GIA Scandal, looks like the $h*t is hitting the fan...
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The story is also in the Metropolitan Section of the NewYork Times today. Since this information has been on Pricescope for some time, I wonder why it took so long for the story to get out to publications with a wide distribution.
I wonder how the value of a GIA report will be ffected by this scandal. They claim it was only in a few instances and on large, important stones. But how can you believe anything they say after this.
I thought I read somehwere that they are offering to recertify stones with a repoirt from them. Is this accurate?
I wonder how the value of a GIA report will be ffected by this scandal. They claim it was only in a few instances and on large, important stones. But how can you believe anything they say after this.
I thought I read somehwere that they are offering to recertify stones with a repoirt from them. Is this accurate?
MissAva
Ideal_Rock
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I am a little bothered by how long it took to report what has been going on, it is both better and worse for the GIA. If it had been reposted immediately then people would have been more annoyed at their lack of action and incomplete responses. But now they have taken action so that at least will be better for them. What is worse is that it is Christmas one of the biggest times of the year for gift giving and that Chanukah is not a major religious holiday the way Rosa Hannah or Yum Kippur is there is still a major amount of gift giving. Now there is a possibility for consumer panic, and for millions of woman to look at their ring, bracelet, pendent or studs and wonder if their stone was one of the one mis-graded.
bookworm21
Brilliant_Rock
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Maybe the prices of diamonds (even the good ones that we all look for) will fall because of this incident. Consumer confidence is a driving force in any kind of market, and the diamond industry may lower prices a bit to lure back customers that may have been scared away. After all, many people assume that GIA is the only reputable grading lab out there. I didn''t even really learn of AGS''s existence until I found Pricescope about 6 months ago.
Then again, I''m not an econ major, so I may not know what I''m talking about.
Then again, I''m not an econ major, so I may not know what I''m talking about.
devientdrow
Brilliant_Rock
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Call me crazy but i''m not that worried about this. My husband and I just purchased a GIA graded stone and when we sat down to look at it we looked at it with a loupe and under a hearts and arrows viewer and we compared it with our second choice, an AGS graded diamond and they were not that far apart in all ways that I could see. It would make sense to me that this whole scam would only really be run on special items anyway. Just because they had a a scam there doesn''t mean all the employees are corrupt. I know there have been story after story on here of people purchasing GIA graded diamonds and having them independently appraised being more than happy with what they have found out. I don''t think anyone should panic if they have a GIA graded diamond or if they are looking at purchasing one.
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The industry has always assumed that bribery and favoritism might exist at the highest levels, but there was no evidence or available proof. Apparently this case has the proverbial "little black book" which has names, dates and amounts paid. It is a shame that human nature seems to have a propensity for greed.
I have been a staunch and long term promoter of removing as much subjectivity from the diamond grading process as possible. This promotes more object measures of the 4 or 5 C's of diamonds and would serve to put a lot more limits on who might be bribed and what illicit services they might be able to offer. In other words, I see more objective measurements would benefit consumers, and the diamond trade while helping to promote honesty in spite of our human failings.
The rumor mill indicates a rather small number of slightly misgraded large size diamonds may exist. The GIA, while quite secretive (as always), seems to have reacted in a way that is in the public's interest as well as its own. When you are on the top of the mountain, the only path ahead leads downward. I think the the GIA will pretty much survive this rather large financial and ethical problem, but in future will use more discretion in accepting contributions, allowing membership discounts and in how it handles its rather sacred role in the diamond business. At least, I hope it will.
For people with diamonds of normal size, color and clarity, I doubt there will be any issue of bad grading. For those who over the past year+ purchased very large diamonds, and possibly fancy colored, rather large diamonds, they may wish to have a review of their grading report run by the GIA. This is something GIA is offering, I believe. In time, we may hear more details about how many diamonds were subjected to altered reports, who took the bribes and how much the GIA is going to pay out in settlements should the lawsuits proceed. I don't believe consumers should be at all in a panic about this. While it makes sensational news, it is not that kind of situation where everyone has been affected.
I have been a staunch and long term promoter of removing as much subjectivity from the diamond grading process as possible. This promotes more object measures of the 4 or 5 C's of diamonds and would serve to put a lot more limits on who might be bribed and what illicit services they might be able to offer. In other words, I see more objective measurements would benefit consumers, and the diamond trade while helping to promote honesty in spite of our human failings.
