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"Certifigate": Appealing to the Feds

By Rob Bates, Senior Editor

Posted on March 19, 2008

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At Monday night’s DMIA meeting, president Ronald Friedman disclosed his organization had written a letter to Michael Garcia, the U.S. attorney of New York’s Southern District, asking for action on the now-two-year-old allegations about GIA graders being bribed to "upgrade" stones.

Friedman also noted that, a few months ago, he had a face-to-face meeting with prosecutor Harry Chernoff, in charge of the GIA case, to argue that the case be further investigated.  Here is what Friedman told me …

The meeting was something we reached out to do. There was kind of an open discussion on our part in terms of what we are seeking and what we would like to happen with the case.

[Chernoff] wanted to know what we knew about the case. I basically said to them: That’s why we are coming to you. Because we would like to know what happened here.

No one gave any indication [about the status of the investigation.] Frankly, I didn’t walk out of the meeting with any other feeling other than the fact that I felt we got our message across.

We went in there to make sure the US Attorney understood what our expectations are. We are determined to see this through.

Friedman said that while Chernoff “absolutely knew” about the case he was reluctant to confirm any ongoing investigation. (Here, Chaim Even-Zohar says that, based on his sources, the investigation is closed.)

At this point, I think there is a consensus that prosecutors should look into any abuses at the lab. Chernoff apparently spends his days putting away gang members and other high-profile cases, so obviously this is not first on his priority list.  But any corrupting of the grading process  may have netted millions, and, quite possibly, put competitors out of business. Surely, that is appealing to any prosecutor. And I do think industry pressure helps.

Finally, I’ve heard concerns, which were expressed at the DMIA meeting, that bringing this up this will hurt consumer confidence in diamonds, and perhaps everyone should keep quiet about it. To me, this is self-defeating thinking. The trade wanted to keep the “conflict diamond” issue under the rug in the 1990s, and look what happened there. This industry can no longer take the position that our failings are best left buried. In an information age, things have become a lot harder to hide. (And one of the reasons this industry has a bad reputation is the rap that it’s “secretive.”)

This subject has already rated articles in the New York Times, the Wall Street Journal and CNN, and there wasn’t a big rush on jewelers with GIA reports. Plus, consider the alternative: That the bribers – who did what is, by all standards, a reprehensible thing – will get away with it. If a person is corrupt enough to bribe a grader – who knows what else they are capable of?  These are not people we want in this industry.

Comments will be strictly monitored on this topic, and defamatory and/or abusive posts will be deleted. My email is rbates@reedbusiness.com for private correspondence. And, as they said in grade school, let’s not always see the same hands …

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