LKI’s Retreat to Higher Ground

by Frank Dallahan, Associate Publisher -- JCK Online, 2/1/2000 2:00:00 AM

My November column about the Pegasus processed diamonds prompted Leon Tempelsman, Lazare Kaplan International’s president, to phone and disagree with my contention that his company and General Electric had bungled the introduction of this “new product.” I promised to present my understanding of his arguments.

Tempelsman made five key points:

The de-coloring, or “whitening,” process is irreversible.
LKI and GE wanted to introduce this new development responsibly.
LKI and GE now are working closely with the Gemological Institute of America.
LKI and GE want a method of detection and are putting “a lot of money behind this effort.”
The process is one of the most important developments ever to occur in the diamond industry.

He also disputed my charge that keeping GIA out of the loop until laboratory test results were completed was “sneaky.” His response: LKI wanted to conduct double-blind testing to ensure the validity of its tests. He noted that testing had been conducted for more than a year at every leading lab worldwide. He told me that GE’s scientific and laboratory capabilities were among the best and that GE had invested considerable time and money in the project. He said GE was comfortable bringing the product to market because the process was irreversible and “replicated conditions in the earth.”

Tempelsman also discussed pricing and distribution. He said LKI’s decision to set prices of Pegasus diamonds close to those of their natural counterparts and to sell these diamonds directly to retailers was meant to preclude exploitation by the unscrupulous. Tempelsman credibly repositioned LKI’s actions. But they are a reaction to the widespread opposition that greeted the company’s initial attempt to sell these diamonds. The market forced a change in plans.

One more chapter in the story remains to be written—the one that will finally address the identification issue. Laser-inscribing the girdle of the stones with the letters “GE POL” is irrelevant when the inscription can easily be removed. Pegasus diamonds must be marked in a permanent manner so that a typical jeweler can identify them.

Judith Osmer successfully marked her firm’s created rubies with a fluorescing agent. Similarly, Arthur Groom marks emeralds treated with his “filler.” Granted, these are different processes. But should we not expect something comparable and permanent from GE and LKI?

Aversion to technological change is not the issue. Putting a positive face on ill-conceived decisions isn’t it, either. The issue is preserving—better yet, enhancing—the integrity of the jewelry industry. Lack of candor destroys any relationship. Let’s hope a permanent marker is developed for Pegasus diamonds, and soon. These diamonds are no better than created gemstones made in a lab. They are made after all, in the words of GE, “under conditions that replicate the actions of the earth.” They should be positioned, marketed, and priced accordingly just like other created gemstones under heat and pressure.

Finally, if other firms in the industry “discover” GE’s “secret process,” they shouldn’t bring their enhanced diamonds to market without a permanent marker. The trade should insist on this to protect the integrity of the diamond business.