Undisclosed Synthetics: Indian Industry Moves To Maintain Consumer Confidence

(IDEX Online News) – The Indian gem and jewellery sector set up a wide-based committee to formulate ways to protect itself from undisclosed synthetic diamonds and gemstones. The committee is also empowered to act as a watchdog and take appropriate action against those found to be knowingly passing on undisclosed synthetics.

The setting up of the committee is a concerted response to the issues thrown up by the recent revelation that all 600 diamonds in a parcel bought in New York, most of which were in the 0.30 carat size range, were actually undisclosed synthetics. All the stones were from Gemesis, the world’s largest producer of synthetic diamonds, which is controlled by Indian diamantaire Jatin.

As a consequence of the New York incident, the global gem and jewellery industry was suddenly and shockingly made aware of the possibility that tens of millions of dollars worth of diamonds, which are already in circulation – many of them already in consumer hands – might on subsequent testing, turn out to be lab-grown synthetics.

In price terms, a lab-grown synthetic could fetch as low as just half the price of its naturally mined counterpart. The consequences in terms of financial liability and more importantly consumer confidence, are staggering.

The committee set up to respond to all this is a coming together of four different organizations – the Gem & Jewellery Export Promotion Council (GJEPC), the Bharat Diamond Bourse (BDB), the Mumbai Diamond Merchants Association (MDMA) and representing retailers, the very end of the process and production line, the All India Gem & Jewellery Trade Federation (GJF).

The committee held its very first meeting on July 11. Representing the GJEPC were Ashish Mehta of Kantilal Chhotalal and Avnish Shah of Rajendrakumar A. Shah. The BDB was represented by its Chairman Anoop Mehta of Mohit Diamonds as well as its Vice Chairman Mehul Shah of the Star Brillan group.

Representing the MDMA was its Secretary Rohit Shah of P. Rohitkumar & Co., while the GJF was represented by Chairman Bachhraj Bamalwa of Nemichand Bamalwa & Sons along with the Chairman of its Finance, Accounts & Administration Committee Paresh Shah of P & S Jewellery Ltd. As the first order of business, the committee elected Ashish Mehta as its Convener.

Included in the first meeting and on board in an advisory role for the long term as well, were a group of special invitees whose experience and expertise would help the committee achieve its goals. The special invitees with diamond and jewellery expertise were GJEPC Vice Chairman Sanjay Kothari of Kunal Diamonds and Diatrends Jewellery, Russell Mehta of Rosy Blue, Parag Shah of K. Girdharlal and Rahul Dholakia of Shree Ramkrishna Export.

The other invitees brought their technical expertise in the testing and detection of synthetics to the table. They were K.T. Ramachandran, Executive Secretary & Chief Gemmologist of the Gemmological Institute of India (GII), Nirupa Bhatt, Managing Director, India & the Middle East of the Gemological Institute of America (GIA) and Tehmasp Printer, Managing Director India, of the International Gemmological Institute (IGI).

WHY THE COMMITTEE WAS SET UP

Explaining the impellers behind the committee’s formation and what in essence its functioning would be, Sanjay Kothari said, “It is important to protect the integrity of the trade and the confidence that consumers have in it. It is clear that as far as the industry is concerned, there should be zero tolerance on anyone trying to pass off synthetic diamonds as natural.

Thus the committee was formed to develop a common strategy among all stakeholders in the gem and jewellery industry including the trade, retailers and the laboratories.”

Kothari explained that the actual reporting of any violations would be at the member association level. These associations would now encourage members to immediately report any violations and they would in turn bring the violation to the notice of the committee. The committee would then initiate the necessary action through the association.

Kothari noted, “The committee will send letters through its constituent associations urging all members to bring any violations to light. This way,” he explained, “we can ensure that there is a clear-cut system to ensure that any violations would be reported and dealt with appropriately.”

The committee is also ensuring that the necessary technical expertise is being brought to bear on the problem. “That’s why we got the leading laboratories on board with this,” Kothari said. “We want to strengthen our technical response and ensure that we have good scientific resources being deployed in support of the initiative.”

Inputs from the laboratories will go into ensuring that the gem and jewellery industry countrywide is aware of what is necessary and thus ensure that they are absolute certain that the laboratory they might entrust any testing to is fully equipped to deal with the problem.

WAITING FOR OFFICIAL ACTION WHERE IT HAPPENED

With regard to the New York incident that has triggered this industry-wide reaction, IDEX Magazine – India Retail has learnt that an industry panel including the the BDB and GJEPC had asked Jatin Mehta for a written explanation of what transpired and what his involvement in it was.

The Indian panel concluded that given Mehta’s declaration in writing that he had nothing to do with the sale of the undisclosed synthetics, the matter be treated as closed pending any further revelations to the contrary. The panel’s view was that it has no legal jurisdiction in this matter as the incident unfolded in New York, where the diamonds were bought and in Antwerp, where they were tested by the IGI and found to be synthetics.

One person with knowledge of the matter said, “Nobody here is in any position to determine whether the sale was made with intent to defraud and to determine who is liable. In terms of industry jurisdiction, the matter has to be handled by the Diamond Dealers Club (DDC) in New York and the Antwerp World Diamond Council (AWDC) in Antwerp.

In terms of law enforcement, it would be for the Federal Bureau of Investigation (FBI) in the United States and the Belgian police to investigate and reach a conclusion. If there is any criminal liability, those agencies will certainly be liaising with Indian law enforcement authorities.”

Meanwhile, the undisclosed sale of synthetic diamonds is considered by many to be the single largest threat to global gems and jewellery industry. Not only does this fraudulently deprive the buyer of actual market value, it destroys the consumer’s confidence in the industry’s product in general. The consumer’s belie in it is the diamond’s only real value. Without that belief, it is worth nothing.