Potential Game Changer for Industry and Grading Labs
By Chaim Even-Zohar
The advent of a reversible (temporary) color enhancement treatment in the diamond market potentially presents a radical “game changer,” comparable to the discovery of the Yehuda Treatment in the early 1980s, or the General Electric/Lazare Kaplan HPHT-color enhancements of the 1990s.
In these methods, the color change is stable and permanent. A new treatment, that may cause an up to three grades change of color in diamonds that will revert back to its original color, may greatly impact the way the business is conducted.
GIA scientists and other gemologists are working around the clock to discover the treatment method as well as the triggers that activate the reversal process. This article, in a cautious manner, looks at the little that is known so far. It is a scary and quite unsettling story.
The Story So Far
Two Israeli police investigators spent most of their time recently at the Gemological Institute of America (GIA) laboratory in Ramat Gan, Israel. The Israel Diamond Exchange (IDE) called in the police after the GIA issued its alert noting that the “GIA reasonably suspects that approximately 500 colorless to near colorless diamonds submitted primarily to our laboratory in Israel potentially were subjected to an undisclosed temporary treatment.”The geographic location of the discovery is not relevant: the existence of the unknown treatment potentially affects each and every diamond center. The Israeli bourse acted resolutely. It took the almost unprecedented step to call law enforcement into the rather closed diamond community, when learningabout “tradingtreateddiamondswithout disclosure in the Israeli diamond and trade,” and trading with “GIA diamond grading reports that misrepresent the diamonds’ true identity.”
A New Precedent
As far as this writer is concerned, this is the first time ever that the Israeli bourse’s internal disciplinary bodies were bypassed regarding the handling of such suspicions. They were, instead, catapulted straight into a full-fledged police investigation. This investigation is being conducted in coordination “with the appropriate state authorities,” which have been called in to “take the needed measures,” said a statement released by the bourse.
At this point in time, we find it hard to understand what the police can contribute to the GIA-created imbroglio, except perhaps for generating short- term positive public relations overseas. Moreover, if GIA clients tried to defraud the GIA, i.e., if they found a system through which the GIA would unwittingly issue an overstated diamond certificate, why didn’t the GIA go the police itself? Why was that left to the Israel Diamond Exchange to do?
GIA: ‘We Followed Normal Protocol’“As always in these situations, we first apprise the presidents of the WFDB and IDMA, and, in this instance, also of the Israel Diamond Exchange,” explained GIA Senior Vice President Tom Moses. “The bourse decided to call in the police. If they hadn’t done this, we most likely would have done it ourselves. In any event, we are fully working together with the police, as is evident by the long hours spent in our lab talking with our people.”
Incidentally, it’s not clear why the police were spending so much time at the GIA lab; most likely, they are getting a complimentary crash course in gemology. Meanwhile, we have learned that the police are checking the prices for which the buyers bought the suspect stones. If they paid substantially below market price for them, then it may be assumed that the buyers knew they were buying misrepresented goods. If they paid full market value – they may have been “had,” provided that the stones are indeed treated.
This story is still developing and it has only been a few weeks since the GIA issued its initial announcement. At this point, the GIA and other scientists have not yet been able to conclusively determine the nature of the “undisclosed temporary treatment.”
Some skeptical diamantaires retort that this whole incident “seems like a giant cover-up for some GIA clients (or maybe even just one client) bribing some GIA employees and inducing them to give color upgrades… but then were caught.” Some diamantaires are also angry with the GIA for specifically identifying Israel in its statement.
The local Israeli GIA lab director vehemently rejects any suggestion that the police are actually investigating the GIA itself. Tom Moses also categorically and unequivocally denies and dismisses any talk about GIA wrongdoings or cover-ups – and I believe him. Unfortunately, what I believe is irrelevant.
What we have now is a situation that demands conclusive, unequivocal answers, and the onus to provide these answers falls completely on the GIA. This is the only way to restore market tranquility. Moses assured us that all of the institute’s findings will be shared fully with the industry.
