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Restoring the Shaken Towers of Consumer Trust
Every day thousands of people go to work in the major gem labs all over the world. They are there for only one purpose to serve the gems and jewellery industry and above all the consumer...
By: Shweta Dharia
Apr 25 2006 12:00AM
Reference: 2154  


Every day thousands of people go to work in the major gem labs all over the world. They are there for only one purpose to serve the gems and jewellery industry and above all the consumer. However, there are limits to what they can do. Can you separate fact from fiction in terms of their capabilities? A lab grading report isn’t a guarantee.

The opening line on a GIA lab grading report states “This report is not a guarantee, valuation or appraisal”. No lab wants to guarantee anything or leave you with the impression that they do, because if something goes wrong in the transaction they don’t want to be held responsible. A lab grading report is not a certificate. A certificate would authoritatively confirm the facts and a lab grading report states a few facts but mostly subjective opinions. It was the jewellery industry (not the labs) that started the slang use of the word “certificate” for lab grading reports. G.I.A categorically states that they do not certify any person, place or thing. To be perfectly accurate we should all be saying lab grading report or document if what we are saying is opinion based. E.G.L. USA does use the word ‘certificate’ on their grading reports but disclaims any responsibility for any errors or omissions in the report.

Don’t confuse a bonding document (fully-bonded) which does guarantee value and a lab grading report. A lab grading report is an opinion on the overall quality of the diamond and does not increase the diamond’s worth. The fully-bonded appraisal is the most comprehensive document you can get on the quality of the diamond. It includes every measurement (taken from a calibrated Sarin or Megascope machine); a colorimeter reading where grade and type are listed and a consensus of four graders who all must agree on what the clarity grade is. Then, it is accompanied by an unconditioned lifetime bonding document to guarantee current market value and secondary market value, says Fred Cuellar, author of the best-selling book “How to Buy a Diamond.”

Every lab has its standards to grade diamonds. You can always resubmit a diamond for grading if you are not satisfied with the reports.

“There are times when the grade of a diamond is at, or close to, a boundary point between grade ranges. For this reason, we offer services whereby a client may resubmit a diamond to be subsequently examined by additional independent experts, who may or may not render an opinion that differs from the original grading”, says GIA.

“Diamonds may be resubmitted at least two times if the owner disagrees with our grading. After two submissions, the owner can have a consultation with the senior graders,” according to EGL. “It’s very simple, if the customers are not happy with our results and believe we are wrong they can resubmit it for evaluation again,” says Peter Yantzer of A.G.S. who use their own in house system (such as AGS) while EGL recognizes an SI-3 grade. In addition, none of the labs agree with each other on one standardized system for measuring proportions.

If you are buying a high priced, high quality diamond, it is worth while considering whether you should get an expert opinion. It is surprising how few people do so! Confidence and integrity can be eroded if consumers are misled into purchasing treated diamonds or synthetics in the belief that they are untreated or natural.

In the past few decades, a set of international diamond grading standards have emerged. As yet there is no single world-wide standard, but the standards applied by the Gemological Institute of America (GIA), have influenced European laboratories. GIA terminology and standards have become almost a de facto international standard. GIA certificates are accepted almost world-wide.

CIBJO is the European organization which has a number of affiliated national gemological laboratories, including, the London Gem Lab in Britain. They grade to the same strict standards as the GIA. Although CIBJO lab certificates are not as universally accepted as those issued by the GIA, they provide perfectly good independent expert testing, grading and certification for diamonds and other gemstones.

Gemmological Institute of America (GIA)
GIA, the pinnacle of grading has been hit by the recent controversy that is still causing ripples in the industry. The scandal of counterfeit grading reports had brought the issue of trust and faith to the forefront, in industry jargon, the issue of Consumer Confidence has surfaced.

The whole world is talking about the scandal that has rocked the industry but feedback from industry personnel and unchanged consumer buying patterns suggest that GIA still goes strong.

