GIA Shakeup: Ralph Destino Takes Over

The Gemological Institute of America has appointed Ralph Destino as chairman of the venerable industry educational group. Destino formerly served as chairman of GIA’s board of governors and, before that, of Cartier. The move comes in the wake of the GIA lab money-for-grades scandal.

Although the late Richard Liddicoat held the title of GIA “chairman for life,” Destino’s position is considered a new one. In an exclusive interview with JCK, Destino, who will work out of GIA’s New York office, said he will take on an active day-to-day managerial role. President William E. Boyajian, formerly the Institute’s highest-ranking official, will report to Destino.

“I’m responsible for everything, but my first priorities are linked to the lab,” Destino said. “Bill Boyajian has had a fabulous career here. But the board felt it was better to put an outside person into a senior position.” Destino promised some other changes in lab procedures. “You haven’t heard the last from us,” he said.

Eventually Destino hopes “to broaden everyone’s view of the totality of GIA,” so that it is perceived not only as a lab but also an educational and research institution.

Destino reports to the Institute’s board of governors, which has taken an active role in managing the scandal’s fallout. At press time, it was unclear who would replace Destino as board of governors chairman. Susan Jacques, president of the Omaha, Neb.–based retailer Borsheim’s, is current vice chairman.

GIA also announced a number of changes to its lab procedures:

  • It will no longer solicit or accept donations from diamantaires whose stones are graded in the lab.
    “There was nothing in the [GIA internal] investigation that ever said that any donor ever benefited [improperly] from their donations,” Destino said. “But there is an appearance that if a diamond dealer should make a major contribution to GIA’s endowment fund there will be a quid pro quo. I don’t want that appearance problem, so we are discontinuing all of that.”
    Destino said GIA will still “have a development department but it will not solicit funds from diamond dealers.” He was unsure of the fate of the organization’s lavish League of Honor dinner but said, “I think in the future any dinner we might hold will celebrate our students and not so much be a celebration of donors.”

  • The names of diamond dealers who may have violated GIA’s Code of Ethics have been turned over to law enforcement officials. GIA notified these dealers that it will no longer accept diamonds from them for grading. Many in the trade want GIA to publicly release the names of the companies involved, but Destino said lawyers have tied its hands.
    Even though GIA is in touch with law enforcement, Destino doesn’t know if the government will pursue the case. “What the government does is not up to us,” he said. “We are not a law enforcement agency. The only action we can take is discontinuing our business with those companies. We have written letters to those companies and they have been terminated.”

  • It will discontinue its lab “membership” program and introduce a single price structure for all clients.

In addition, a letter from new lab head Tom Moses reiterated the changes the lab made in the wake of the scandal. Among them:

  • No lab employee may solicit or receive compensation from clients, including cash, gifts, or entertainment. Violations will result in dismissal.

  • GIA has strengthened its Professional Ethics and Conduct Compliance Statement. GIA employees are now required to inform senior management of any code of conduct violations they witness or of which they become aware. Failure to do so will result in dismissal.

  • GIA has retained EthicsPoint, provider of services to promote ethics and corporate governance, to enable GIA clients, employees, students, and vendors to communicate openly, anonymously, and safely with GIA management and its board.
    In April, GIA was sued by a former Harry Winston employee in a suit that alleged “payments” to improve lab grades. Following that, the Institute’s board of governors launched a four-month investigation that resulted in the firing of four graders for “misconduct.”

For more on the GIA scandal, see “Analysis: GIA Under the Loupe,” p. 82.