GIA Scandal Makes News Again

A long-awaited third story from the Wall Street Journal on the Gemological Institute of America lab scandal appeared in March—but the story contained little that was new and was not the earthquake many had feared.

The most tantalizing nugget was its report that GIA had banned “three more prominent dealers,” whom it did not name. (GIA won’t name them, either.) But otherwise there was little fresh news in the article, despite considerable legwork from reporter Ann Zimmerman, who even showed up at the office of a GIA official who left under a cloud four years ago.

Still, the article was hardly boffo public relations for the industry; at one point it noted, “If the scandal is as widespread as some dealers believe, it is conceivable that many consumers may have overpaid for their diamonds.”

In a statement issued following the article, GIA said it “wants the diamond and jewelry industries as well as the public to know that the Gemological Institute of America operates with the highest ethical standards, and they can and should continue to have full confidence in GIA’s laboratory operations and the reports we issue.”

It continued: “After completing nearly 100 interviews and reviewing over 100,000 documents spanning a 10-year period, the independent investigators concluded that any violations of GIA’s policies were very limited in scope. In addition, we have taken a number of steps to enhance our already stringent laboratory procedures and controls, and we continue to monitor our processes with great diligence. However, in order to dispel any lingering concerns, we are offering free verification of any GIA-graded diamond.”

GIA also cited what it called an “inaccuracy” in the story, namely, that it fired four employees for “accepting bribes”—a widely held perception in the diamond industry. The newspaper eventually ran a correction that said the four employees were fired “for violating the group’s code of ethics, which prohibits contact between employees and clients and the exchange of gifts.”

But GIA’s wording left open the possibility that some of the employees might have been fired for bribery—just not all four. In addition, many consider exchanging gifts a form of bribery. GIA spokeswoman Laura Simonton deflected repeated queries regarding the bribery issue, saying only that the four were fired for violating GIA’s ethics policy.