US diamond valuing scandal spreads

[emad]

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.
http://www.timesonline.co.uk/newspaper/0,,172-1948399,00.html

[sui generis]

1. the entire diamond trade is disgusting

Especially out of Africa. Unlike Las Vegas, where real accountancy made underworld control less profitable than legitimate business interests and changed the mob profile in Las Vegas, sourcing in the diamond trade benefits much more readily from the underworld than from legitimate business.

All that glitters is not diamond.

[Zynx]

5. Boycott diamonds.

Even if one buys from a firm that doesn't brutally opress its workers that purchase is still supporting the overall market price which is a ridiculous one.

[Ian David]

2. Think this may eventually include Pat Robertson?

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:
http://www.skeptictank.org/robem2.htm

[emad]

3. Sure would smell sweet!

Wouldn't put it past him.

[deadmessengers]

4. FEMA

Think this will get FEMA to pull the link to Operation Blessing off their website?

[emad]

6. Scam spreads to UK/Europe: today's Times update

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.

http://www.timesonline.co.uk/newspaper/0,,173-1952701,00.html