HARRY LEVY: Along With Synthetics, Natural Diamonds Need Full Disclosure

Ever since gem quality synthetic diamonds came into the market, Harry Levy, president of the London Diamond Bourse, Chairman of the International Diamond Council (IDC) and president of the Gemological Association of Great Britain (Gem-A), has been a powerful voice in the discussions about the need to recognise them for they are. He has argued why the diamond, gem and jewellery industry and trade should not fight them and voiced his opinion on what terminology or nomenclature ought to be employed when referring to these stones.

The following interview was conducted with Levy by veteran diamond industry consultant and spokesman YA’AKOV ALMOR, who is also IDC’s director of communications.

• Is the confusion — and possibly panic — about synthetic diamonds over, or are we still in a stage of denial when it comes to synthetic diamond s in the marketplace?

There is still confusion — and some denial too — on a number of levels and in various sectors of the diamond and jewellery industry. It seems there are plenty of players in the polished diamond trade who still hope that synthetic diamonds are a passing phenomenon, and that as long as we do not talk about them, they will simply go away.

Last year, the Israel Diamond Exchange (IDE) re-issued a directive that bans synthetic diamond from its trading floor, arguing that they may be confused with natural diamonds and mixed up or interchanged. In my fifty years of holding bourse membership, I have rarely known of stones being confused or changed. While the IDE has acknowledged that synthetic diamonds are a legitimate product, by banning these stones from their trading floor, they support the trade in natural diamonds, but at the same time hinder the trade in synthetic diamonds.

There is also still confusion — and dispute — about what synthetic diamonds need to be called. A few months ago, The De Beers Group of companies published a booklet, aimed at their sightholders, entitled Undisclosed Synthetics, What You Need to Know. On the one hand the authors refer their readers to the nomenclature defined by CIBJO, the World Jewellery Confederation and the US’ Federal Trade Commission (FTC). At the same time, however, they encouraged their readers not to use the term ‘synthetic diamond’, but only to use the descriptive adjective ‘synthetic.’

As such the authors were in transgression of their own directives and advice, undermining “the integrity of the entire diamond supply chain, damaging both trade and consumer confidence in buying diamonds.” Of course, De Beers has since retracted the booklet, but I give this example because it illustrates the lack of resolve — and possibly understanding —- on what nomenclature is to be employed.

I’d like to give another example that illustrates the lack of consensus on — or the acceptance of — nomenclature.  In April, a well-known trade press journalist, in a blog wrote that “there’s no way around it, synthetic means fake,” and that he calls a synthetic diamond as such because he is “not ‘bound’ by any authoritative group.” Clearly, there is still a lot of work to be done.

• This month, the congress of CIBJO, the World Jewellery Confederation and the Las Vegas conference of the Accredited Gemologists Association (AGA) will both have synthetic diamonds high on their discussion agendas and in mid-June, the topic will also be discussed at the 36^th World Diamond Congress in Antwerp. What will the point of departure be for a discussion on synthetic diamonds? 

We need to be frank and more resourceful. During the past months there have been several meetings in Antwerp and India, designed to prevent synthetic diamonds getting into the supply chain. In March, the World Federation of Diamond Bourses (WFDB) issued a six-page statement “the WFDB Charter on Disclosure of synthetic, treated natural and natural diamonds.” Among others, the charter recommends that we print statements on our invoices that all the goods sold are (guaranteed to be) natural, and also untreated.

While this document was published in good faith, it also raises a lot of questions. For instance, I wonder how many undisclosed HPHT diamonds circulate in the supply chains. While I can fully trust my own supplier for his honesty, integrity, ethical standards, his knowledge of gemmology is probably no greater than mine. So how would I know, and when?

A synthetic diamond will get into the supply chain when one person buys a synthetic diamond and knowingly sells it as a diamond without disclosure. Should this be discovered further down the supply chain, we are advocating to punish those people who show us a purchase invoice with the above statement, using it in their defence, i.e. that they bought the stone in good faith. This is not an excuse that would stand up in any court of law, anywhere in the world. It is hearsay evidence, and the seller can be regarded as having acted without due diligence. Printing such a statement of disclosure solves very little, as it is a positive statement which may prove to be a lie. Therefore, without such a statement the seller may be accused of ignorance, with it, he will be probably be accused of fraud.

• What is the solution? 