Unknown Color Treatments
In conversations with Tom Moses, he reminded me that, historically, every decade brings new color treatments that are, initially, quite unknown.
One recalls the Yehuda Treatment in the early 1980s, or General Electric and Lazare Kaplan’s colorless diamonds (called Bellataire) in the 1990s. It took the gemological community some time to compile the “protocols” or the ways to identify, detect, understand the materials, durability, permanency of stones subjected to these treatments. One also needs thousands of stones to study before getting a comprehensive understanding of all gemological characteristics of each treatment.
It might well be that the color enhancement method that is being used by the suspected parties is a variation on some of the known methods; it might also be something entirely different.
The inventors or users of the treatment method in question are not coming forward, nor are they presenting their expertise for analysis. That, by itself, hints at something about the bad intent underpinning this activity. It is treatment meant to defraud. It is, indeed, a matter for the police to get involved in.
The essence of a ‘Temporary
It is quite scary to think that there is an unstable, reversible, and temporary diamond-color- enhancement method in the market that is escaping detection. In fact, it apparently doesn’t leave any traces!
The GIA describes the treatment in its alert as “a process that temporarily masks the inherent color of the diamond and can lead to higher grading. The color difference can be as much as three grades.” Such a color difference easily translates into 60-70 percent of a stone’s value.
The vast majority of suspect stones in this story are above 1 carat, with some being in the 3-5 carat ranges. The Israeli GIA lab only grades stones up to 2.99 carats in size; therefore; the larger stones were graded in New York or California. The GIA confirmed to Diamond Intelligence Briefing (DIB) that the US submissions contained stones all belonging to some of the same four companies that were publicly identified in the (May 12, 2015) GIA alert.
A Diamond Recall
The GIA has known about this temporary enhancement for probably a few months – ever since an innocent third party brought in a stone that clearly showed a color mismatch compared to its own certificate. Though the GIA alert refers to 500 suspicious certificates, only 424 of them were included in the lab’s list of diamond certificates that require rechecking.
The reason for the difference is that some 76 stones were already rechecked before the alert was issued. The majority of these rechecked diamonds turned out to have gone back to their original (and natural) color – up to three grades lower. Apparently, the “best” color seen in the treated stones is “E” – though there might somewhere be a “D.” Most of the treated stones are “E” and below. The problem is real – not imaginary.
In fact, sources at the GIA intimate that the practice may have started somewhere around the end of 2014. In any event, the GIA has issued a recall that includes diamonds that were certified by the GIA in the past six months. What the GIA did was simple: as soon as it had identified some parties that had submitted the undisclosed treated stones, all certificates issued to these companies were considered suspect. They all were recalled – and voided.
It is quite possible that other companies were aware of the treatment. It is also quite possible that there may be other companies out there still applying this same treatment method. In addition, a possibility is that several additional companies could have made submissions of stones to the GIA with temporary color enhancement on behalf of the companies already identified. (Indeed, from the four identified companies, one has stated that it did “a favor” for one of the others, as they had reached the company submission limit of stones set by the Israeli GIA lab. The company had never even seen the stones…)
It is a real and justified fear that this incident might just be the tip of the iceberg. If so, this may have made it necessary for the GIA to go public – even before having all the details about the process.
From a few minutes to a few weeks
Color enhancement is one thing – permanency of the change is a different matter altogether. An unstable diamond color will greatly affect its price – and become a source of potentially enormous legal and commercial trouble. (It already has. A buyer in Israel wanted to return a stone he had bought in the bourse; the seller refused to take it back. The buyer wants to cancel the post-dated check given in payment. Cancelling checks is prohibited. This is going to be an interesting arbitration.)
GIA Laboratory Alert
May 12, 2015 – GIA reasonably suspects that approximately 500 colorless to near colorless diamonds submitted primarily to our laboratory in Israel potentially were subjected to an undisclosed temporary treatment.