Media Jumped to Erroneous Conclusions:
GIA was a prey to unforeseen events and a bad representation in the press when the scandal broke out. When a lawsuit was filed against GIA, it reacted and had an internal investigation carried out by an independent firm of Attorneys from California. This resulted in stumbling upon four employees who were not following the strict code of conduct laid down by GIA. The results of internal investigations were not given out to the media but GIA blundered by publishing that its four employees were terminated . Though the termination had no relation to the ongoing controversy, the media added two and two together and inferred that GIA had terminated the employees since they were connected to the case.

Meanwhile, The Wall Street Journal published a story on GIA. This article is a follow-up to recent stories focusing largely on isolated incidents of ethical violations by a handful of ex-GIA employees and diamond dealers. GIA and the entire diamond and jewellery industries suffer greatly when a few dishonest players damage the reputation of the honest majority. In addition, inaccuracies in reporting and misrepresentations by the press do a disservice to all, including the public at large. The Wall Street Journal article on March 8, 2006 erroneously states that the “Gemological Institute of America fired four employees it accused of accepting bribes from diamond dealers as part of an inquiry into inflating the grades of stones.” This statement is not true. The employees were terminated following an extensive investigation conducted by independent counsel on behalf of a Special Committee of GIA’s Board of Governors, for violating GIA’s Professional Ethics and Conduct Compliance Statement. GIA has therefore requested that the paper publish a correction to set the facts straight.

Marathon Review:
GIA restated to the industry and the public that it is committed to operating with the highest ethical standards, and the public can have full confidence in their laboratory operations and the reports issued. Over the past several months, they have communicated openly about the actions taken to uncover the facts related to the ethical violations and the numerous measures implemented to ensure that nothing similar can happen again. As reported previously, 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, they have taken a number of steps to enhance already stringent laboratory procedures and controls, and continue to monitor their processes with great diligence.

In addition, GIA is offering free verification of any GIA-graded diamond to dispel any lingering concerns. Any retailer or customer who owns a GIA-graded diamond can have the report verified free of charge. Submission procedures for this free verification service can be found on the GIA website. The website also contains detailed information about the Institute’s grading methods for those who wish to learn more about these processes. GIA has a 75-year history of ensuring trust in gems and jewellery by upholding the highest standards of integrity, academics, science, and professionalism. They take this mission seriously and are firmly committed to continuing to take the appropriate steps that will enable them to serve the public and the industry even better in the future. It is important to GIA and central to its mission to uphold the highest standards of integrity. For this reason they are providing the third party support described below for use by GIA’s clients, students, employees, and vendors.

GIA Ethics Hotline:
GIA has retained an independent firm called Ethics Point—a leading provider of services to support compliance, workplace ethics, and corporate governance—to enable clients, students, employees, and vendors to anonymously and openly communicate with GIA’s management and Board. Via a toll-free hotline or the Internet, individuals can report cases of actual or even potential misconduct anonymously and confidentially. The multilingual website, and domestic and international toll-free hotlines, also with multilingual support, will be available 24-hours a day, 7 days a week. In order to preserve the highest level of anonymity, they recommend that you use non-GIA equipment (phone or computer) to submit your report.

Grading Report Formats Changed: Beginning in January 2006, the GIA changed the format of its Diamond Grading Reports and its Diamond Dossier.

The new GIA Diamond Grading Report & Dossier

GIA India remained unruffled during the crisis. “GIA in India has seen no change in the way industry perceives it,” says Deepak Bagai, GIA spokesperson for India. GIA scandal was blown off course by media reports. Not all aspects of the issue were reported correctly, according to Bagai. GIA has been following very high standards and has made commendable efforts to stick to those high standards as well. “When news of GIA being alleged with irresponsible grading broke out with the knowledge of a lawsuit being filed it made the media jump at the story and the media sensationalized it. Some people got mileage out of the publicity but it hurt the industry as a whole,” explained Bagai. According to him media should have waited to cross examine facts and listen to GIA. By the time GIA gave out its statement the issue had caused too much impact and GIA’s statements were too inadequate to hold back the damage that had already been caused. That is how a mole-hill became a mountain !