The simple solution is to call diamonds ‘natural diamonds’.  For years, the default position of the diamond trade has been that that a ‘diamond’ is regarded as a ‘natural diamond’ when the term is used without further qualification.  However, this trade rule is not known among consumers.

But synthetic diamonds are also diamonds, the only difference being their origin, and this does not stop them from being called diamonds. I am not advocating that synthetic diamonds should be sold as diamond but they need disclosure, and this means that natural diamonds will be needing disclosure as well!

I think that we do not need to try and re-invent the wheel. Let’s look at how the coloured gemstone trade has dealt — and deals — with synthetic gemstones and take a page out of their book. The coloured gemstone industry has been coping with synthetic counterparts of their most important stones for a very long time, mostly because they are — contrary to synthetic diamonds — relatively easy to produce. A variety of synthetic rubies, sapphires, emeralds, and a large group of other synthetic gemstones, have been around for more than a century, and continue to be produced.

Have these products killed the coloured gemstone industry?  Not really. Are they a problem? Sometimes. How do our colleagues in the coloured gemstone business deal with them? They cope with it by getting educated and by insisting, by means of strict rules and regulations, that synthetic coloured gemstones are disclosed properly and honestly when traded and sold.  By the way, natural coloured gemstones are more popular than ever before, and their prices keep rising.

Also, let’s take a look at the pearl industry and trade. It is simply wrong to believe that cultured pearls have driven out natural pearls, or to conclude that a similar thing can or will happen to diamonds. Cultured pearls became popular because natural pearls became very rare and very hard to find. This came about because of over fishing of the oysters and pollution from oil production in the Persian Gulf. Today natural pearls are rarely found; they fetch very high prices and usually can only be found in top market jewellery stores and at prestigious auctions. At present there is a debate in the pearl business to drop the term ‘cultured’ for pearls — as 99.9 percent of pearls traded are cultured pearls anyway  — and call cultured pearls simply ‘pearls’ and qualify the term for natural pearls and sell these as ‘natural pearls.’

Of course, there is no chance of a similar development happening to synthetic diamonds, as there are too many natural diamonds around, and excellent prospects exist of finding many more through mining.

• What is you recommendation to industry leaders at these gatherings?

We need to try and reach agreement that our ‘prime directive’ is to protect the trade in natural diamonds and our industry leaders should produce arguments as to why natural stones are better than synthetic ones. One powerful argument is, of course, that natural diamonds are rare, can only be mined once, and that each and every stone is unique due to its provenance and characteristics. Quartz is very abundant, hence it is cheap. The supply of synthetic diamonds is limitless! Natural diamonds have aesthetic, emotional and historic value, while synthetic diamonds have none of these.

To allay another fear often expressed in the market, we are not helping producers of synthetic diamonds to sell their products; we are protecting the trade in naturals by giving as much information as possible to consumers for them to make an informed choice! We will give the impression that synthetic diamonds are “better” than natural ones if we continue to hide them. Being transparent will help everyone, being invisible will help no one.

• There are currently practical problems that need to be addressed such as the use of small, synthetic diamonds in jewellery. What are your views on this?

You’re speaking of smaller stones, most often below 10 points. Here positive detection will be difficult; the synthetic product will be better looking than the lower grade natural stones and will be considerably cheaper when compared to similar looking natural stones. I envisage consumers will eventually demand some sort of guarantee and identification for larger stones, that they are in fact natural. The demand for such specific identification statements (concerning smaller diamonds ed.) may very well outgrow the demand for grading reports of (larger, ed.) natural stones.

Up to this point in time, all the attempts at solutions advocated by the trade have looked downstream of the distribution chain. Debates about terminology and how to disclose will probably go on for some years yet. But maybe we should look to the upper part of the supply chain for the solutions. 

We must identify the synthetic diamond producers, not the cutters and distributors. We must identify those who produce the machines that make synthetic diamonds. I don’t know if we will get any resistance from them but it is essential we know who these people are and those who buy these machines. In the coloured gemstone business, producers of synthetic gems are part and parcel of the community.

They share their knowledge and inform their peers of what they do. We need to encourage the producers of synthetic diamonds to become part of our industry, to sort themselves into an organisation, as well. Only then, by becoming discussion partners, can we come to agreements with regard to all the above mentioned issues. Under no circumstances should they be allowed to remain ‘underground…’