GIA’s Boyajian resigns, questions about grading lab scandal linger

BoyajianWilliam Boyajian, president of the Gemological Institute of America (GIA), resigned on May 22, marking the latest casualty in a pay-for-upgrading scandal that has sullied the reputation of the educational organization and gem grading laboratory.

Donna Baker, GIA’s senior vice president and general counsel since 2001, will serve as acting president while GIA searches for Boyajian’s replacement, the institute announced.

Boyajian’s resignation comes as GIA struggles to come to gripes with a diamond grading scandal that has rocked its credibility. In October 2005, GIA announced that Thomas Yonelunas, chief executive of its lab operations, had resigned and that it had fired four lab employees based on an internal investigation it had undertaken in the wake of a lawsuit accusing GIA’s New York lab of falsifying diamond grading reports. News stories of the scandal received prominent headlines in The Wall Street Journal, The New York Times and other newspapers just before Christmas last year, heightening fears among jewelers that diamond sales would suffer.

In November, Ralph Destino, chairman emeritus of Cartier and a member of GIA’s Board of Governors, was appointed executive chairman of GIA, effectively relieving Boyajian of day-to-day control.

Boyajian tenure spanned the modern era at the 75 year old school of gem sciences. Joining as a teacher in 1975, he climbed up through the role of marketing and new project director and ascended to president in 1986, succeeding gemology pioneer Richard Liddicoat of the Four C’s.

Perhaps Boyajian’s greatest legacy, unlike the gemological contributions made by his predecessors, will be GIA’s 1996 relocation from Santa Monica to an expansive, modern campus overlooking the Pacific Ocean in Carlbad, CA. Under Boyajian’s leadership on the project, the industry donated millions for the campus construction.

Plot Thickens in Carlsbad

Ultimately, it would be the issue of fund-raising that would come to haunt GIA, becoming inextricably intertwined with allegations of bribery at the lab. Under Destino, GIA quickly acted to remove any appearances of impropriety stemming from programs such preferred pricing for “member” dealers. Dealers believed to have been involved in the scandal were banned from receiving any diamond grading services.

Since 1995, GIA has recognized donors of $100,000 or more each year at its League of Honor Dinner in New York. The grading scandal raised questions about the list of inductees, which includes upward of 100 companies from DeBeers to Tiffany & Co.: Did diamond companies on the list benefit in their grading for donating?  Did the money donated by non-diamond companies go to a worthy cause?

From here on, however, GIA has vowed to no longer solicit or accept donations from companies whose stones are graded in lab and said that it will change the focus of the annual dinner from honoring donors to recognizing individuals for industry service.

Diamantaires still want names
Within the diamond community, Boyajian’s departure was greeted with the sense that the move was unfortunate yet inevitable.

“I think that the board at GIA felt this was a necessary step,” says Ronald Friedman, president of the Diamond Manufacturers and Importers Association (DMIA).

While not surprised by the move, he stresses that the lab issue shouldn’t overshadow Boyajian’s accomplishments during his 20-year tenure as president.

“One shouldn’t lose sight of all the work that was done. He certainly shaped and oversaw the growth of the organization. Both in gemological services and education, I think he left an indelible mark,” Friedman says.

But there remains frustration over the fact that those implicated as bribers have not been named or held accountable.

“The industry and the trade is still waiting for the release of the names which is critical for the whole industry to get past the situation,” he adds.

Jeff Fischer, president of the International Diamond Manufacturers Association, echoed Friedman’s sentiments, praising V Boyajian’s track record but noting desire for exposure of any diamond dealers involved.

“That’s a law enforcement process and we are still hoping to see that,” he says.

While those in the diamond community wouldn’t comment on whether the resignation is good or bad for GIA, they said overall changes made to address the issue are for the better. 

“My personal feeling is that GIA is on the right track,” says Ronnie Vanderlinden, vice president and chief financial officer for the DMIA. “As far is Bill goes, he’s an unfortunate casualty.”

Still, some said that as leader of GIA, Boyajian had to take the ultimate responsibility for what happened on his watch. One industry insider, who asked not to be named, likened the situation to when a coach who pushes his team to perform must be held accountable if his players take it too far and start using drugs.

Boyajian will stay on through July as a consultant, working with Baker and Destino through the transition. According to Helene Fortunoff, the new chairman of GIA’s Board of Governors, the institute has formed a special committee to search for a new permanent president. Baker will be considered as a candidate, she said.

Recruited by Boyajian in 2001, Baker’s job had been to oversee GIA’s legal affairs, human resources, operations, real estate planning and development. A GIA graduate gemologist, she also oversaw GIA’s museum, library and numerous special projects.

Written by Whitney Sielaff and Susan Thea Posnock
Published in National Jeweler