GIA believes that the treatment is a process that temporarily masks the inherent color of the diamond and can lead to a higher grade. The color difference can be as much as three grades. GIA has not yet identified the treatment process, but this is being actively researched. At this time, the diamonds treated in this way have been submitted by just a few clients.
Report numbers with this suspected treatment are listed here (see http:// www.gia.edu/gem-lab/laboratory-alert- may-2015) and we ask anyone who has purchased or holds these diamonds to please re-submit them to any GIA location for review. GIA will expedite the service, and no fee will be assessed. We have terminated submissions from the clients who have submitted these diamonds to GIA and have notified the appropriate trade bodies.
It is well known that exposure of a diamond or gemstone to an artificial source of radiation will change its color. This is sometimes followed by a heat treatment (annealing) to further modify the color.
One esteemed gemologist, Dr. Sharon Ferber, D.G., G.G., noted in one of her studies that,“The problem with irradiation is that although the colors are attractive, there is some question about their permanency and the health hazards. Irradiated diamonds are guaranteed to survive the normal, everyday wear and tear, but the color may change when the stone is exposed to high heat.”
Is irradiation something that can always be detected? Yes and no. There are many diamonds that will always show some form of irradiation, mainly because of their mining source. Sometimes, the proximity to a uranium mine enough reason for irradiation in diamonds to show up.
“It all depends on the doses,” says a GIA source. Massive irradiation would turn a diamond totally black. Small doses may not always be visible. But irradiation is mostly used for colored diamonds. Although perhaps not any longer – we still don’t know.
This new “temporary” unstable color enhancing feature is an entirely different ballgame. Color changes can be made in several ways – though this is not the place to discuss these. However, HPHT color enhancements, Yehuda Treatment, and other known methods bring about permanent, irreversible and durable color changes. In some instances, a color may change again by some treatments – but they don’t revert back to their original color. This is definitely a game-changer for the entire industry.
Seeking the ‘Trigger’ that Activates the Reversal Process
If the submitter knows that the stone may revert within a few hours or days to its original color, he would use the GIA’s more expensive “express checking service,” to get his certificate, while the artificially-induced grade still appears. The Israeli lab director confirmed, however, that some of the suspect stones were submitted in the ordinary process, which would actually suggest that the “time framework” before reverting back to original color is longer than currently is assumed.
What we have learned is that in most instances, the diamond reverts to its original color within two days, but some last only for a few hours. If that’s the case, what accounts for the time difference? Sources within the GIA explained that it depends on a yet unspecified “trigger” that activates the reversal process. That “trigger” can be many things: the exposure to a specific source of heat, exposure to a (shortwave or longwave) ultraviolet fluorescent lamp when checking the fluorescence of a diamond, or exposure to certain other light sources.
Someone familiar with the rechecking of the 76 treated stones (before the GIA publicly issued its alert) confided that in some instances, the stones actually went back to their original color during the examination, while still at the GIA in New York. In other instances, the gemologist had started to work on a stone in the afternoon, and when he or she came back the next morning, the grade was lower.
This actually gave rise to some interesting possibilities. At the GIA, every stone is “cleaned” before being examined. Certain solvents are used in the cleaning process. It may well be that the “trigger” to activate the reversal may be a chemical used in the cleaning solvent. It is just one more area for investigation.
The Israel Diamond Exchange, for whatever reasons, seems to think that the fraudulent method is coating-related. The bourse’s website carries a regrettably misleading headline: ‘Update Regarding GIA Coated Diamonds Case.’ That’s jumping the gun.”
If, indeed, there is a“trigger”that activates the color reversal, it is quite logical that, in some instances, the change back to its original grade may be a matter of hours, days or even weeks or more. It all depends on what the triggers are – and when the stones are exposed to them.Coating and Deep-Boiling
After interviewing members of Israel’s bourse, it seems that many diamantaires – for whatever reason – believe that the color change comes from a specific deep-boiling process. They assert that some chemicals were added to the customary deep-boiling process that removes the remnants of black ink, fingerprints and other dirt from the polished diamonds.
