Please meet Sarah Winterton, the Secretary of CIBJO Europe. She is the lady in charge of implementing CIBJO’s three-pronged strategy to achieve a strong political movement towards EU-wide diamond terminology legislation in the 30 EC and associated countries, followed by the eventual adoption of a worldwide standard for synthetics nomenclature and diamond grading. A strategy document developed by Winterton and her colleagues indicates that it still may take between 3-5 years to secure these objectives. Winterton is in charge of, apparently, unlimited resources and, in pursuit of her objectives, she and her colleagues have already held some three dozen meetings with Members of the European Commission, members of the European Parliament, with the European Council and with Member States.

What is CIBJO Europe, one might wonder. CIBJO is a world-wide organization. So what is this new and unknown body, located in luxurious premises of the CIBJO Europe Secretariat at 19 Buckingham Gate in London? Just a few months ago, CIBJO’s President Dr. Gaetano Cavalieri informed his colleagues that the CIBJO Europe Group “is an ad hoc task force created to advance the principle of a single diamond grading and nomenclature standard within the European Community. The goal is to create a nomenclature standard in CEN, which is a European quasi-governmental consumer body that could promote a pan-European standard for diamond nomenclature.”

Who are the formal members of CIBJO Europe? Explains Winterton: “CIBJO Europe itself is an informal working group of CIBJO which is focused on consumer confidence and nomenclature in the diamond industry, a consumer facing project. The only formal membership of this group is Cavalieri as President of CIBJO and myself as the secretariat.” Thus a committee-of-two!

The strategy documents in our possession specifically about legislation, and there is nothing ‘quasi-governmental’ about that. They note specifically that European legislation “can form the basis of a global ISO standard.” A global standard on synthetics nomenclature is something that affects each and everyone in our industry.

How do you get politicians to do anything? You scare them. It is that simple. Dr. Charles Tannock, member of the Conservative Party of Great Britain, and member of the EPP/ED Group, the largest faction in the European Parliament, is one of CIBJO’s supporters in the European Parliament. Tannock cites the dangers that “a lack of standardization and clear terminology risks damaging consumer confidence, undermining the diamond industry and impacting negatively on economies which are reliant on the diamond industry for revenue and jobs.” First we had conflict diamonds that threatened the economic fortunes of nations; now the danger comes from diversified certification standards and the confusion created by using the term ‘cultured diamonds’. This is quite an effective strategy.

Transparency and disclosure are the virtues to be espoused by the legislation. Transparency and disclosure, however, starts at home. Winterton is not a gemologist; she is Managing Director of the Political Division of The Communications Group plc. (TCG), one of Europe’s leading independent communications and (political) public relations company. TCG’s clients list shows as few hundred of the world’s largest and finest blue chip companies. CIBJO is not listed as a client on its website – however the Diamond Trading Company of De Beers proudly appears on the ‘new clients’ list. What does TCG do for the DTC? Its website gives the answer: “The Communication Group has been appointed to support the Diamond Trading Company Consumer Confidence Team on a broad strategic brief.” The DTC’s Jonathan Kendall is quoted as saying that TCG’s “strategic insight and focused approach has proved invaluable over the past year.” [CIBJO will be added to the website’s client list in 6-7 weeks, we were told.]

CIBJO Europe is basically an instrument largely funded and supported by De Beers. Rio Tinto and BHP Billiton joined the legislative initiative in a minor way, they also support CIBJO financially and their officials have participated in some meetings in Brussels. Instead of going directly to Europe as producer (and as a certificate issuer) and lobby directly for a nomenclature, De Beers opted to try and achieve its objectives through using the international standing of CIBJO. Ostensibly, this is odd – given the fact that De Beers and CIBJO differ greatly in their respective synthetics positions.] Says De Beers: “We are assisting CIBJO by providing it with the capacity and the resources it doesn’t have.” Cavalieri stresses that CIBJO has its own contract with TCG. Winterton elaborates: “CIBJO is a client of TCG and we are contracted by CIBJO to undertake the provision of these secretariat services.”

