have violated our code of ethics would be dealt with swiftly and decisively.

 

We can appreciate that many in our industry want to know if the violations of our code of ethics by former employees or dealers is systemic.  Fortunately, the answer is no. I have been at GIA for over 20 years, and I have worked closely with the graders and other staff members.  The graders at GIA today in opinion are diligent, honest, and talented people deeply committed to the mission of the institute.

 

Many in our industry are also speculating that the there are thousands of stones with grades that are suspect.  The credible evidence presented by the independent investigative team indicates that an extremely small fraction of the diamonds graded by GIA over the ten-year period covered by the investigation could have been affected.  As you all know, the grading of diamonds is not and never has been as exact science.  Although I am proud to say that GIA has over the years developed grading standards that factor in human tolerances to establish consistency in the process, at the end of the day, it is part science, part art, with the acumen, expertise and perspective of the grader all playing a vital role.

 

Most importantly, I want you know that we stand by our reports.  If you feel that any diamond graded by GIA for any reason requires a second exam, we will do so free of charge for the next six months.  You can find out more details about this on our website.

 

The third point I want to make is that the few dealers we believe violated our code of ethics have been notified and told that we will not do business with them going forward.

 

That said, I want you to know that we are working actively to instill a strong culture at GIA which encompasses the highest standards of ethics and integrity.

 

The initial steps we are taking include:

• The appointment of a Chief Compliance Officer who will report to GIA’s general counsel;
• Annual mandatory ethics and professional conduct training for all employees; and
• The retention of an outside, independent company to provide services, a hotline essentially, that will allow confidential communications between clients and employees with GIA’s board and senior management.

 

And, I will be stressing in my first end of year letter to all clients that we will not tolerate any dealer attempting to give money or favors to any grader for any reason or other wise seek to influence the grading process.  Period.

 

I know that after an issue like this is brought to light, the only real remedy is in the actions we take and in the reputation we earn going forward.  And that is how I ask you to judge us.

 

I also want to take this time to say that we are thankful for the many expressions of support we are receiving from around the world.  Many clients have contacted us to express their appreciation for what we are doing, and to reiterate their long-held belief in the standards and ethics of the Gemological Institute of America.

 

Next year we will celebrate 75 years of excellence in education, research and laboratory services.  We built our reputation on integrity, and it is my intention to adhere to, and to propagate, the very highest ethical standards and practices as head of our laboratory.

 

At this time, and as I am sure you understand, there is very little more I can say while the litigation is ongoing.  Therefore, I am going to close, and I will be unable to take questions on this matter at this time.

 

Thank you very much for your time, your attention, your understanding and your support of GIA.”