The E-Sylum:  Volume 8, Number 54, December 25, 2005, Article 16

BRIBERY ALLEGED IN GEM GRADING: IS COIN GRADING VULNERABLE?

An article in the December 20 Wall Street Journal discusses
a recent scandal involving independent graders of gemstones.
How good are the checks and balances at the top numismatic
grading services?  Could such a scandal befall ever the coin
grading industry?   We all hear the constant complaints about
the services, but I've never heard a whiff of such shenanigans
in our field.

"Bribery allegations at the nation's top rater of diamonds
are rocking the jewelry business and tarnishing trust in
the system for valuing gems.

The Gemological Institute of America, which grades diamonds
for independent dealers and big retailers such as Tiffany &
Co. and Bailey Banks & Biddle, recently fired four employees
and shuffled top management after a four-month internal
probe of its policies.

The institute also is in talks to settle a lawsuit filed
last spring by a diamond dealer accusing workers in its New
York laboratory of taking bribes to inflate the quality of
diamonds in grading reports, said people familiar with the
situation.

The institute's grading system is relied upon by most
dealers and retailers in determining the worth of diamonds.
Since the quality of gemstones is impossible for a layperson
to evaluate, independent labs like the Gemological Institute
are vital in determining a diamond's worth."

  Wayne Homren, Editor

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