TCG is, however, doing much more than just secretarial services. Winterton, who is a top-class political consultant, has been designated to serve as Chairperson of the crucial CEN Workshop that will shape the multi-year European standardization approval process.

Winterton came to TCG in 2006. Before that she served as Director of Public Affairs at the British Retail Consortium. She has over 14 years experience in the political consultancy industry in both the EU and UK and has over 2.5 years experience within the diamond industry. Sarah comes from a “political” family - she is the daughter of Conservative MPs Nicholas and Ann Winterton, a husband and wife team of parliamentarians. De Beers could not have picked a more qualified person or company to achieve its strategic objectives. There is also nothing wrong with De Beers largely footing the bill for this highly complex, protracted and probably mega-expensive exercise. But it should have been disclosed. In not a single one of the documents presented to either CIBJO members or European politicians and parliamentarians – at least in none of the documents we have seen – has this link been disclosed.

Sarah’s Three-Pronged Strategy

The stated primary objective of De Beers, acting in partnership with CIBJO Europe, is, to “achieve legislative action across the EU that protects consumers from the deceptive or unfair business practices that occur with the misuse of the nomenclature used in conjunction with non-natural diamonds, including synthetics, simulants and treatments.” This pan-European legislation will:

¨      Standardise terms used across the EU;

¨      Increase consumers’ confidence in the diamond industry;

¨      Provide a solid base for future, sustainable growth of the European diamond industry;

¨      Support industry self-regulation: legislate for full disclosure in diamond nomenclature.

These objectives are laudable and we don’t want to debate these in the present context. We wonder about the practical implications of making CIBJO/IDC grading standards the ‘law of the land’ and have difficulty in understanding what it means for other certificates. Undoubtedly, the HRD certificate will be greatly strengthened and gain a competitive edge if and when the relevant legislation is passed.

What interests us most is the strategy to be followed by Winterton. She suggests:

¨      Utilizing standardization as part of a step-approach to achieving disclosure legislation (using CIBJO Blue Book);

¨      Leveraging Producer and key Member State support to demonstrate high level concern and ethical urgency for action;

¨      Boosting EU Commission and Parliamentary support and momentum behind the campaign.

The CIBJO Blue Book

What we feel is missing is a chance for a reasonable debate with other stakeholders, especially those in the United States, before deciding that CIBJO’s Blue Book (which currently only allows the word ‘synthetics’ and does not agree to man-made, laboratory grown or cultured terminology) becomes the basis of the exercise. Incidentally, the choice of the Blue Book has been explained to CEN by its statement that “the jewelry industry has self-regulated and generally uses as reference a set of permitted descriptors that are outlined in the CIBJO Diamond Blue Book and IDC Rules.” I am not sure how accurate this statement is.

Look at the facts. Some 50 percent of worldwide diamond jewelry sales take place in the U.S. where compliance with the Federal Trade Commission’s Jewelry Guides is mandatory. Australia has its Advertising and Promotion in the Jewellery Industry guide which makes the practitioner compliant with the Trade Practices Act 1974; Canada has its Guidelines, which were accepted by government and are based on the U.S. model. The hundreds of gemological labs in the world produce 3-3.5 million certificates annually. The majority of these certificates come from non-CIBJO standard labs. Hypothetically, if the drivers of the initiative would go for FTC standards in Europe, then global standardization would almost have been achieved de facto, without having to go the ISO world standards road. Such course of action, however, has no chance of succeeding – as we’ll show shortly.

Voluntary versus Mandatory

In the U.S., the Federal Trade Commission’s Jewelry Guides are the law of the land. Compliance is not optional; it is mandatory. Basically, in a number of countries a similar situation exists. Some gemological laboratories we approached dismissed the standardization exercise as irrelevant by saying that the European Standards, promulgated by CEN, are voluntary and not binding. That might be possible – but that isn’t the agenda. Winterton’s team, and all documents I have seen, only talk about legislation.

