GIA’s Indian Papers
February 25, 10The rumor mill about the quality of GIA India certificates started almost from the very moment that the diamond-grading lab in Mumbai opened. Needless to say, in every organization’s infancy, there are childhood challenges that need to be met. When reports first reached me about so-called “upgrades,” I quietly learned that, in fact, a considerable part of the GIA’s actual certification wasn’t done in Mumbai at all, but rather in
With the controls in place, it was highly unlikely that influence peddlers or bribery could impact grading. The consistency of diamond grading is strictly a commercial issue of little concern to this writer. Only when bribes and fraud come into play, it becomes an issue to be pursued relentlessly. I have no direct evidence that the latter is or was the case in Mumbai. Others, apparently, think differently.
In the business class section on a recent flight from Tel Aviv to Brussels, filled by diamond merchants, word went around that all GIA Mumbai staff had been “on the take” and that, consistently, every certificate had, at least, one extra color and clarity grade added to it. One diamantaire claimed that Israeli and Belgian dealers specifically sent goods to Mumbai for certification because the grades are invariably better there. “They do it quickly before the party is over.”
Apparently, the World Federation of Diamond Bourses (WFDB) had become so alarmed by these stories that the heads of bourses in
The not-officially-announced meeting contributed to added market speculation. Thus, more than two weeks later, the WFDB issued a press release, merely mentioning that it met to discuss “quality assurance standards, global grading standards and compliance issues.” It is a pity that no Indian WFDB executive member had been invited to that
Word on the plane also had it that, “everyone at the Mumbai lab had been fired a few weeks earlier, and that the GIA Mumbai’s managing director, Nirupa Bhatt, had been called to New York.” A few days later, I flew to
Problem More Imaginary than Real
The only concrete incident that we have been to able to discover involves an Indian diamantaire who claims “he had evidence of misgraded colors with stones submitted to the
Moses, in response to our questions, clarifies that these “stones were under a carat and for the most part lower colors. Of the 49, there were four that the
But the most telling subsequent discovery was that of the few that would have been graded lower — each and every one was originally graded in the
Looking at the Figures
When people have already made up their minds, they often don’t let the actual facts bother them too much. GIA’s top management in the
· Stones submitted to the
· Of the remaining stones submitted to the
· In 2008, 95% of the colors of such stones were finalized by
· In 2009, the figure was 70% and in 2010 the number is about the same as the 2009 figure.
· In 2008, in regard to the overall grading (this would include the other grading attributes), 86% of the stones submitted to
· In 2009 that figure was 59%. In the last few weeks, the figure is greater than the 2009 percentage.
Moses told me that he continues “to be impressed with the quality of work being done by the Indian local staff. They are a hard working group with a focus on learning and improving their performance.” He voiced bitter words, however, about the repeated “attempts by unscrupulous dealers which, for many years, are using various ploys” to misrepresent grading results. “We have seen an increase of this in the last year or so,” he complained. More about this later.
Clients Defrauding Customers
In comparison to the certificates of other gemological laboratories, GIA paper is still most akin to Federal Reserve Treasury Notes or “pure money.” The GIA name adds tangible value to the stone. We would never hold the U.S. Bureau of Engraving and Printing or the U.S. Federal Reserve responsible for any counterfeit money in the market. The GIA is increasingly facing tricks to abuse the system but is basically in a similar situation as the Federal Reserve where falsifications are involved.
It is my opinion now, as in the past, and hopefully shared by all, that we should rid our industry of those who intentionally and knowingly defraud innocent consumers through the use of all kinds of manipulations with stones and certificates. One diamantaire recently warned some of his colleagues of a scheme in which the GIA is very much aware. Let me now reprint the email exactly as I received it:
Subject: How to turn an E IF into D IF, and make about 5K profit
1. Find a stone with a GIA cert size 110 to 1.50 D, VS1 or VS2 on which the inclusion of the stone says “FEATHER.” This means if you remove the feather from the side, and you downsize the stone to 1 to 1.10, the stone will be D IF.
2. Send the stone for 30 times to GIA for grading and keep all the “empty” certs.
3. Now you have 30 empty GIA certs. [These papers basically tell you] that if you fix and downsize the stone, it will be D IF.
4. [When submitting a recent stone, the GIA will not] check the color again, because you attach the old cert that has the color is D ,they therefore only recheck the clarity.
5. Buy on the market 30 stones E IF size 1 ct. to 1.10 Ct.
6. Put the E IF stone you just bought into the cert of D VS1 you have, and send it to GIA for a Clarity recheck.
7. In 10 days you get back from GIA a new cert that states the color and clarity are D IF.
8. Sell the stone, and go happily to the bank, you just made $5,000 profit.
End of email.
Anyone trying to do any of the above, or a handful of other similar tricks, is nothing but a certified jerk and, from a legal perspective, is probably committing pure fraud. The sender of this email, who may have sent it to alert rather than to inspire, may well be wrong in his assumption that GIA “doesn’t check the color again.” If, indeed, it didn’t, it sure does so now.
According to Tom Moses, “A diamond that is re-cut will or may change in all of its attributes. With this said, it is possible for an ‘E’ to change to a ‘D.’ It depends on many things, such as: Was it a boundary call as an ‘E’? Was the size or angles or girdle reduced in some way that changes the color grade? The color or clarity may change for the worse also. For example, graining may now be visible or more pronounced after the re-cutting that was not evident at the original weight.”
Reputational Dangers
In our diamond business, it is very hard to put ill-founded rumors to rest. When one tries to do so, one is immediately suspected of acting “on behalf of” or thought to have another agenda. This is as unfortunate as it is sad. The most serious challenges facing our industry in the years ahead are of a reputational nature. If we cannot maintain trade and consumer confidence, one might as well get out of this business.
I am not naïve. More than anyone else in the trade press, I am aware of fraudulent grading, influence peddling or other unworthy grading practices – and no specific laboratory holds a monopoly on these. If market premiums generated by a certificate measure anything, then it is clear that the GIA still holds a first class reputation for its paper. Usually, however, where there is smoke, there is also some fire. But we must be careful not to let rumors get out of hand or allow them to inflict unnecessary damage on ourselves for no real justifiable reason.
Moses, when asked to comment on the market unrest, stresses that “the GIA continues to commit more resources to quality control by sending stones and people around the world to work in the different locations. We are working hard to measure quality within our labs accurately and even harder to make improvements to it through training and the use of technology.” It is now clear that whenever a stone is submitted to any lab, one may never know where it was actually graded.
In
Have a nice weekend.