GIA Named Names in the Hacking Investigation. But Why Stop There?

The Gemological Institute of America acted commendably this week by publicly listing the 19 companies that allegedly submitted diamonds that received now-invalidated grading reports due to unauthorized access to its system. It has also listed all the reports involved.

It’s important to note that the investigation is still ongoing, and we don’t know why those grades were changed. (Indian authorities have arrested two former employees of database contractor Tata Consultancy Services, who allegedly made the switches.) Hopefully law enforcement will conduct a thorough investigation and will get to the bottom of what happened.

A few points:

For all its (thankfully rare) travails, GIA remains a reputable organization, and its lab is considered the gold standard in the industry. These limited incidents are, in a way, a perverse testimony to the lab’s reputation and the weight given to its grades.

GIA has also, along with trade groups, become more aggressive in outing companies that may have acted improperly. In May, it listed the five companies that allegedly submitted diamonds with a treatment that temporarily improved its color. (That investigation is ongoing as well.) In August, it sent out a widely circulated letter cutting off five Indian companies for allegedly falsifying diamond inscriptions.

Most in the trade cheered those moves. They represent a notable and welcome shift from how the lab acted about a decade ago, when several companies were banned for “improperly attempting to influence” lab graders. That was generally assumed to mean bribery, by either gifts or money.

Viewed in hindsight, and compared with how things are being handled now, the way former management dealt with its bribery scandal feels even more inadequate than it did then. In 2005, GIA did not inform the trade which reports were affected and might have to be invalidated. The trade also wasn’t notified how many reports were involved (just that the problems were “very limited”), or whether GIA even knew that information. Finally, GIA, citing legal considerations, never said which companies had their privileges revoked. If those companies faced real repercussions, rather than an easily circumvented ban, it’s possible these issues might not have recurred.

Still, it’s not too late to get that information out. As long as it’s embraced openness in this new episode, perhaps it’s time to clear up the lingering issues from the old one.

Yes, we are talking about long-ago history. But those reports could still be circulating, and those companies may still be active. That episode was every bit as dispiriting and sordid as this recent one. And many members of the trade would still like to know.

JCK News Director