A CEN guidance document explains it as follows: “Standards, unlike legislation, are essentially voluntary in application unless called up into legislation or cited as part of a contract. Legislation can also refer to a standard as a mean of compliance. This means that compliance with the standard is indicated as a possible way of fulfilling legal requirements. Other ways to comply with the legal requirement may be chosen, but those using the standard have the presumption of being in conformity with legal requirements.”

Once ratified by CEN, a European Standard (EN) has to be implemented by CEN members as an identical national standard and any conflicting national standards must be withdrawn. A European standard, therefore, potentially replaces some 30 different national standards. Even if Winterton and her colleagues fail to get full legislation in all these countries, the standard will be applied in court cases and in a range of other situations. Let’s therefore not ‘dismiss’ the crucial significance of the exercise.

De Beers Wants Only CIBJO as Partner

Why did De Beers decide to team up with CIBJO, an organization that doesn’t have (anymore) any approved CIBJO-standard laboratories in the world? Why go with CIBJO knowing that the position on synthetics of De Beers and of CIBJO is quite different? There are historical reasons for this otherwise inexplicable relationship.

Historically, CIBJO was created as a European Consortium to achieve a common understanding among Europeans on the jewelry industry. When the prices of diamonds shot up, after grading was introduced, CIBJO tried to bring some order and honesty into diamond grading. At that time there was a proliferation of gemological labs, many involved with both the grading and selling of diamonds. Many diamonds were misgraded. Then CIBJO requested that each CIBJO country nominate ONE laboratory in its country which was reliable as an “official” laboratory.

In those days most European countries had a lab which worked under a Chamber of Commerce. Each country appointed one lab; they became known as CIBJO Approved labs. Serious problems arose over the one-lab-per-country rule, as some countries had more than one diamond or jewelry center. These labs were supposed to operate under CIBJO rules. At that time the U.S. was not in CIBJO.

Then, about fifteen years ago, there were pressures to allow other labs to get CIBJO Approval. The originators opposed this as, by then, their CIBJO labs had gained national and international recognition and frankly they did not want competition, and they wished to maintain their monopoly in each country. Eventually, after considerable acrimony, the concept of CIBJO Recognized labs was created, enabling granting CIBJO status to more than one per lab country. The U.S. was a latecomer to CIBJO, and labs like the GIA were too well established to need CIBJO - and they also found the CIBJO lab rules too restrictive. There was little love between the U.S. and CIBJO.

De Beers Mistrust of U.S.

About 10 years ago De Beers, which held Observer Status, received legal advise that should there be litigation against a lab, and the lab could not settle, then plaintiffs could revert to CIBJO, as they were in some way in charge of their labs. The U.S. Jewelers Vigilance Committee further complicated the issue, saying that should an ‘undesirable’ apply for CIBJO recognition, CIBJO would find it difficult to not accept them, under the fear of litigation. CIBJO took fright over all this and the end result is that there is no lab in any way recognized or approved by CIBJO. If there is still any lab operating under CIBJO rules, it must be because of national pressures.

Historically, De Beers was mistrustful of American organizations and felt comfortable with the mostly European organization. Nationalism played a major role within CIBJO. The original CIBJO members, in their xenophobia, were loath to accept any mandatory country rules for the industry as binding on CIBJO, which is why they always opposed the FTC. Ironically, the French government issued a Decree (law) for the jewelry industry - based on CIBJO rules. Since the French have a law, every time one tries to change a rule in CIBJO, the French say this cannot be done as it would go against the French Decree. Within CIBJO, the French have always been supported by the Germans, while both Austria and Switzerland also tend to go with these lead countries.

Current CIBJO President Cavalieri has worked hard to expand the organization – something not really appreciated by the core group of ‘old members’. The latest standardization initiative is, in a way, precisely what CIBJO members never wanted: to have governments in charge of setting, or approving, the rules. On the other hand, and this is something Cavalieri clearly understood, if standardization is inevitable – then it must be based on CIBJO rules. If it was good for the French, why wouldn’t it be good enough for the rest of the world. If you cannot beat them, join them – or even better – lead them. De Beers apparently thinks likewise and believing that Europe would have gone for FTC rules is simply not understanding history and misreading the current realities. CIBJO would have led the fight against the FTC.

