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Destino to Head GIA
Dec 1, 2005 1:33 PM
By Martin Rapaport
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Ralph Destino, former chairman and president of Cartier, Inc., has been appointed chairman of the Gemological Institute of America (GIA). Destino began his career in the jewelry industry over 30-years-ago as Cartier’s president and chairman of the Far East division as well as chairman of the American Corporation. After assuming his new position, Mr. Destino spoke about the GIA in an exclusive interview with Martin Rapaport.
Martin Rapaport: Mr. Destino, can you tell us about the Gemological Institute of America’s (GIA) Board of Governors meeting held two weeks ago?
Ralph Destino: We held a very important three-day board meeting that was attended by all members. All of the major decisions were decided unanimously. The following are the eight most important decisions that were made:
- Number one: The GIA governors persuaded me to become the chairman of GIA, a newly created position. This chairmanship is now the senior-most position at GIA. Bill Boyajian, who has done so much for the GIA over the years, will remain as president reporting to me. My office will be in 580 Fifth Avenue where the New York lab is located. And as an employee of GIA, I will now be reporting to the same board of governors that I used to chair. In other words, I’m stepping down as chairman of the board of governors and stepping up
as chairman of GIA itself.
- Number two: Starting January 1, 2006, GIA will discontinue its membership structure. GIA laboratory grading service will be offered to everyone at the same price. We will have a new one-price policy. Every client, large or small, will pay the same price for GIA laboratory services.
- Number three: On January 1, we will open up consolidation services to anyone who wishes to provide them. Anyone in any country, at any time, who wants to open a GIA collection and drop-off window can do so. They will of course have to satisfy certain GIA standards, but there will be no exclusives.
- Number four: To avoid any appearance of impropriety, GIA will no longer solicit or accept donations from diamantaires whose diamonds are graded by the GIA lab. We’ve taken this decision despite the fact that our investigation did not provide any compelling evidence of any donor getting favorable treatment. However, the perception of a conflict of interest is enough for us to discontinue donations from diamantaires.
- Number five: The names of several diamond dealers who violated our code of ethics have been turned over to law enforcement officials. We are not making the names or number of dealers public at this time. We have informed these dealers directly that we will no longer accept their stones for grading and we have closed their accounts with us.
- Number six: We have appointed Linda Scholl as our chief compliance officer. We have also engaged the services of Ethics Point, an independent company that provides compliance support services. Anyone can call Ethics Point anonymously and safely report anything improper without fear of any repercussions. Such reports will be investigated and acted upon. Ethics Point can be reached in the U.S. and Canada at 1.866.295.2625 and via collect call to +1.503.726.2269 from overseas. Their website is www.ethicspoint.com.
- Number seven: GIA will now provide free verification services. Anyone holding a GIA report can send their diamond to GIA and we will verify the grading at no charge other than shipping and handling fees. We want to provide our clients with a strong level of comfort. The free service will continue for at least six months.
- Number eight: I have appointed an operations review committee to make a comprehensive study of all lab processes and procedures. We will absolutely assure that one, diamonds are randomly distributed to graders in our laboratories and two, the total anonymity of the diamonds submitted. No one will know whose diamond they are grading. The committee is already working on establishing new procedures.
MR: Is the new title chairman of GIA a permanent position and what will be your initial focus?
RD: It is not a temporary position. My initial focus and priority will be to address the litigation and other issues surrounding the pending lawsuit.
MR: Will GIA’s management structure change significantly?
RD: Everybody who reported to Bill Boyajian will continue to do so and Bill will report to me as the senior executive. My management style is to respect the chain of command but I’ve already indicated to middle and senior management that for expediency or other reasons I may step around the chain of command and speak directly to people at lower levels. Nobody should take offense from that and I don’t think anybody will.
MR: Donations. Will you accept donations from nonmembers of the diamond industry?
RD: We have always received — and will continue to receive — donations from alumni, foundations, trade organizations and others. We will discontinue soliciting donations from diamond dealers whose stones we grade in the lab.
MR: Did donors or members have preferred access to the lab? Did they get their stones back from the GIA faster than others?
RD: No.
MR: Under the new regime everyone will pay the same price for GIA services. Will overall prices go up or down?
RD: Details of the price structure are still being worked on and will be announced shortly. I can tell you that prices are not going to vary very much from the current membership prices. In any case, I was flabbergasted to learn that GIA has never raised its prices in 17 years. The same price structure that’s in place this minute was put in place 17 years ago. I don’t know what else in the world is the same price today as it was 17 years ago. But in any case, we are not planning a price increase. That is not the goal here.
MR: Will GIA support take-in windows?
RD: The logic of take-in windows seems to me to be clear. In many parts of the world there are lots of people who would like to have their stones graded at GIA, but for one reason or another it is too complicated, uneconomical, or difficult to send the diamonds directly to GIA. I can understand that people welcome the idea of having a local drop-off point and a professional person to take their stones, get them to GIA, have them graded and return them within a reasonable amount of time and at a reasonable price. That is a great service for small users all around the world.
