In a recent development in the HRD bribery investigation,
the four Belgian diamond bourses are displaying a list of stones on their
premises that may be inaccurately or faudulently certified. The HRD hasn’t been
able to comment further on the matter since it’s a case under investigation.
However, the presidents of the various bourses, who are not under the same
secrecy restrictions, have discussed the public listing of the suspicious
certificate numbers along with some specifications about the stones.
The listing stems from HRD’s discovery a few months ago that
several companies had apparently managed to bribe a number of lab employees.
Reportedly, one of the HRD employees hacked into the lab’s computer and the
system in place to protect the anonymity of the ownership of stones being
certified was compromised. Shielding the ownership assures objectivity in
grading. Following the HRD’s own investigation, four employees were dismissed
and the case was subsequently turned over to the police.
Willy Rotti, president of the Antwerp Diamond Club, said:
“We’re talking about some 300 stones, about which there could be a reasonable
doubt as far as their certificates are concerned. But it’s only a doubt so far.
The only way we have to statistically estimate how many of those stones might
actually bear a falsified certificate is our evaluation of a sample of 30
diamonds found in the vaults of one of the companies suspected of involvement in
the fraud. Out of those 30 stones, about one-third turned out to bear wrong
information on their certificates. The 30 stones were all reexamined by the HRD
lab and the finding was the same for all: They all were certified as one color
degree too high.”
Projecting these sample findings statistically would suggest
that one-third of the suspect 300 stones on the list being displayed in the
bourses are wrongly certified. Of course, this is only an educated guess
because nobody knows exactly how the list was compiled, according to Rotti.
“The demand came through the HRD and was originally issued by the police,” said
Rotti. “The lists have been displayed since the beginning of the summer
holidays and will most probably be posted for one more fortnight. If anyone has
bought a stone on the list, the HRD will re-examine it for free.”
The stones on display range in size from 1.5 carats to 4
carats. So far, no diamantaires have contacted the bourse authorities for a
review of stones they purchased previously.
POLICE LIST
Maurice Fischler, president of the Antwerp Diamond Bourse,
said “It’s true that we’ve been asked by the police to display the complete
list of diamonds whose grading reports issued by the HRD lab might be dubious.
As far as we understand, the list was made up by the police, possibly with the
support of the HRD. But it’s important at this stage to recognize that those
300 stones are the full extent of the damage and only a portion of them might
be problematic. Having said that, two things have to be remembered. First, it’s
a good thing that the HRD reacted promptly and released the information early,
and second, the fact that the list was released is a protection for buyers who
might want to have their own stones re-examined.”
One detail shouldn’t be overlooked, explained Rotti. “The
list was posted by the police; if there’s any mistake in it, it’s their
responsibility, since we know nothing about what they are doing in this
investigation and how they’re doing it. As soon as we receive such a demand, be
it from the police or the judicial authorities, we do our best to respond. We
don’t want to hide problems nor to give too much exposure to such issues. A
fraud is always a serious matter. Incidentally, the list also was made
available on the World Federation of Diamond Bourses (WFDB) site, even though
the police didn’t specifically ask for it. All international bourses are free
to use that information as they see fit.”
BREAKING UP
Apparently, the Belgian justice system doesn’t like the idea
of cancelling without notice long-term relationships between producers and
sightholders, or any other kind of “preferred” clients. De Beers has run into
problems with the Belgian justice system twice for this kind of practice. On
August 8, the Flemish weekly magazine Trends reported that “Beginning in 2012,
the mining company Rio Tinto was condemned by the Antwerp civil court because
it didn’t wish to supply anymore its years-long client Crisdiam.”
Michel Leonard, co-owner of Crisdiam, confirmed that “Rio
Tinto was taken by us to the tribunal after it unlawfully stopped supplying us
goods. In its February 2012 verdict, the court fully agreed with all our
arguments, condemning Rio Tinto and assigning them to pay us a compensation
fee.”
Leonard said that his company subsequently
filed an appeal, seeking higher compensation “more in line with the inflicted
damage.” Jean-Marc Lieberherr, general manager of diamond sales and marketing
for Rio Tinto, refused official comment since it is an outstanding court case.
THE MARKETPLACE
• Activity in the trade was extremely weak in recent weeks.
• Demand for fancy shapes is continuing to grow, a trend
that could be explained by three factors: for the same quality, a fancy shape
is cheaper than a round cut; there’s less choice in fancy shapes than in the
round shapes, so buyers are obliged to be less picky and there’s less rough
available to produce typical U.S. princess cuts.
Article from the Rapaport Magazine - September 2012. To subscribe click here.