Boyajian resigns from GIA, Baker named acting president

The 20-year career of Bill Boyajian as president of the Gemological Institute of America came to an abrupt end on Monday with his resignation, apparently the most high-profile casualty of a diamond grading scandal that is threatening to tarnish the image of the organization that calls itself “the world’s foremost authority in gemology.”

The resignation came after a meeting of GIA’s Board of Governors Monday at its Carlsbad headquarters, GIA said in a statement. While the grading crisis at GIA’s New York laboratory occurred on Boyajian’s watch as president, Boyajian himself isn’t implicated in any violations of GIA’s policy.

GIA’s senior vice president and general counsel Donna Baker, will serve as the acting president until a permanent replacement is made, said Helene Fortunoff, the recently elected GIA board chairman. The board has formed a special committee to search for a permanent president, Fortunoff said, adding that Baker is a candidate for the permanent position.

The GIA statement said that Boyajian will stay on as a consultant to ensure a smooth transition. A source inside GIA said Boyajian will stay on until July 31, exactly 20 years after he was first named president. Boyajian, who was first hired at the Institute as a staff gemologist, has been with GIA a total of 31 years.

The die may have been cast for Boyajian’s exit from the GIA when the Institute named Ralph Destino, former chairman and president of Cartier, Inc., as GIA chairman, a newly created position, on Nov. 22, 2005. Boyajian, who led the Institute since 1986, was now in a position where he had to report to Destino.

Destino’s appointment was one of many changes to the Institute, following bribery allegations at its New York laboratory.

“It has been a challenging, yet productive year for the Institute,” Boyajian said in the statement. “With many of these matters now behind us, it is the right time for me to retire from GIA. After 20 rewarding years as president of GIA, I feel that it is time to pass the baton to new leadership. I look forward to working with Ralph, Donna, and the Board of Governors to effect a seamless transition over the next two months.”

Fortunoff added, “GIA has confronted and successfully addressed a number of critical issues this past year. The Board is grateful to Ralph Destino, Bill Boyajian, Donna Baker, and Tom Moses, who all have worked closely with a special committee of governors to implement a number of important management changes and enhanced policy initiatives. We believe these initiatives have served the best interests of GIA’s stakeholders worldwide.”

A Liddicoat protégé
Boyajian first became interested in the jewelry business during his college days while working for Belkeith Jewelry Co. in his native Fresno, Calif. Three weeks after receiving his Bachelor of Arts in economics, he began gemology classes at GIA and never left.

GIA president Richard T. Liddicoat hired Boyajian in August 1975 as a staff gemologist, and then instructor. Liddicoat eventually promoted Boyajian into management. Over the next decade, Boyajian amassed an outstanding record of service at GIA. In 1986, at the age of 34, he was named president of GIA.

During his tenure as president, GIA grew in size and stature, to become a leading provider of diamond grading and gem identification services, a prominent research organization and instrument developer, and the key educator for gem and jewelry professionals. Among other milestones, Boyajian spearheaded GIA’s move to its headquarters in Carlsbad in 1996, hosted International Gemological Symposia in 1991 and 1999, and expanded GIA’s campuses to 14 schools globally.

He is a member of many industry organizations and is the recipient of numerous awards for his accomplishments.

The unraveling
Boyajian’s 31-year career at GIA began unraveling more than a year ago when dealer Max Pincione filed a lawsuit against GIA claiming, with documentation, that payments were made to the GIA Laboratory in New York to have a diamond-platinum ring and a pear-shaped pendant upgraded. Pincione said he sold the ring to a member of the Royal family of Saudi Arabia, which was returned without explanation. He later sold the pendant to a Saudi entrepreneur. Again, the diamond was returned. This time he said he was advised that the stones were not of quality stated in the GIA grading reports.

This caused Pincione to risk “incarceration and punishment in Saudi Arabia,” the suit said. For the harm to his business reputation and other complaints, he was seeking $50 million.

The lawsuit first became public when it appeared on the JCK Web site on Aug. 18, 2005.

In early November, following an internal investigation of the charges, GIA announced that it fired four employees of the New York Lab for unspecified violations of its “Professional Ethics and Conduct Compliance Statement.” In addition, the investigation led to the resignation of Thomas C. Yonelunas, GIA Laboratory chief executive office, although he was not implicated in any violations of GIA’s policy. He was replaced by Thomas M. Moses, G.G. GIA also adopted a “zero tolerance” policy.

Less than a month later, in a statement to JCK, GIA acknowledged that there were “isolated incidents of misconduct.”

In mid-November, GIA announced a second round of action that included:

* Appointing Linda Scholl as vice president of Human Resources and Compliance and promoting Baker to senior vice president and general counsel, with both responsible for reporting to the board of governors on corporate compliance issues.

* Revising the GIA Code of Conduct and Professional Ethics Policy to include even more stringent requirements.

* Providing annual and mandatory ethics training seminars for all employees.

* Reemphasizing the current policy in the code of conduct against employees soliciting or receiving compensation in any form from lab clients, including cash and/or non-cash gifts, or entertainment.

* Providing a way for clients, students, employees, and vendors, a means by which to openly and safely communicate cases of potential misconduct anonymously and confidentially with GIA’s management and board via a toll-free telephone hotline or the Internet.

With the Nov. 22 announcement of Destino’s appointment came other changes, including:

* GIA no longer accepting donations from diamantaires;

* The GIA Laboratory discontinuing its “membership” structure;

In mid-December, Destino told JCK that he turned over information to federal investigators. It was at this time that the scandal was being reported in the mainstream media, in both major publications and the scandal sheets.

On Dec. 21, GIA announced that it settled the lawsuit with Pincione. Neither party disclosed the price of settlement but the Times of London reported that it was $15 million. The next day, GIA announced that it was ending its tiered pricing structure, which went into effect, Jan. 1.

Throughout this time, GIA had periodically announced that it has banned dealers from having their stones graded. However, it has maintained a policy of not releasing the names of the dealers.

Baker’s rise at GIA
As senior vice president and general counsel, Baker’s responsibilities have included oversight of GIA’s legal affairs, as well as Human Resources, Operations, Real Estate Planning and Development, Information Technology, and Community Development. In addition, Baker is responsible for the operation of GIA’s museum and library, as well as a number of special projects.

Baker was recruited by Boyajian in 2001. Prior to joining GIA, she was a partner in the law firm of Burke, Williams & Sorensen, LLP. Before that, she was an associate in the law firm of Morrison & Foerster, LLP. Baker received a Bachelor of Arts from Loyola Marymount University in Los Angeles, and a Juris Doctor and a Masters in Business Administration from the University of California, Los Angeles. She is a member of the American Bar Association, California Bar Association, and the American Corporate Counsel Association.