CounterPoint

Frank Dallahan, Associate Publisher -- JCK Online, 11/1/1999 2:00:00 AM

Moral Lapses

At the Gemological Institute of America Symposium last summer, I listened intently to Rushworth Kidder talk about ethics and their relevance. During his speech, Kidder presented some startling statistics. The first was a survey of high school students on the subject of cheating. Eighty percent of the students indicated that they had cheated during examinations. Ninety-four percent of the cheaters weren’t caught. Of the 6% who were caught, the vast majority weren’t punished.

Kidder also cited a survey of graduate students at Rutgers University. Fifty-seven percent of students in the school of education admitted to cheating; so did 63% of students in the law school and 68% in the medical school. Topping the list were the business school students, with 76% admitting they cheated.

Contrast this survey with one describing the expectations of the American public. When asked to name the most serious problems facing the country, 56% identify a decline in moral values as one of the most significant issues. Sixty-six percent believe today’s “acceptable behavior” is worse than before. The following moral values were identified as the most important:

Compassion, love, and caring
Honesty and integrity
Fairness and equity
Responsibility
Respect

Kidder concluded by asserting that trust will become more important in the future—not less important. He noted that full disclosure is the norm in medicine and finance and said that if businesses don’t regulate themselves, government will impose regulations. In short, disclose or be disclosed.

With these thoughts as backdrop to the General Electric-Lazare Kaplan International-Pegasus Overseas Ltd. diamond-treatment affair, retail jewelers again find themselves in the middle of a potentially explosive situation just as the holiday season draws near. In the absence of clear, provable science, jewelers have no choice but to disclose to consumers that diamonds, like many other gemstones, are subject to enhancements that permanently improve their appearance.

It’s disappointing that a firm such as Lazare Kaplan chose to initiate the distribution process—in concert with GE—by setting up GIA for embarrassment. (It sent the first batch of enhanced diamonds to GIA for evaluation without disclosing the new enhancement process.) In my opinion, that decision was sneaky and unworthy of Lazare Kaplan. Maurice Tempelsman’s comment on the situation—that technology cannot be stopped—is irrelevant. The issue is trust, integrity, and credibility.

GE is to be condemned as well. The company is a major producer of a wide variety of consumer and industrial products and financial services, and we deserve a higher level of ethical performance from its leaders.

But, then again, 76% of students in the Rutgers University graduate business school admitted to cheating. I have no doubt the result at Rutgers would be replicated at virtually any other graduate school. I wonder where these students find employment?

Leaders, whether of a company or a country, are responsible for setting the tone, expectations, and character of the institution. Unfortunately, because of a lack of good judgment on the part of two icons, the diamond business has been forever altered, and new questions about jewelry industry ethics, or lack thereof, have been raised. How’s that for caring, honesty, integrity, fairness, equity, and responsibility? Again, it is the retail jeweler who must deal with this issue on the firing line.