Others think it is a coating process. Indeed, thin- film coatings are sometimes used on diamonds to change their color. Crude yet effective coatings can also include the use of permanent ink markers along the girdle surface of a diamond, causing its face-up appearance to be affected by the color of the ink used.
We are even familiar with coating methods that use metal oxide films. If I am allowed to speculate: one can even “stick” or “paste” some infinitely small material on several places on the diamond’s girdle, which will lead to a light distortion giving the stone a better color, and thus a better grading. When the diamond reaches the jeweler, who uses heating materials to set the stone into its setting, the material may unwittingly be removed.
The Israel Diamond Exchange, seems to think that the fraudulent method is coating-related. The bourse’s website carries a regrettably misleading headline: “Update Regarding GIA Coated Diamonds Case.” That’s jumping the gun. The GIA doesn’t know yet if a coating was applied to the diamonds under investigation. If the Exchange knows something that the GIA doesn’t, it should immediately inform both the GIA and the public.MOUNTING LEGAL AND COMMERCIAL PROBLEMS AHEAD
With due caution, let’s have a look at some of the legal, commercial and gemological aspects of the known facts. Some of the five companies mentioned in the GIA alert are considering libel, defamation and/ or damage actions against the GIA. They have acquired some of the best lawyers one can find.
Rightly or wrongly, gemological labs have lately become the “preferred” target of law firms that are advertising class-action lawsuits against wrongdoings. However, the GIA seems to have done its homework – and we cannot find legal flaws in its carefully crafted announcement. Moreover, it apparently acted in full accordance with the agreed terms and conditions applicable to all of its grading activities.
Intentional fraudulent diamond upgrading provides enormous windfall profits to unscrupulous industry players. Let them discover that crime doesn’t always pay…
We applaud any legal actions if they lead to the removal of rotten apples from our industry. However, the GIA doesn’t belong in that category. It has become the industry’s standard-setter and benchmark. And its integrity needs to be protected. That is most of all its own responsibility.
However, it also needs to labor day and night to find ways to detect these treatments. I understand that the lab has already asked outside scientists to join them in the search for detection. But until it finds the answers, any color grade on any diamond report by any lab may become questionable.
If most stones revert back to their original color in two days, all labs should hold stones for that period before commencing grading. And, if the period for the color change takes longer to take effect, stones may have to be held by all labs, gemologists and appraisers for several weeks before they are released.
Currently, the diamond business is in bad shape. Bad news seems to hit us with ever greater frequency. There is a tendency to “smooth things over lest we negatively impact trade sentiment and consumer confidence.”
Though we don’t believe in magic, the GIA’s early assurances that it is in control of the detection issue – and has shared this information with all labs and industry bodies – may well be the best news we can hope for at the moment. Tom, if you’re ever able to pull off miracles, this is the time to do so.
IDE Issues Announcement on GIA Lab Alert
On the morning of May 13, 2015, The Israel Diamond Exchange (IDE) called an extraordinary meeting of its board of directors, with the participation of the presidium of the Israel Diamond Manufacturers Association (IsDMA); the IDE’s Head of Security, Israel Vantovsky; Police Commissioner (Ret.) Yossi Sedbon; and the IDE’s Legal Counsel, Adv. Shmuel Ini.
Expressing indignation and resentment, meeting participants resolved to identify the suspects who distributed close to 500 high-quality, polished diamonds suspected to be treated in the Israeli diamond trade, without disclosure, and with GIA diamond grading reports that misrepresented their true identity. The meeting therefore decided to act immediately and, in coordination with the relevant parties in the bourse and the appropriate state authorities, to take the needed measures.
To expedite the process, the board decided to delegate the handling of the case to a number of board members, together with the IDE’s advisors and counsel.
The Exchange will provide further updates as they become available.
w IDE Announcement about GIA Coating Case
The Israel Diamond Exchange released a further announcement following the alert issued by the GIA regarding stones that had been submiited and received reports that are suspected to have undergone a color treatment process.
