GIA Answers on “Certifigate”

The following is the text of a letter Gemological Institute of America chairman Ralph Destino sent to GIA lab clients about some of the recent press and commentary on the now two-year-old grading scandal. (It was not provided by GIA.)  I have edited it for length (it’s really long.)  … Destino makes some fair points and includes some interesting details I hadn’t seen before … I have some comments afterwards.

Destino starts by saying he wants to address “unfounded rumors and innuendos,” and talks about the GIA’s measures in response to the Pincione lawsuit:

The centerpiece of [those] actions was to authorize the law firm of DLA Piper to conduct an extensive internal investigation of GIA. A team of six attorneys, lead by Thomas O’Neil, a former Assistant U.S. Attorney, was given an unequivocal mandate: investigate the allegations fully and completely with no holds barred, and with a free hand to examine all procedures, all people, all past and present activities, leaving no stone unturned in the process. The investigators were further mandated to turn over all their findings — unedited — to the Department of Justice.

The team did exactly as mandated. In addition to conducting nearly 150 interviews of more than 80 individuals — both inside and outside of GIA — they examined more than 3,000 certificates, going back 10 years, paying particular attention to patterns of involvement by grading individuals and supervisory personnel. Over a six month period, the team met repeatedly with Federal law enforcement officials and made over a dozen separate reports of their findings to the FBI and the U.S. Attorney’s Office. GIA was adamant that these reports be all-inclusive and that no finding, however minor, was to be omitted or glossed over …

But GIA did not stop there. GIA took many additional steps, including: establishing a state-of-the-art compliance program; no longer accepting endowment fund contributions from lab clients; discounting the former “membership” structure; redesigning the grading process, and the associated technology, to help ensure that past violations could not be repeated in the future; terminating the lab employees found to have engaged in misconduct; and closing the accounts of those diamantaires found to have violated our code of conduct.

Many have asked us why no one has been indicted in this case. The simple answer is, “We don’t know.” Nor do we know whether anyone will be indicted in the future. It is the job of the FBI and the U.S. Attorney to receive information, to investigate, and, at some point, to make a judgment about whether or not to file charges. It is the Department of Justice’s policy not to disclose the status of any ongoing investigation, much less reveal their intentions regarding possible indictments …

In summary: …

– GIA’s wish has always been that the government would file charges against the violators. That is why we brought this matter to the attention of the U.S. Attorney. There has never been a “cover-up.”

– All of the rumored “dealings’ which have appeared in print and in various blogs are old anecdotes which have been fully investigated. None are new. GIA today has a zero-tolerance policy which applies to both our staff and clients. Should anyone have new insights in this matter, they are urged to let us know, or, if they prefer, to send same to law enforcement officials.

– Despite the heated demands by columnists and bloggers that GIA release the names of the violators, the powerful libel laws in this country and elsewhere prevent us from doing so. When and if the U.S. Attorney brings indictments, then the names will be brought forward to the trade and to the public.

OK. First, kind of a pedantic Internet point … not everyone who writes on the Internet is a blogger. You need a blog to be a blogger. I am a blogger, and one of the few to address this topic. I have never asked GIA to release the names of the violators; I would like to know who they are as much as anyone, but I never thought that was a particularly realistic request.

Second, and perhaps more importantly, things aren’t moving with this story right now. We are stuck. We are basically where we were in 2005. That may not be the GIA’s fault, but that is where we are.

If you recall the fuss over “conflict diamonds,” whenever the Kimberley Process ran into a snag, activists blamed the diamond industry. That wasn’t always fair, but people perceived “conflict diamonds” as an industry problem, and held the industry responsible for a solution.

Today, people perceive this issue as a GIA problem. And so my hope is, going forward, that the GIA works with the industry in brainstorming possible solutions to this – and getting this story un-stuck.

One more thing … it is sad I have to do this, but as with all GIA posts, comment monitoring is on. All comments must be respectful to the people involved.

JCK News Director