The advent of a reversible (temporary) color enhancement treatment in the diamond market potentially presents a radical “game changer”, comparable to the discovery of the Yehuda Treatment in the early 1980s, or the General Electric/Lazare Kaplan HPHT-color enhancements of the 1990’s. In these methods, the color change is stable and permanent. A new treatment, that may cause an up to three grades change of color in diamonds that will revert to its ORIGINAL color, may greatly affect the way the business is conducted. GIA scientists and other gemologists are working around the clock to discover the treatment method as well as the triggers that activate the reversal process. This DIB in a cautious manner looks at the little that is known so far. It’s a scary and quite unsettling story.

 

Two Israeli police investigators spent most of their time recently at the Gemological Institute of America (GIA) laboratory in Ramat Gan, Israel. The Israel Diamond Exchange (IDE) called in the police after the GIA issued its alert noting that the “GIA reasonably suspects that approximately 500 colorless to near colorless diamonds submitted primarily to our laboratory in Israel potentially were subjected to an undisclosed temporary treatment.” 

 

The geographic location of the discovery is not relevant: the existence of the unknown treatment potentially impacts each and every diamond center. The Israeli bourse acted resolutely. It took the almost unprecedented step to call law enforcement into the rather closed diamond community, when learning about   “trading treated diamonds without disclosure in the Israeli diamond and trade,” and trading with “GIA diamond grading reports that misrepresent the diamonds’ true identity.”

 

A New Precedent

As far as this writer is concerned, this is the first time ever that the Israeli bourse’s internal disciplinary bodies were bypassed regarding the handling of such suspicions. They were, instead, catapulted straight into a full-fledged police investigation. This investigation is being conducted in coordination “with the appropriate state authorities,” which have been called in to “take the needed measures,” says a bourse statement.

 

At this point, we find it hard to understand what the police can contribute to the GIA-created imbroglio, except perhaps for generating short-term positive public relations overseas. Moreover, if GIA clients tried to defraud the GIA, i.e., if they found a system through which the GIA would unwittingly issue an overstated diamond certificate, why didn’t the GIA go the police itself? Why was that left to the Israel Diamond Exchange to do?

 

GIA: ‘We Followed Normal Protocol’

“As always in these situations, we first apprise the presidents of the WFDB and IDMA, and, in this instance, also of the Israel Diamond Exchange,” explained GIA senior vice president Tom Moses. “The bourse decided to call in the police. If they hadn’t done this, we most likely would have done it ourselves. In any event, we are fully working together with the police, as is evident by the long hours spent in our lab talking with our people.”

 

Incidentally, it’s not clear why the police are spending so much time at the GIA lab; most likely they are getting a complimentary crash course in gemology. Meanwhile, DIB has learned that the police are checking the prices for which the buyers bought the suspect stones. If they paid substantially below market price for them, then it may be assumed that the buyers knew they were buying misrepresented goods. If they paid full market value – they may have been “had,” provided that the stones are, indeed, treated.

 

We are writing these lines a few weeks after the initial GIA announcement was issued. At this point, the GIA and other scientists have not yet been able to conclusively determine the nature of the “undisclosed temporary treatment”.

 

Some Skepticism: A Cover-Up?

Some skeptical diamantaires retort that this whole incident “seems like a giant cover-up for some GIA clients (or maybe even just one client) bribing some GIA employees and inducing them to give color upgrades... but then were caught.” Some diamantaires are also angry at the GIA for specifically identifying Israel in its statement.

 

The local Israeli GIA lab director vehemently rejects any suggestion that the police are actually investigating the GIA itself. Tom Moses also categorically and unequivocally denies and dismisses any talk about GIA wrongdoings or cover-ups – and I believe him.  Unfortunately, what I believe is irrelevant.

 

What we have now is a situation that demands conclusive, unequivocal answers, and the onus to provide these answers falls completely on the GIA. This is the only way to restore market tranquility. Tom Moses assured us that all of the institute’s findings will be fully shared with the industry.

 

Unknown Color Treatments

In conversations with Tom Moses, he reminded me that, historically, every decade brings new color treatments that are, initially, quite unknown.

 

One recalls the Yehuda Treatment in the early 1980s, or General Electric and Lazare Kaplan’s colorless diamonds (called Bellataire) in the 1990s. It took the gemological community some time to compile the “protocols” or the ways to identify, detect, understand the materials, durability, permanency, etc. One also needs thousands of stones to study before getting a comprehensive understanding of all gemological characteristics of the treatment.

 

It might well be that the color enhancement method that is being used by the suspected parties is a variation on some of the known methods; it might also be something entirely different.

 

The inventors or users of the treatment method in question are not coming forward, nor are they presenting their expertise for analysis. That, by itself, tells something about the bad intent underlying this activity. It is treatment meant to defraud. It is, indeed, a matter for the police to get involved in.

 

The Essence of a ‘Temporary’ Color

It is somewhat scary to think that there is an unstable, reversible, and temporary diamond-color-enhancement method in the market that is escaping detection. In fact, it apparently doesn’t leave any traces!

 

The GIA describes the treatment in its alert as “a process that temporarily masks the inherent color of the diamond and can lead to a higher grade. The color difference can be as much as three grades.” Such color difference of three grades easily translates into 60-70 percent of a stone’s value.

 

The vast majority of suspicious stones in this story are above 1 carat in size, with some being in the 3 to 5 carat ranges. The Israeli GIA lab only grades stones up to 2.99 carats in size, thus the larger stones were graded in New York or California. The GIA confirmed to DIB that the U.S. submissions contained stones all belonging to some of the same four companies that were publicly identified in the (May 12, 2015) GIA alert…

 

Click here to read the full Temporary Color Enhancement: A Potential Game Changer for Industry and Grading Labs article.