CEN’s Approved Business Plan

Many CIBJO member organizations would prefer independency. This may explain why the current very active political moves are kept under a low profile. Now we have brought this issue into broad daylight, let’s see what will happen next. How will the European standard be set? Winterton’s preferred option is for interested parties (De Beers, IDC, CIBJO) to enter into a so called Workshop Agreement. A CEN Workshop Agreement (CWA) is a document developed in a CEN Workshop (and not, for example, in a Technical or Project Committee.) CEN Workshops are open to direct participation of any interested party. In a Workshop participation is not based on national delegations (as in the case for Technical and Project Committees). Workshop participants can also come from outside Europe.

Though it has not been publicized, it was formally agreed last month that a “Workshop will be organized with the objective to achieve an agreement on what constitutes clear nomenclature at point of sale for diamonds, synthetic diamonds, treated diamonds, treated synthetic diamonds and simulants. The permitted descriptors are set out in the CIBJO Blue Book and IDC standards and the objective of the Workshop is to formalize the CIBJO/IDC standards as the accepted framework for nomenclature in the industry.” With this objective, the outcome is probably a foregone conclusion – unless some powerful forces pull CEN into a different direction.

CEN has already established the chairwoman for the workshop. One guess… Indeed, Winterton. Says the relevant document, “It is anticipated that the participants of the Workshop will include the following: CIBJO/CIBJO Europe, International Diamond Council (WFDB/IDMA), De Beers Group of Companies, Rio Tinto, BHP Billiton, trade officials from European Member State embassies, Representatives from Producer Countries, and Officials from the European Commission.

Anyone reading that list will agree that CEN has, to say the least, been misled. How would 30 countries in Europe want to adopt regulations regarding the marketing of synthetics without having one single known gem synthetics producer participating in the process?

Why is the exercise dominated by natural diamond producers? What about the GIA? They are in Europe as well! Are the major chain stores and luxury brand retailers all represented by CIBJO Europe? And what about the consumers? Shouldn’t they play a role? How would the natural producers of diamonds have reacted if the producers of synthetic diamonds would have quietly organized (by paying the best lobbyists tons of money) a nomenclature for natural diamonds? Is it right for shoe manufacturers to set the standards for socks? “We consult widely within the industry but also the whole diamond pipeline on our consumer confidence work in Brussels and on occasions, De Beers, Rio Tinto and BHP Billiton have been involved with some of our meetings,” says Winterton. This isn’t enough.

Without Transparency the Exercise will Fail

Very few diamantaires – or even CIBJO members – are familiar with this lobbying process. We asked the President of CIBJO’s Diamond Commission for comments. He didn’t know anything about it; he couldn’t even tell me what CIBJO Europe was all about. One European official who was aware of the exercise called it a “De Beers hijacking of CIBJO’s policy making on synthetics”. Dr. Cavalieri, through a spokesman, stated, “CIBJO is not for sale.” Nobody has suggested that – and nothing in this article implies that. To the contrary.

I hope that Winterton, as chair of the CEN Workshop, will have the wisdom to take the required time to learn about the diamond business and make sure that this exercise will be driven by a wide enough stakeholder group, to make the outcome politically and legally robust. If challenged, no court will accept a marketing terminology for synthetics when not a single synthetics producer had a voice in the process. Her first order of business should be to reach out and not to be limited by the list of potential Workshop Participants that has obviously been prepared for her.

As the exercise is all about consumer confidence, trust, transparency and disclosure – that is not only the best thing to do, it is the only thing to do. Moreover, the political process – and its outcome – is of interest to every diamantaire and jeweler in Europe and beyond. Winterton should understand that this industry doesn’t want to get caught unexpectedly by legislation, without having a chance to meaningfully affect the process. With all the odds – and strange bedfellows – the legislative exercise is important, and it should succeed.

Have a nice weekend.