US diamond valuing scandal spreads

by **emad** » Wed Dec 21, 2005 1:22 pm

The Times December 21, 2005 US diamond valuing scandal spreads By James Doran, Wall Street Correspondent THE secretive world of diamond dealing has been rocked by a bribery and corruption scandal that has shattered the authority of the Gemological Institute of America, the body responsible for grading and valuing the world’s most precious gemstones. The GIA, which values almost all diamonds on the market from the giant Hope Diamond to the quarter carats in a pair of earrings, was accused in a lawsuit of issuing false valuation reports for two stones bought for $15 million (£8.5 million) by a member of the Saudi royal family and an associate. After an investigation, the GIA found that at least two clients were paying bribes to four GIA staff members to issue false valuation reports on stones worth millions of dollars. The staff members have since been fired and the unnamed clients blacklisted. But The Times learnt last night that the US Attorney’s Office in Manhattan is investigating the corruption scandal after being handed boxes of documents by a GIA executive. Ralph Destino, the chairman emeritus of Cartier, the jewellery house, and president of the GIA, told The Times that he was “shocked and outraged” by the discovery of corruption within the GIA. “To my knowledge there has never before been any stain of any kind on the GIA’s reputation,” he said. Grading and valuing diamonds is a tricky business. It is impossible with the naked eye to tell the difference between the various grades of diamonds at the upper end of the valuation scale. The GIA employs experts in its American laboratories who use laser measuring equipment to test the colour and clarity of a stone. Along with size and cut, these are the factors that determine its value. Tiny differences in clarity and colour, which could never be seen outside the laboratory, can alter the price of a stone by thousands or millions of dollars, depending on its size. The GIA is the lone guardian of these almost immeasurable differences and trades solely on its reputation for issuing honest reports. Mr Destino said the GIA was confident that it had rooted out the problem, which centred around “a handful of people and a handful of stones”. “The trade and the public can rest assured that there is no reason to question the integrity of any report from the GIA,” he said. But the scandal is likely to broaden in coming weeks as investigators from the US Attorney’s Office in Manhattan are preparing indictments against the GIA clients and the former GIA staff alleged to have exchanged bribes in the case. A source close to the GIA confirmed that the authorities had been handed all the evidence gathered during the internal investigation. It is also understood that the GIA will this week sign a seven-figure settlement with the diamond dealer who brought the lawsuit against it as a first step toward repairing its tarnished reputation. Max Pincione, an independent diamond dealer who travels the world seeking buyers for large, rare diamonds, is expected to be paid at least $15 million to abandon his legal claims against the GIA. JEWELLERY BOX Diamonds are graded and valued using a scale based around the so-called four Cs Colour: colour ranges from D, colourless, to Z, Fancy. Stones rated D, E and F are the most expensive on the market. Diamonds commonly used in good jewellery are found in the G, H, I, and J spectrum, which are “near colourless”. Clarity: the clarity scale ranges from Fl, or flawless, to I3, or included. An inclusion is the gemologist’s term for a flaw. Most good jewellery is graded as VVS1 or VVS2, very very slightly included. 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. Carat: the carat is the unit of weight used to measure the size of a diamond. Bigger diamonds are scarcer than smaller diamonds, meaning that the carat is also a measure of a diamond’s rarity. <a href="http://www.timesonline.co.uk/newspaper/0,,172-1948399,00.html">www.timesonline.co.uk/new...99,00.html</a>