MR: How is GIA cooperating with law enforcement agencies? Are there any international enforcement agencies involved?
RD: Since this investigation began, GIA has regularly filed reports of our findings with federal law enforcement officials and kept them abreast of the investigation every step of the way. We have turned over names, whether of internal employees or external lab clients, as we discovered violations of our code of ethics. The investigation was conducted by Tom O’Neil of the DLA Piper law firm. Tom is a former U.S. prosecutor so he was fully conversant and fully cooperative with the law enforcement agency. We have not been in touch with any international agencies.
MR: Why are you not releasing the names of those that have violated GIA’s ethics? Will you do so in the future?
RD: We are going to be silent on the matters of the lawsuit as long as it is pending. The moment the lawsuit is no longer pending, you can ask that question and get some answers. I understand the desire to know who we have determined to be in violation of our ethics policy and how many there are. Ultimately they will be known, but not now, not from us.
MR: If people are afraid they may have an upgraded certificate, what should they do?
RD: We have a free verification system and are happy to address anyone who has any question about any stone. Send the diamond back with the certificate and we will verify it.
MR: Tell us about GIA’s code of ethics?
RD: The code of ethics is designed to inform and educate our employees as to what they can and cannot do. Because I have just become a GIA employee, I was handed the code of ethics, which looks like the New York City telephone directory. It’s a very thick book covering all sorts of issues. It tells employees that they are not to accept any donations, gifts, entertainment, Christmas presents, anything at all. Not from clients or anybody else, and it requires employees to pledge to uphold the ethics that this institute rests on. We are going to be 75 years old next year, and if there’s one thing that’s clear it’s that this institute was founded on two legs — trust and integrity. The code of conduct reinforces that for all of our employees.
MR: Is there a code of ethics for people submitting diamonds to the laboratory?
RD: Yes. The membership and service agreements clearly address the same issues as the employee handbook with references to gratuities or financial influences.
MR: Who is on the operations committee and what will it do?
RD: It is a combination of three types of people: Governors, management and outside legal assistance. They are studying the nuts and bolts of existing lab procedures and they will be making necessary recommendations about all aspects of the grading processes. Particular attention will be paid to anonymity and random distribution. They will address other issues as well and have already met on several occasions.
MR: The GIA has always maintained the ability to communicate with the people in the diamond industry about their diamonds. Will there still be an opportunity for cutters who are submitting stones for grading by the GIA to communicate with people at the GIA about their stones?
RD: GIA has always offered a consultation service to its clients. We consider it a helpful service, where we will, if asked, provide suggestions on how to improve a stone or even how to attack a piece of rough. We will continue to offer this service and we will continue to provide guidance in those areas. But that guidance will not be performed by anyone who has anything to do with grading the stones. We have gemologists on staff who can provide a kind of expertise that diamond dealers might request and we will continue to provide that service, but there will be no connection whatsoever between the advisors and the subsequent graders. Nor will there be any communication between those two.
MR: What does the GIA plan to do if and when this “ethics problem,” as you refer to it, hits the consumer press?
RD: I think the operative cliché answer here is that “we’ll cross that bridge when we get there,” but we’ll think about it before we arrive. There’s one word that has always guided everything I’ve ever done in my career and my life and that word is transparency. Perhaps that will give you a clue as to how we would respond.
MR: What should a jeweler do if a member of the public is unsure of a GIA grade?
RD: If anyone, a dealer or a member of the public, is concerned about a stone they should simply send it back to us with the report and we’ll verify the grading for free. We’ve indicated that there will be no charge for at least the next six months and if necessary, we will lengthen that time frame.
MR: Will diamonds coming in for verification slow down the lab?
RD: We do not anticipate any delays because of this. We’ve added a vast number of graders both in New York and in Carlsbad and we will be in the position to turn these verification reports around quickly. Verification will not impact the flow of our regular grading business.
MR: Do you know how long it takes to get a stone back from GIA right now?
RD: It’s never the same one week to the next. My understanding is that we’re now at about ten days to two weeks.
MR: As the new chairman of the GIA, what plans do you have? Will the GIA consider opening up international laboratories or the grading of colored stones? Tell us about the future.
RD: There are many things in the works for future implementation. I would not want to attach a timetable to these quite yet. A pearl grading system is on the immediate horizon and it will impact the pearl business importantly, just as the original diamond reports impacted the diamond industry. We have a number of new educational initiatives including a degree in Business Administration that specializes in the running of a jewelry business. We will be releasing new equipment from our gem instruments division. And of course we have our new diamond cut grade taking effect on January 1. We have a lot of exciting prospects on the horizon, all of which will be designed to fulfill our mission, which is to serve the public interest.
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Tags:
Compliance, GIA, Jewelry, Laboratories
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