The rumor mill indicates a rather small number of slightly misgraded large size diamonds may exist. The GIA, while quite secretive (as always), seems to have reacted in a way that is in the public's interest as well as its own. When you are on the top of the mountain, the only path ahead leads downward. I think the the GIA will pretty much survive this rather large financial and ethical problem, but in future will use more discretion in accepting contributions, allowing membership discounts and in how it handles its rather sacred role in the diamond business. At least, I hope it will.
For people with diamonds of normal size, color and clarity, I doubt there will be any issue of bad grading. For those who over the past year+ purchased very large diamonds, and possibly fancy colored, rather large diamonds, they may wish to have a review of their grading report run by the GIA. This is something GIA is offering, I believe. In time, we may hear more details about how many diamonds were subjected to altered reports, who took the bribes and how much the GIA is going to pay out in settlements should the lawsuits proceed. I don't believe consumers should be at all in a panic about this. While it makes sensational news, it is not that kind of situation where everyone has been affected.
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David,
I will be interesting to see how many different dealers and stones were involved. We may never have all the answers. One article said a handful of dealers, what does this mean? If they were some big diamond dealers and this has been going on for rs it could very well involve a lot of diamonds.... we may never know the whole truth.
And another thought; Who would ask for a 100+ carat diamond to be changed without asking about much smaller stones and working your way up?
I have always said; "Look and compare diamonds, not papers and reports".
We (us within the industry) shouldn''t be so casual about this. This is very important news and could very well change our industry. Maybe back to shopping with who your trust and not put all your faith in papers, reports, etc.
I will be interesting to see how many different dealers and stones were involved. We may never have all the answers. One article said a handful of dealers, what does this mean? If they were some big diamond dealers and this has been going on for rs it could very well involve a lot of diamonds.... we may never know the whole truth.
And another thought; Who would ask for a 100+ carat diamond to be changed without asking about much smaller stones and working your way up?
I have always said; "Look and compare diamonds, not papers and reports".
We (us within the industry) shouldn''t be so casual about this. This is very important news and could very well change our industry. Maybe back to shopping with who your trust and not put all your faith in papers, reports, etc.
Mara
Super_Ideal_Rock
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Suddenly that independent appraisal somehow looks more important....
...you just never know!
ETA....does anyone think that this may cause GIA graded stones to suddenly have a drop in pricing, like the discount that EGL graded stones typically have due to reputation or lack thereof? That would be interesting.
ETA....does anyone think that this may cause GIA graded stones to suddenly have a drop in pricing, like the discount that EGL graded stones typically have due to reputation or lack thereof? That would be interesting.
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If only 4 out of around 700 graders have been dismissed, it cannot have been a huge percentage of stones being upgraded.
Unless these 4 would have been working together, the stones involved must have been borderline-cases too. After all, if the other graders grading a stone conclude it is a VVS2, how can one grader (even if he or she is a supervisor) change the grade to IF, without the initial graders protesting. If you would do that regularly, it would definitely not go unnoticed in the lab.
In the meantime, GIA says that they have informed some clients (cutters or dealers) that they are not welcome to send any more stones to GIA, in other words, to take their business elsewhere. Rumours are circulating in the Antwerp streets on which companies received this notice. Tiffany''s (in the capacity of rough miner through Diavik) and BHP-Billiton (Ekati) have asked their customers to confirm in writing that none of their group companies received such notification from GIA. If they cannot confirm this, they will no longer be able to buy from these rough producers. Probably, De Beers'' and Rio Tinto are working on a similar questionnaire, with the purpose of taking the bribers off their client-list.
Even if GIA does not reveal the identity of the bribers, we will soon know.
Live long,
Unless these 4 would have been working together, the stones involved must have been borderline-cases too. After all, if the other graders grading a stone conclude it is a VVS2, how can one grader (even if he or she is a supervisor) change the grade to IF, without the initial graders protesting. If you would do that regularly, it would definitely not go unnoticed in the lab.