The IDE said that following a meeting of management on May 13, it is continuing to deal with the issue and is taking the following steps:
We provided briefing sessions for authorized state authorities with a panel that was especially established for the purpose with the following IDE members: Meir Dalumi, Shalom Papir, Loni Grinker and Moni Bachar along with legal counsel and retired former police commander Yossi Sedbon.
We held coordinated discussions with World Federation of Diamond Bourses President Ernie Blom and with presidents of diamond exchanges around the world.
We issued an announcement to all the exchanges and relevant bodies in the global diamond industry.
We carried out an evaluation of the situation with media advisers and briefings for journalists.
We asked all IDE members to turn to the Legal Department regarding transactions carried out for stones that were on the GIA list. We also received reports that there were no problems with some of the stones that were on the list.
The IDE said it would continue to inform the diamond public regarding new developments.
The notice was signed by IDE President Shmuel Schnitzer.
Meri Dalumi, the chairman of the IDE’s Legal Committee said that any diamonds traded that are on the GIA list should be handed over to the IDE’s Legal Department for guidance about what steps to take. Trading is not allowed for any stones on the GIA’s list. Anyone in possession of such stones is required to submit them to the IDE’s Legal Department.
ALL SORTS OF DECEPTION
From passing off lab-grown diamonds as natural, to playing around with color, there have been more than a few cases of dishonesty in the diamond and gem industry.
One sadly common type of deception is the practice of “masking” whereby a lower value large Type IIa br
One sadly common type of deception is the practice of “masking” whereby a lower value large Type IIa brown stone is treated with a detectable HPHT (high pressure, high temperature) treatment and becomes a D color with F clarity.
But how is this deception hidden from the consumer? According to Chaim Even-Zohar, after the brown stone has been transformed into a perfect white diamond, it is subsequently subjected to irradiation, which slightly alters the diamond’s crystal lattice and knocks some carbon atoms out of place, not because it needs it, but purely to mask the HPHT treatment.
Once this is done, says Even-Zohar, it is virtually impossible for a laboratory to conclude that the stone started out in life as a cheap Type IIa brown, especially as only a few very experienced labs (GIA, HRD, De Beers Research Center, and some others) have the ability to discover “masking.”
The Exchange will provide further updates as they become available.
Quite the biggest deception involves passing lab-grown diamonds off as synthetics. Recently, undisclosed diamonds have been finding their way to India from China.
Earlier this year, the Surat Diamond Association (SDA) recovered 110 synthetic diamonds from a packet belonging to two diamond traders operating from the Mini Bazaar diamond market in Varachha.
This is the first time that synthetic diamonds have been discovered in the diamond-manufacturing city.
SDA president Dinesh Navadia said the stones were cut and polished in Bhavnagar. He added that the Natural Diamond Monitoring Committee (NDMC) set up by the Gems and Jewellery Export Promotion Council (GJEPC), is looking into the issue. This committee was established after a huge quantity of synthetic diamonds was detected in Mumbai in 2013.
But, it is not just diamonds that are subject to undisclosed treatments. In 2012, the American Gemological Laboratories (AGL) announced that it had identified a number of Colombian emeralds that have undergone irradiation treatment.
Although rumors about treated emeralds had been rife, the lab said this was the first time it had received stones that have been identified as being irradiated – a procedure that was first shown to modify the color of natural and synthetic emeralds nearly 20 years ago.
AGL said in a release that although the color of the emeralds was slightly unusual for a typical Colombian emerald, color alone cannot distinguish treated gems. Instead, detection is most effectively carried out using a spectrometer (an instrument used to measure properties of light over a specific portion of the electromagnetic spectrum) since the treatment may produce different types of defect centers that absorb in the ultraviolet region of the spectrum.
“Interestingly, we also noted that these emeralds had been clarity enhanced by introducing a polymer-type resin into fissures to reduce their visibility,”said Christopher P. Smith, president of AGL.“So these particular gemstones had the standard emerald enhancement of clarity, as well as an additional enhancement of irradiation.”
Download the PDF: Idex Online – Temporary Color Enhancement