The full text of the press release by the Board of Governors of The Gemological Institute of America (GIA) regarding the review by the special committee:

 

 

GIA Completes Independent Review; Announces Organizational Changes

 

Carlsbad, Calif. – Oct. 18, 2005 – The Board of Governors of The Gemological Institute of America, Inc. (“GIA”) announced today that a Special Committee of the Board has completed a comprehensive review of the policies and practices currently in place at the GIA Laboratory.  The review was initiated as a result of a lawsuit filed in the spring of 2005 by Max Pincione, which named GIA as one of four defendants. GIA is continuing to defend itself vigorously in that litigation.

Ralph Destino, Chairman of GIA’s Board of Governors, said, “The Board was deeply disturbed by the claims asserted in the complaint, and we felt that we had a responsibility to ourselves, our clients, and the public to not only look into them but to also thoroughly examine all lab practices. That is precisely what we have done.” 

Four-Month Independent Review

In May, the Board formed a Special Committee to investigate the allegations in the lawsuit and any related business practices.  The Special Committee, in turn, engaged the law firm of DLA Piper Rudnick Gray Cary US LLP (“DLA Piper”) to conduct the review under the leadership of Thomas F. O’Neil III, a partner based in Washington, D.C. who chairs the firm’s Government Affairs practice group and who served as an assistant United States Attorney for the District of Maryland.

“Tom O’Neil has an outstanding reputation as a thorough and tough investigator. We knew we were in good hands,” said Mr. Destino.

Mr. O’Neil said, “We conducted an extensive four-month review, during which we interviewed dozens of witnesses and reviewed tens of thousands of documents, including thousands of diamond grading reports. From the outset, the Board embraced the important guiding principles of self-policing and zero tolerance of misconduct. 

“The investigation revealed that, although GIA had undertaken to fortify various facets of the grading process during the past decade, additional measures are warranted.  Accordingly, we have presented for the Board’s consideration a number of possible enhancements of, and supplements to, existing policies governing the grading process and compliance in general. The Board already has decided to implement a number of our recommendations, including the appointment of a Compliance Officer in the laboratory who will report to the general counsel and will oversee the enforcement of the Institute’s compliance policies,” added Mr. O’Neil.

Board Action

The Board has appointed an Operations Review Committee to assess, and implement as appropriate, the recommendations of DLA Piper. 

Mr. Destino said that, “As a consequence of the investigation, GIA has made a number of key personnel changes including:

·         Four employees of GIA’s New York lab have been terminated;

GIA Completes Independent Review; Announces Organizational Changes (P. 2)

 

·         Thomas M. Moses, G.G., a distinguished gemologist with a stellar reputation around the world, has been named the new head of the GIA Lab, with the title of Senior Vice President, GIA Laboratory and Research; and

·         Thomas C. Yonelunas, former head of the GIA Laboratory, while not implicated in any violations of GIA’s Professional Ethics and Conduct Compliance Statement, has tendered his resignation, effective December 31, 2005 to ensure a smooth transition of leadership.” 

Zero Tolerance Policy

Mr. Destino said, “We have zero tolerance for any misconduct by employees of the laboratory. They undermine confidence in GIA’s ability to serve the diamond industry and ensure the public’s trust in gems and jewelry. Going forward, all GIA employees will be obligated to report all suspected violations of the Institute’s compliance policies to the new Compliance Officer.

“At the same time,” added Mr. Destino, “our policies apply with equal force to lab clients. We, therefore, will not tolerate any violations of our code of ethics by clients of the lab, most particularly improper attempts to influence the outcome of our grading reports. We have identified a small community of lab clients who are implicated in such actions and, rest assured, they will be dealt with swiftly and decisively.”

GIA Must Be ‘Beyond Reproach’

GIA President William E. Boyajian said, “I want to thank the Board of Governors for their strong leadership in this sensitive matter. Because of GIA’s important position in the industry and in the public eye as the leading authority in gemology, we take very seriously the need for our practices, procedures, and employees to be beyond reproach.”

 

Mr. Boyajian continued, “That is why we are so pleased with the appointment of Tom Moses to oversee the laboratory. Tom Moses is a man of unquestioned integrity and professionalism, as he has demonstrated over his 23 years of outstanding service to the Institute. His leadership will be essential in bringing a serious, systematic approach to our efforts to strengthen our organization even further. At the same time, I want to thank Tom Yonelunas for his many years of service to GIA and the entire industry.”