by **emad** » Thu Dec 22, 2005 3:09 pm

Diamond market falls victim to fraudsters From James Doran in New York A CORRUPTION and bribery scandal engulfing the secretive world of international diamond dealing has spread to Britain with claims from one of the trade’s highest authorities that the London diamond market has fallen victim to fraud. The wholesale trade in large and expensive diamonds is a notoriously clandestine business that relies almost entirely on trust and the expertise of the Gemological Institute of America (GIA), the body responsible for grading and valuing the world’s most precious gemstones. But the GIA’s expertise and the good faith it fosters has been shattered after it discovered that four of its senior staff had accepted bribes from clients in return for falsifying diamond valuation reports. Now, Ralph Destino, the GIA’s top executive who is also chairman emeritus of Cartier, the jewellery house and luxury goods company, has told The Times that fake valuation reports have been discovered in London and on the Continent. “There have been some cases of fraudulent GIA certificates in recent months in London and also in Antwerp,” Mr Destino said. The discovery of the fake documents has further rocked the gemstone trade and puts the GIA under greater pressure to assure the public that it is safe to buy diamonds. “The GIA is doing all that it can to ensure that these cases remain a rarity,” Mr Destino added. He said that diamond purchasers should ensure gems are accompanied by an appropriate GIA certificate which should be laminated and include a hologram. “Copies of documents or documents that are not laminated and sealed should not be trusted,” he said. The GIA employs experts in its American laboratories who use specialised laser measuring equipment to test the colour and clarity of stones, which, along with size and cut, are the factors that determine their value. Tiny differences in clarity and colour, which could never be seen outside of the laboratory, can alter the price of a stone by thousands or millions of dollars, depending on its size. The GIA is one of the only guardians of these almost immeasurable differences and trades solely on its reputation for issuing honest reports. The bribery scandal is expected to broaden in the coming weeks as the Manhattan District Attorney is close to the conclusion of an investigation into the former GIA staff and two clients already accused of exchanging large amounts of cash to falsify GIA reports. The case first surfaced in April when Max Pincione, an independent diamond dealer who travels the world seeking buyers for large rare stones, sued the GIA over what he claims were fake valuation reports. <a href="http://www.timesonline.co.uk/newspaper/0,,173-1952701,00.html">www.timesonline.co.uk/new...01,00.html</a>

by **emad** » Thu Dec 22, 2005 3:12 pm

OFFICIALS MUM ON ROBERTSON DIAMOND MINE OPERATION PROBE A yearlong investigation of televangelist Pat Robertson's activities in Africa is now over, but state officials are sitting on the final report pending a review by attorneys, reports the Virginian-Pilot newspaper. The probe focused on possible inappropriate activities involving Robertson's Operation Blessing outreach, and a private corporation he operated known as the African Development Co. Based in Zaire, the firm was established by Robertson during the rule of the late dictator Mobutu Sese Seko. The two men established close ties, and Mobutu wined and dined Robertson during one visit to the country; ADC also received vast forestry and mineral concessions, but the diamond mining operation eventually went bankrupt. Mobutu, after a quarter-century of iron fisted rule, died last year in exile from cancer. He left Zaire bankrupt and impoverished, and since 1994 had even been considered persona non grata in the United States. In April, 1997 two pilots who worked for Operation Blessing charged that planes linked to Robertson and his ministry flew mostly to haul equipment for ADC's private diamond operation. Robert Hinkle, the chief pilot told reporter Bill Sizemore that of about 40 flights within Zaire during the half-year period he was there, "Only one or at most two" were related to the humanitarian mission of Operation Blessing. The rest were "mining-related." "We got over there and we had 'Operation Blessing' painted on the tails of the airplanes, Hinkle told the Virginian-Pilot, "but we were doing no humanitarian relief at all. We were just supplying the miners and flying the dredges from Kinshasa out to Tdshikapa." If so, that activity could jeopardize Operation Blessing's special tax exempt status. It also highlights Robertson's network of projects and corporations mixing religion, politics and private business. MORE: <a href="http://www.skeptictank.org/robem2.htm">www.skeptictank.org/robem2.htm</a> WITH thanks to DU's IanDB1

by **bamabecky** » Thu Dec 22, 2005 11:48 pm

Emad, you come up with some good stuff! Bama Be the Media! Write a personal essay to your friends and family, telling them what's going on and tell them how and where to find more info.

by **Marathon Man** » Fri Dec 23, 2005 12:55 am

"Is it safe"?

by **Trifecta** » Fri Dec 23, 2005 5:40 am

Diamonds being rare and thus valuable is another one of those big lies... much like oil being a fossil fuel. The whole thing is corrupt and has been for lifetimes.

US diamond valuing scandal spreads

US diamond valuing scandal spreads

Scam spreads to UK/Europe: update

OFFICIALS MUM ON ROBERTSON DIAMOND MINE OPERATION PROBE

Robertson

Diamonds

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