In the meantime, GIA says that they have informed some clients (cutters or dealers) that they are not welcome to send any more stones to GIA, in other words, to take their business elsewhere. Rumours are circulating in the Antwerp streets on which companies received this notice. Tiffany''s (in the capacity of rough miner through Diavik) and BHP-Billiton (Ekati) have asked their customers to confirm in writing that none of their group companies received such notification from GIA. If they cannot confirm this, they will no longer be able to buy from these rough producers. Probably, De Beers'' and Rio Tinto are working on a similar questionnaire, with the purpose of taking the bribers off their client-list.
Even if GIA does not reveal the identity of the bribers, we will soon know.
Live long,
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SteveL may be right. THey could have worked their way up to large diamonds, having started even years ago with small ''favors" on normal sized stones..... I think they only took the chance on especially valuable diamonds and not all that often, but we''ll eventually know more.
A 3 carat diamond is not what I''d call "large". Large diamonds begin at 6 carats and over. Where Rapaport leaves off, the less usual market begins.
A 3 carat diamond is not what I''d call "large". Large diamonds begin at 6 carats and over. Where Rapaport leaves off, the less usual market begins.
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Of what I''ve read the problem was with 4 people out of 700 employees. I agree with David that larger stones you might want to have inspected again. Most qualified gemologists should be able to evaluate a diamond to see if the stone in question along with the certificate matches. I can''t speak for all jewelers but we always check out the diamond and certificate. If I disagree with the grading I ship it back. With drop shipped diamonds this might be a problem but a good appraiser should be of help. Just over two weeks ago we sent a diamond that was re cut back to GIA for a new certificate. The stone was a GIA VS2 before and SI1 after re cutting. Go figure!
There will be lawsuits and some fall out but the industry will be better for it and better policed. Hopefully we will go back to trading diamonds rather than paper
There will be lawsuits and some fall out but the industry will be better for it and better policed. Hopefully we will go back to trading diamonds rather than paper
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Trading diamonds rather than paper.....a correct concept. This whole situation gives me one more reason why I will continue to evaluate and grade my client''s diamonds BEFORE looking at any lab report.Date: 12/20/2005 3:00:21 PM
Author: mepearl53
Of what I''ve read the problem was with 4 people out of 700 employees. I agree with David that larger stones you might want to have inspected again. Most qualified gemologists should be able to evaluate a diamond to see if the stone in question along with the certificate matches. I can''t speak for all jewelers but we always check out the diamond and certificate. If I disagree with the grading I ship it back. With drop shipped diamonds this might be a problem but a good appraiser should be of help. Just over two weeks ago we sent a diamond that was re cut back to GIA for a new certificate. The stone was a GIA VS2 before and SI1 after re cutting. Go figure!
There will be lawsuits and some fall out but the industry will be better for it and better policed. Hopefully we will go back to trading diamonds rather than paper
www.metrojewelryappraisers.com
strmrdr
Super_Ideal_Rock
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about 30% of the stores in my area sell gia only.
about 65% gia, egl and igi
and 2-3 sell ags along side of gia and egl
knock out gia and thats a lot of hurting.
No it wouldnt hurt the PS bunch much at all but it would have made a big dent other places.
Most guys have enough problems forking over the mega cash for a chunk of dirt without the added bad press.
It would have had a very bad impact on sales.
It cofirms the general perception a lot of people have of the diamond business.
You and I know its true in some cases and untrue in others but it only takes one negative to knock out a 1000 positives when the negative is on this scale.
Im not worried about it because the vendors I recomend including you check there inventory over closely.
Art Nouveau
Brilliant_Rock
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I read the article on the GIA bribery scandal in today''s Wall Street Journal. There isn''t any information in there that is not already on the internet. Just curious how GIA was able to keep the story from hitting the regular press for so long. GIA is taking a step in the right direction by firing the 4 graders involved and offering to regrade certificates for free. However, I feel this is not enough. They should reveal the names of the companies involved in the bribery. If the big firms in New York are involved, the number of diamonds affected may be much more than what people are led to believe currently. There is also no word regarding how or who is going to compensate the consumer if the regraded diamond turns out to be a lower grade. Who is responsible, the store, the manufacturer, the diamond dealers who bribed GIA or GIA? Unless there is a plan in place to compensate people who have bought "bumped up" certificates, who is going to rush to send their diamonds to GIA to get regraded? Is it going to take a class actioin law suit? Usually under those circumstances, only the lawyers end up making money.
