Tuesday, December 20, 2005

GIA Manhattan Diamond Grading Lab Faces Bribery Inquiry

Federal prosecutors are gathering information about a bribery scandal at a diamond-grading laboratory in Manhattan that is known as the nation's most trusted evaluator of the quality of precious gems, sources close to the inquiry said.

The Gemological Institute of America (GIA) said it reported to federal law enforcement officials that "a small community" of diamond dealers had been trying to improperly influence employees of its Midtown laboratory, which assigns grades to diamonds for their clarity and color. The institute replaced the executive who oversaw the lab and fired four employees who worked there, but has declined to say how many dealers were offering bribes or how many diamonds may have been fraudulently rated.

Ralph Destino, chairman of the institute, confirmed last night that the institute's lawyers had turned over information to prosecutors about violations of its code of conduct by the four unidentified employees who were dismissed and a "handful" of the lab's customers. He said the employees had "improper contact" with dealers who had submitted diamonds for grading. The violations involved only a "handful of stones" he said, though he declined to provide a specific number.

Jewelry dealers in the diamond district have been buzzing about the matter for weeks. The Diamond Dealers Club, a group of prominent brokers, has called on the institute to define the scope of the problems it uncovered and release the names of those it suspects of offering bribes, but Mr. Destino declined.

"I'm sure diamond dealers are curious, but the G.I.A. is not a law enforcement agency," Mr. Destino said. "We don't accuse, we don't indict, we don't subpoena."

Mr. Destino said members of the diamond-trading industry had "grossly exaggerated" the size of the problems at the lab. "I can assure people that there is no reason to question the integrity of any G.I.A. report that's out there."

The internal investigation was spurred by a rare lawsuit against the institute brought by an iconoclastic gem broker who once managed the diamond room at the Harry Winston jewelry store on Fifth Avenue. The broker, Max Pincione, alleged in the suit that two large diamonds he sold to members of the Saudi royal family in 2001 had been given inflated grades in certificates issued by the Midtown lab.

Friday, December 09, 2005

Diamond Prices Update - December 9, 2005

With the holiday shopping season now in full swing, loose diamond prices continue to remain steady with no apparent increases in sight. With only 2 weeks left in the season we do not expect any price spikes at this point.