GIA Goes on As ever:
However GIA still is where it was and will serve the trade as it did till today. “GIA certification is the ultimate guarantee of the quality of the gemstone being offered for sale anywhere in the world... No wonder, all the leading brands depend on GIA lab, especially for diamonds of larger sizes,” says Bagai. Some of the more celebrated gems graded by GIA include: the Hope Diamond (45.52 carats), the Steinmetz Pink (59.60 carats), the Taylor-Burton Diamond (69.42 carats), the Allnatt (101.29 carats), the De Beers Millennium Star (203.04 carats), the Centenary Diamond (273.85 carats), and the Incomparable Diamond (407.48 carats).

There are many other laboratories throughout the world, but not all can be relied upon to provide first class, honest, and reliable grading. Indeed in most countries anybody could, and often does, set up a gemological grading laboratory, offering cut-price grading certificates to dealers, manufacturers, and retailers of all ethical persuasions.

After varied reactions to the GIA controversy its time to see what the gemological fraternity has to say. International labs are crowding in and India being the polishing centre its no wonder everyone wants to be here. With new tax laws foreign players are targeting the Indian luxury segment. The jewellery boom is an added advantage and India is a good market for these players. Labs want to be where their clients go and so they foray into the Indian markets.

I.G.I India
I.G.I. started its laboratory in Mumbai, India in November 1999. The laboratory, over the period of six years has grown to a team of 120 qualified gemmologists who are involved in the identification and grading of loose diamonds, colored stones & mounted jewellery. I.G.I’s state of the art laboratories are located at Opera House and SEEPZ. To meet the growing needs of the jewellery trade across the country, I.G.I has recently set up a new mobile laboratory (Grading at site) for the branded jewellery manufacturers and leading showrooms in cities like New Delhi, Bangalore, and Chennai to service their exclusive range of collections at their premises.
The gems and jewellery sector is one of the largest foreign exchange earners for India and over the last few years there has been a tremendous rise in the consumption of diamonds and diamond jewellery in the domestic market as well. To increase consumer confidence and satisfaction and ensure the authenticity of their diamonds, I.G.I certification offered on all the diamond jewellery is claimed to conform to the international standards of excellence, integrity, accuracy and reliability and adding credibility to the diamonds and diamond jewellery purchased.

A gemstone/diamond, which is certified by IGI, provides the consumer with the confidence & assurance while making a buying decision,” says Tehmasp Printer, Managing Director, International Gemological Institute (IGI– India). “We have remained and will continue to remain an independent organization providing an unbiased opinion. We have systems in place so that integrity is maintained at all times,” he adds.

AGS India

AGS Laboratories was founded in 1996 by the American Gem Society, who saw a need in the industry for a diamond grading laboratory dedicated to consumer protection. The American Gem Society was founded in 1934 by Robert M. Shipley.

AGS has been operating a take-in window since 2005 in Mumbai. They view India as a strategic part of their global initiative. It is one of the most important diamond centres in the world, and crucial to the industry and their business model.

They claim to abide by the highest standards of ethics in the industry.

AGS provides diamond grading and laser inscription services with customer satisfaction. It was the first major lab to offer a cut grade, and is the first lab to offer a fancy shape cut grade. Currently, they provide cut grades on Princess Shapes, in addition to round brilliants. New shapes are coming on line.

The Diamond Quality Document:
Diamond Quality Document (DQD) is the world’s leading diamond report for Cut, and the first one offering a Cut grade for both round brilliants and princess cuts. The DQD also provides a complete grading analysis of cut, color, clarity and carat weight. They examine the performance of a diamond — how it handles and refracts light. The DQD’s 0-10 grading scale, with 0 representing Ideal, is easy to understand and provides a simple basis for comparison with other diamonds.

DQR offers a complete grading analysis of color, clarity and carat weight in an easy-to-understand presentation. It also includes information on proportions, polish and symmetry. Unlike other reports, the DQR shows cutting information without judging the quality of that information.

