Gemological Association of All Japan intentionally and fraudulently manipulated diamond color grades to over-estimate quality

Why am I posting this news article below?

I am so doing because I noticed that GAAJ was publishing -- excuse the expression -- crap about "paraíba" tourmalines, research reports (what a joke those were) about andesine, and other stones.

This article goes to the heart of that lab's total lack of credibility.

Major gem company (GAAJ) manipulated color standards to overestimate diamond quality

This chart shows how the GAAJ manipulated its color evaluation of diamonds, with the left column showing grades based on the industry's standard, while the arrows and the right column indicating the result of manipulated grades. The higher the grades are, the more clarity the diamonds have.

by The Mainichi Daily News, May 22, 2010

A leading gemology company engaged in diamond grading had deliberately overestimated diamond qualities by manipulating color evaluation standards, it has been learned.

The Gemological Association of All Japan (GAAJ) had been using the manipulated color standards between late February in 2007 and late October in 2008, affecting some 338,000 diamonds that were evaluated during the period, industry insiders told the Mainichi.

The Association of Gemological Laboratories Japan (AGL), which is responsible for the industry's uniform evaluation standards and to which GAAJ belongs, is poised to question GAAJ over the suspected manipulation at an early date.

The GAAJ, however, has refuted the allegations, saying, "We only rectified deviations of our in-house evaluation standards."

According to industry sources, the GAAJ discussed manipulating diamond color evaluation standards during a technical meeting at its Tokyo headquarters on Feb. 24, 2007. Two days later, the association's board officially decided to go ahead with the manipulation so that color evaluation of diamonds weighing 1-carat (0.2 grams) or over would be upgraded by a half to one grade compared to the industry's uniform standards, and that of diamonds weighing less than 1-carat would be upgraded by a half grade.

Following the decision, the association started overestimating diamonds at the Tokyo headquarters as well as its Osaka and Fukuoka branch offices.

In October 2008, a jewelry shop in Tokyo reported to AGL that the evaluation conducted by GAAJ's Fukuoka office was wrong, prompting AGL to re-evaluate the questionable diamonds. As a result, it turned out that GAAJ had overestimated diamond quality in terms of color.

GAAJ is one of the top three gemology companies in Japan that boast a combined 70 to 80 percent share of diamond evaluation in the domestic market. The evaluation certificates such companies issue are used to value diamonds retailed at major department stores and other outlets across the country.

If the color evaluation of a diamond is upgraded by one grade, the retail price can rise tens of thousands of yen to over 100,000 yen higher. As a result of the GAAJ's manipulation, retailers and consumers were effectively made to purchase overpriced diamonds.

"The more highly appreciated diamonds are than their true value, the more profits import companies can make. The GAAJ probably tried to pick up more orders for evaluation by overestimating diamond quality," said a former employee at GAAJ's Fukuoka office.

In Japan, evaluation certificates are only issued for diamonds, specifying their weight, cut and other qualities. The certificates are issued by private companies and their appraisal method does not entail official attestation. International evaluation standards are based on those set by private organizations in Europe and the United States, and Japanese companies mostly adopt the method used in the U.S.

The most commonly used evaluation items are the so-called "4Cs" -- cut, color, clarity and carat -- of diamonds. Only carats can be mechanically gauged, while other qualities -- color in particular -- ultimately depend on appraisers' senses and are subject to varying evaluation.

The credibility and fairness of evaluation certificates are not only important to consumers but also to retailers. AGL and other organizations set uniform color standards in the 1990s by creating "standard gem sets" in collaboration with leading U.S. evaluation organizations and distributing them to its member companies. However, since consumers cannot assess fine details in quality, they have no choice but to believe in dealers' claims that they have appraised the diamonds based on the standard gems.

Link to article: http://mdn.mainichi.jp/mdnnews/news/20100515p2a00m0na014000c.html