Facing criticism and a lawsuit alleging “payoffs,” the Board of Governors of The Gemological Institute of America recently completed a review of the practices at its laboratory.
The board says it was “deeply disturbed” by the lawsuit, and the Board formed a Special Committee to investigate. It engaged the law firm of DLA Piper Rudnick Gray Car to conduct the review under the leadership of Thomas F. O’Neil III, who chairs the firm’s Government Affairs practice group and who served as an assistant United States Attorney for the District of Maryland.
O’Neill conducted an extensive four-month review, during which he interviewed dozens of witnesses and reviewed tens of thousands of documents, including thousands of diamond grading reports.
As a result of the investigation, the GIA:
* terminated four employees of its New York lab.
* appointed Tom Moses to be the head of the GIA lab;
* Thomas C. Yonelunas, former head of the GIA Laboratory, while not implicated in any violations of GIA’s Professional Ethics and Conduct Compliance Statement, has tendered his resignation.
They also agreed to appoint a compliant officer who will oversee standards and practices at the laboratory. All employees now have to report infractions to the Compliance Officer.
“We have zero tolerance for any misconduct by employees of the laboratory,” said Board of Governors Chairman Ralph Destino. “They undermine confidence in GIA’s ability to serve the diamond industry and ensure the public’s trust in gems and jewelry. Going forward, all GIA employees will be obligated to report all suspected violations of the Institute’s compliance policies to the new Compliance Officer.
Destino added: “Our policies apply with equal force to lab clients. We will not tolerate any violations of our code of ethics by clients of the lab, most particularly improper attempts to influence the outcome of our grading reports. We have identified a small community of lab clients who are implicated in such actions and, rest assured, they will be dealt with swiftly and decisively.”
This theme was later picked up by the Diamond Manufacturers and Importers Association, who called the moves “a first step towards ensuring credibility in the GIA Gem Trade Laboratory and its Grading Reports.”
It urged that any corruption “must be prosecuted to the fullest extent of the law for all involved. Industry organizations, as well as producers, financial institutions, and retailers must be committed to stand up and take appropriate action.
The GIA is clearly making the right moves here. By taking its action, it basically admitted that, yes, there was a problem. Four graders being fired is no small thing. We sincerely hope everything is taken care of and we will never have to hear about this kind of thing in the future.
Because the end, the trade needs a GIA. It needs independent authorities to grade diamonds. We all have plenty of diamonds with GIA certs in our safes. If GIA is discredited, we are all in trouble.
On the other hand, this whole affair shows what we have said for some time: this trade is way too dependent on paper and certificates. The reason people wanted to allegedly pay off graders is because a difference in a GIA cert can mean thousands of dollars. But why should what the GIA says mean more than what a person sees with his or her own eyes?