GII Lab India

The Gemological Institute of India (GII) is the very first Gemological Institute in India.

They have no branches. However GII is a project of The Gem & Jewellery Export Promotion Council (GJEPC), that has similar Institutions in Delhi, Surat and Jaipur. GII has sown the seed of gemology in the country and is active in promoting and propagating the science of gemstones in India.

Today Gemology has grown into a gigantic tree spreading its branches and roots in all corners of the country, thereby creating a strong sense of consumer’s awareness, confidence and value to gemstones. GII is looked upon as an impartial and independent trade laboratory. The institute is recognized by CIBJO – World Federation of Gems & Jewellery – as CIBJO Laboratory, as “Scientific Industrial Research Organization (SIRO)” by Dept of Scientific & Industrial Research, Ministry of Science and Technology, Government of India and Allied Teaching Centre (ATC) of Gemmological Association of Great Britain, London, UK, for FGA

The GII method of Grading is strictly as per the international norms and procedures. As per CIBJO Rules, each diamond should be studied and graded by at least 3 graders and the majority opinion is taken before issuing any certificate for color and clarity grading.

“Science and technology have developed so much today that the modern synthetics can be considered as “Test-tube Babies” resembling the natural gemstones,” says K. T. Ramchandran of GII. “These test-tube babies have created panic amongst the gemstone traders all over the world. Hence present day gemology is more concerned with the study of inclusions in a gemstone. We have developed our own software by which 100% security and confidentiality is maintained. Graders have no connection with the outside world. The Bar-code system designed by GII is a foolproof security system,” he adds.

Universal Diamond Grading Institute (UDGI)
UDGI was established in 1997 and its affiliated Gems & Jewellery Consulting Lab was established in 2005 to create awareness about certified gems and jewellery. At present the labs are operating from three branches in Mumbai at Zaveri Bazar, Opera House and Bandra. The lab is the only one in Mumbai which offers consulting services to traders as well as customers. The aim of the lab is to provide an unbiased opinion about the goods, examined only by highly experienced and qualified professional gemologist.

The lab abides by international standard and specializes in Diamond Grading Report, Colorstones Identification Report, Jewellery Certification and diamonds & gems Consultation. They also conduct Corporate Training for Sightholders, exporters, manufacturers, jewellers, Seminars & Workshops in gems and jewellery field, Consumer awareness programs and marketing programs for Jewellery Brands. Though they have not come across any controversies till date at their labs, they believe that controversies seem to be very common in the industry. “Traders have been complaining about getting differences in the grades if the same gemstone is submitted more than once to the same well known lab.” Says Hemant Sane of UDGI.

Not Much Negative Fallout:
The controversies just make the trade better because UDGI has seen a growing demand for certified diamonds, gems and jewellery in the Indian market so it seems there is not much negative effect on the industry. GIA and HRD are the two labs Sane thinks are the best known internationally.

GSL India

GSL opened its Mumbai office in late January 2006 at Panchratna Building, Opera House. GSL also has labs in Toronto, Canada and Dallas, Texas, USA. “Our objective in India is to service the fast-emerging domestic jewellery market as well as servicing their North American customers who have been sourcing their diamonds and finished jewellery products from India,” says Sam Barbuzzi of GSL. Their labs in Toronto and Dallas are both ISO 9001 registered and they are planning to have the Mumbai lab registered later this year. With ISO-9001 registration they follow a rigid management and procedure system which is externally audited yearly, so each of GSL labs are consistent and accountable for everything they do. “Our grading practices adhere to GIA standards and are internally audited through regular testing.”
“We have not experienced any controversy for 21 years of operating. GIA was unfortunate to experience an incident like this. They are the pinnacle of laboratories in the world with a reputation for ethics, integrity and trust. After many years of dedicated service to the jewellery industry and millions of diamond grading reports I don’t believe the industry or the consumers should judge them on one incident which was beyond their control. I don’t believe that consumer confidence has been eroded because of what happened,” Sam adds.

