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The Chaim Even-Zohar Boiler-Downer
December 18, 2006
We all know Chaim Even-Zohar is one of the best and most informed writers on the diamond industry. Last week’s Idex memo is, as usual, filled with insight and good dope.
It is also quite lengthy, complicated and dense. Or perhaps I’m dense, because I had to read it three times to figure it out. Since it’s the holidays and not everyone has time to do that, I figured that, as a public service, special holiday present and with all due respect to the man himself, I would debut a special feature I call the Chaim Even-Zohar Boiler-Downer. The summation below is kind of like Chaim Even-Zohar Cliff Notes, although as they used to say in Cliff Notes, reading it is no substitute for reading the whole thing.
That said, here goes:
-As part of its Supplier of Choice (SoC) agreement with the European Commission, the DTC agreed to appoint an ombudsman to oversee disputes between itself and sightholders.
- Jayam N.V., a major Indian sightholder, recently sued the DTC because it feels it ignored an Ombudsman’s ruling. The DTC denies this – although it is not clear whether the Ombudsman’s decisions are meant to be binding in the first place. The trial is in late January.
Now here comes the complicated part: In its dispute with the DTC, Jayam charged that, when the DTC launched SoC in 2003, instead of evaluating sightholders solely based on their profiles, the DTC “capped” (or limited) sightholder allocations based on the previous years’ allocations. This had a spill-over effect onto subsequent allocations.
-This “capping” was not reflected in the Supplier of Choice “policy statement,” and could be looked at as an “external factor” that compromises the SOC selection process, which is supposed to be objective and based solely on sightholder profiles.
-This raises other questions about the SoC selection process, including the fact that, in the 2003 selection, the smallest companies were dropped.
-If this is proven in court, it could be a “nightmare scenario” for the DTC, placing of Supplier of Choice in legal jeapordy, and giving every current, dropped, and prospective sightholder a legal claim against the DTC.
-For not anticipating the problems with capping, the DTC’s lawyers should all be fired.
-Have a nice weekend.
Whew. Told you it was complicated, but it sure perks up at the end there, doesn’t it? In response, Charles Wyndham argues it is not the DTC lawyers but the company heads who should be fired. Some holiday spirit, guys.
Anyway, that’s the Chaim Even-Zohar Boiler-Downer. This will not be a regular feature.
Posted by Rob Bates on December 18, 2006 | Comments (1)