AN
AN
Quite frankly, what bothers me the most about the entire concept of the bribery/scandal/false grading problems within the GIA are the reports and comments I hear from industry veterans who say that diamonds graded currently as compared against master stones from 30 years ''improve with age''. If a G color from 2002 looks like an H from 1968, Houston, we have a problem. We are not dealing with cheese here. And, throw in a one or two level color upgrade, and a clarity upgrade, and you have a SERIOUS pricing issue. This is not good.
Pending the outcome of the legal rulings and settlements, it would be in the best interest of GIA to seriously come clean to the trade about the entire grading process. The margins are so razor thin in this business, that yes, a color upgrade and a clarity upgrade can and will make the difference in one dealer surviving and another one going out of business.
Great thread, glad I finally stopped lurking and started contributing. Sorry it has to be on this subject, but being in and around the diamond business for my entire life, it is greatly disturbing to hear about these issues when so much of the industry has become completely dependent on ''trading the paper'' and not trading the diamond.
Pending the outcome of the legal rulings and settlements, it would be in the best interest of GIA to seriously come clean to the trade about the entire grading process. The margins are so razor thin in this business, that yes, a color upgrade and a clarity upgrade can and will make the difference in one dealer surviving and another one going out of business.
Great thread, glad I finally stopped lurking and started contributing. Sorry it has to be on this subject, but being in and around the diamond business for my entire life, it is greatly disturbing to hear about these issues when so much of the industry has become completely dependent on ''trading the paper'' and not trading the diamond.
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No desire to rain on your parade, but no, that is not big. Not unless it is pink
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What with so many companies (eg. Tiffany and Walmart) moving their jewellery production to Indian factories, the cost of jewellery is falling.
I do not believe there has been much growth overall in the total value of real jewel sales (costume and fake seems to be growing strongly).
Maybe retail total sales of diamonds have grown 5% in 2-3 years, and jewellery by 10% in the same period.
The reason for lack of growth is huge new efficiency. Less wholesalers, lower retAIL MARGINS ETC
carlsbad
Rough_Rock
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I just had first hand experience at how this could affect the average consumer. I just came from the mall with my fiancee where we stopped in to one of the local vendors to look at settings. I purchased a great diamond from an online vendor, once I told this to the sleazy/pushy salesman he asked me why I didn''t give a local jeweler a chance (him) to match the prices I had seen on the internet. He asked me if it was certified and by who, then proceeded to tell about the GIA scandal and how that could effect the actual grade of my little 1 carat stone.
It doesn''t bother me any because I know better (thanks to pricescope and the other local jeweler that verified my stone - who is listed by the way on pricescope and has a great reputation) but I certainly won''t be doing business with that jeweler. I just feel sorry for anyone who could be swayed by scare tacticts from former used car, mall jeweler salesmen types. (I hope my little rant isn''t offensive to anyone here, the experience just left a bad taste in my mouth)
It doesn''t bother me any because I know better (thanks to pricescope and the other local jeweler that verified my stone - who is listed by the way on pricescope and has a great reputation) but I certainly won''t be doing business with that jeweler. I just feel sorry for anyone who could be swayed by scare tacticts from former used car, mall jeweler salesmen types. (I hope my little rant isn''t offensive to anyone here, the experience just left a bad taste in my mouth)
Lord Summerisle
Brilliant_Rock
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happened to pick up a paper today.... story was in the Business pages:
http://business.timesonline.co.uk/article/0,,13129-1948399,00.html
couple of interesting (unrelated) points: "Cut: the cut of a diamond determines its brilliance. The three main parts of a cut diamond are the crown, the girdle, and the pavillion — the top, the middle, and the bottom." - first bit of amature reporting about diamonds where cut hasnt been linked to its shape (RB, Princess etc.)
and "The GIA is the lone guardian of these almost immeasurable differences"
http://business.timesonline.co.uk/article/0,,13129-1948399,00.html
couple of interesting (unrelated) points: "Cut: the cut of a diamond determines its brilliance. The three main parts of a cut diamond are the crown, the girdle, and the pavillion — the top, the middle, and the bottom." - first bit of amature reporting about diamonds where cut hasnt been linked to its shape (RB, Princess etc.)
and "The GIA is the lone guardian of these almost immeasurable differences"
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