Retailer Grading
A generation ago, many retail jewellers could not even tell you the weight of the diamonds in a ring they were trying to sell you. Things have improved, but many retail jewellers still cannot tell you accurately the quality of the diamonds you are expected to buy from them. Recently, many jewellers, particularly the large multiple retailers, have realized that they need to appear to their customers as being more expert. Many have introduced graded diamonds into their ranges, or offer grading information about diamonds from their stock. Some retailers will give you an oral opinion of the grading. Because of the vast differences in grading standards between laboratories and the diamond trade, the grades you are told may be exaggerated for obvious reason.

The industry players and top brands surprisingly seem unaffected by controversies be it GIA or any other lab. For brands it’s the guarantee aspect that counts. Brands have tie-up with labs for consumer satisfaction and usually provide certificates if consumers demand.

Carbon has captivated the market with innovative designs and is fast moving ahead the competition ladder. The grading controversy in the market has not made any difference. “We have not seen change in consumer attitude towards Carbon,” says Utsav Malhotra, Brand Head for Carbon Accessories. “We just don’t sell diamonds or gold, we sell designs and the whole product.”


Tara grades its diamonds at Gem Lab and has tie-up with the lab to meet all its clients’ demands. Tara has not been affected by GIA controversy. “I have seen no change in the buying pattern after the GIA controversy. All over the world, there are scandals associated with anything that is valuable. I don’t believe, that this scandal has in anyway affected the sale of diamond jewellery,” says Rajeev Sheth, CMD, Tara Ultimo. Tara’s diamond buying process has numerous checks that assure diamond quality. Their quality control as well as quality assurance further guarantees the same. Independent certification is carried out more for customer satisfaction. Tara’s products come with a certificate and are hall- marked.

Ace Jewels

Ace Jewels is an arm of K.P. Sanghvi and the diamonds are sourced directly. “We do not supply graded diamonds but as and when these are demanded by the customers we get them graded from GSL / IGL labs at an additional cost which is borne by the customer. But our pieces are accompanied with a certificate of purity of gold and genuine quality of diamonds. Every piece of diamond-studded jewellery conforms to Best Practice Principles. We ensure that the diamonds supplied by us are genuine, natural and acquired in compliance with the ‘Conflict Diamond’ ban,” says Uday Nanavati.

Consumers also Speak
Diamonds are a unique item about which the consumer has limited expertise and consequently, in order to make an informed choice, the consumer is reliant on the standards and integrity of the diamond industry, and information there from on the 4Cs plus other attributes, including the application of any treatment. The highest professional and ethical standards and technical skills are necessary to ensure that consumer trust is upheld and that the reputation of the gem diamond industry is maintained and enhanced.

In India the consumers aren’t yet well-informed and the diamond industry is not in the lime-light for the consumer to be aware of scandals controversial pertaining to the trade. This is the ultimate reason Indian sales and consumer trust remain unshaken after the GIA controversy. Issues like Kimberly Process, conflict diamonds, etc are non-issues since the consumer doesn’t look into the origin or history of his purchase. The story or life of the diamond begins after it adorns the buyer.

Sonali Pawar, Architect, Mumbai:
“I am not aware of any scandals and counterfeit certificates. I buy branded diamonds and get a certificate of guarantee from the brand, which has buyback value. I do check the quality of diamond and clarity but nothing beyond it. I am happy with my purchases.”

Varsha Parulekar, Working Woman, Mumbai:
“I make all my purchases from a trusted personal jeweller. I like some designs and ask him to make them for me. I do ask for certificates while buying diamonds. The diamonds he offers are good. There is trust and jewellery is bought on the trust factor even today. I know GIA but I am not aware of any controversy related to it. The scandal would anyways not effect me.”

Anjali Karnik, House wife, Mumbai:
“I do ask for certified jewellery. We prefer buying jewellery that comes with buy-back guarantee. I buy jewellery mostly from Tanishq. I am not aware of GIA or any other diamond related scams.”
- Sweta Dharia

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