On Tuesday, the Diamond Dealers Club president resigned, and once again this troubled but important industry organization stands at a crossroads.
So let’s review where we are, and let me throw out some ideas of where the bourse needs to go:
– First off, it’s widely acknowledged that, despite picking up some new members this year, the New York club has had serious problems lately, hemorrhaging members, and now, money. (It has run a deficit for the last few years.) Now, some, though certainly not all, of this is probably beyond anyone’s control. The diamond industry is shrinking, particularly in New York, and it’s not clear what role bourses will play in the new order of things.
The idea of calling in an outside accountant/consultant, Michael Rubin, was a good one. If anything, the Club needs more oversight on the financial side. It must get its books in order and be more transparent about how money is spent, particularly in the light of recent controversies. And while it’s great to have Club officials flying around the world attending meetings, that may not be feasible at a time when the Club’s running a deficit.
It’s a positive sign that the DDC seems to be facing the reality that it is no longer the bourse of the past. It still has the massive trading floor it always did, but there are far fewer people on it. The consultant’s report determined that only about 100 or so members use the Club on a daily basis. One idea that’s being talked about is making the DDC smaller, and returning some space to 580 Fifth Avenue to save money on rent.
– As with the U.S., democracy in the Club now seems increasingly dysfunctional. In the last four years, elections grew so bitter that a former vice president sued the Club, and now a president has resigned.
At this point, everyone needs to turn the temperature down. Even if not every elected official at the Club thinks highly of every other elected official, they all must work together for the good of the institution.
– Along those lines, the wounds in the New York industry must be healed. The DDC and Diamond Manufacturers Importers Association of America (DMIA) have been feuding for as far back as I remember—as have, on an international level, the WFDB and IDMA (which now hold their meetings at different locations.) Lately, these arguments have grown increasingly bitter, and many DMIA honchos have resigned from the Club, even though some of them used to sit on the bourse’s board, and the DMIA used to hold its meetings at the Club.
These tiffs are a luxury the New York diamond community can no longer afford. The local trade needs to come together for its very survival.
The DMIA now consists of some of the biggest companies in America. Getting them involved in the DDC again would boost the Club’s stature enormously. The groups should also look at restarting the DISC (Diamond Industry Steering Committee), the traditional umbrella organization of New York groups.
(By the way, when I ask people what should be done about the Club, the first thing I typically hear is “try to get back the old members who resigned.” I have talked to some of those people; many have expressed an openness to joining again, if they were convinced things had changed.)
– The DDC should also reach out once again to New York City government. Time was, the DDC was a must-stop for just about every prominent local politico. I remember visits by Dinkins, Giuliani, D’Amato—even U.S. Commerce Secretary Ron Brown once stopped by. Not only are these visits a nice member benefit, they enhance the Club’s prestige and give it access to elected officials at a time when the industry needs all the friends it can get.
– Finally, the Club needs to reconnect with its core values. Arbitrations should be as independent as possible; officials should intervene only rarely, if ever. Elected positions are all voluntary; elected leaders should never receive compensation, even if the Board agrees to it. And the people in charge should see themselves as stewards of the 80-year-old Club, not as the personification of it. The DDC belongs to its members, and officials serve at their behest.
The Club has launched some worthwhile ventures of late, particularly its embrace of the Internet. But the past few years of fighting and controversy have been disheartening. I wish the new people in charge—and it’s not clear who they may be yet—a lot of luck as they attempt to revive one of the industry’s great institutions.