An Evening at Sothebys

The World’s Largest D Color, Internally Flawless Diamond Ever Brought to Auction

“Mr. Cuellar, Michael Hart from Geneva is on the phone,” chimed in Julie, my assistant, “from Sothebys!” What Julie and the rest of my staff were quickly becoming aware of was that I was just hours away from bidding on the world’s largest D color; internally flawless (IF); 103.83 carat; cushion cut diamond ever offered at auction. The sale number was GE0306, lot 606. It was November 20, 2003, 7:30 PM Geneva time. This would be the final session and lot 606 would be the final item auctioned. They always save the best for last!
“Michael, how’s it going?”
“Fine, Mr. Quar (Cuellar), fine. I just wanted to let you know that a young man by the name of David will be doing the bidding for you while you listen to the auctioneer on the phone. There are about 100 lots in this session; we’ll need you to be on the phone in about an hour. In the mean time, I’m faxing over the absentee bidders form to you, since you’ll be listed as the primary purchaser.” Michael knew full well that I was just the front man for the real buyer, who will remain nameless. This is not unusual. Many buyers work with diamond dealers to maintain their anonymity. This was history in the making and I was on a very short list of people who could say they were a part of it.
“How many people are we up against?” I asked Michael.
“Oh, Monsieur, I am not privileged to reveal that information.”
“Alright,” I replied. “How many people total do you have on the phones?”
“We are accommodating only 20 phone bidders.”
“How many people are in the room?” I asked
“Oh, my. I am not sure. It is packed! There are, of course, those who are seated and those standing in the back.”
“How many seated and how many standing?”
“There are 45 chairs and approximately 50 people standing.”
“Thanks, Michael.” One hundred fifteen—if I assumed that everyone in the room was going to bid on the big diamond. I was one of potentially 115 people in the whole world who had a chance to bid on one of the greatest diamonds ever found.
“David’s on the phone from Geneva,” announced Julie. “David’s on the…”
“I got it. What line?”
“Line two.”
“Please close my door.” I pressed the Do Not Disturb button on my desk phone, took a deep breath and picked up the phone.
“Lot 601! Repeat…lot 601!”
“Mr. Queerar (Cuellar)?” Boy, my name has been butchered a lot today, I thought.
“Yes. This is Mr. Cuellar.”
“Oh, sorry about that Mr. Quazar. Mr. Quazar, your lot is coming up. Should I be the first one in to get the proverbial ball rolling?”
“No.” I responded quickly. “Let’s not get too excited. Let’s get a lay of the land.”
“Beg your pardon, sir?”
“No. No jumping in until things quiet down. I want to get a feel for exactly how many people are hot for this rock.”
“Excuse me? Hot for…”
“Look. I’ll scream when I want you to bid. Got it?”
“Got it, sir.”
“Lot 606! Lot 606! A superb and highly important diamond!”
I’m taking a break here from the live action to show you a reprint of how the diamond was listed in Sotheby’s catalog.

606 A SUPERB AND HIGHLY IMPORTANT DIAMOND

The cushion-shaped stone weighing 103.83 carats
Accompanied by GIA report no. 11185353 and Gubelin report no. 0111004, both stating that the diamond is D Colour, Internally Flawless. With additional Gubelin appendix stating that the diamond is Type IIa.
This magnificent stone is the largest D colour, Internally Flawless diamond ever to be offered at auction. Only three other diamonds of perfect colour and purity weighing over 100 carats have been sold at auction internationally and Sotheby’s Geneva has had the privilege of selling each of them. These spectacular diamonds are presently the three most valuable gemstones ever to have been sold at public auction.

This diamond, which was discovered in the famous Premier Mine in South Africa, has immense presence and beauty. It is exceptional not only for its size, colour and purity but also because it has beautiful proportions and exhibits the cutter’s skill at its height. The process of planning, designing and cutting the rough crystal, which took place in Johannesburg and New York, took over eighteen months to complete.

Its classic cushion-shaped form in reminiscent of so many famous and historic diamonds such as: the Cullinan II, 317.40 carats, presently in the Imperial State Crown of Great Britain; The “Regent,” 140.50 carats, presently in the Louvre Museum, Paris; and the “Queen of Holland,” 135.92 carats, owned privately.

Only very few “D” colour, Internally Flawless diamonds of over 100 carats exist in the world today and they truly rank amongst the earth’s greatest treasures.

This exceptional gemstone has been exhibited in the Smithsonian’s National Museum of Natural History in Washington during the month of September 2003, in an exhibition entitled “The Splendor of Diamonds”; this is a fitting tribute to such a rare and splendid diamond.
The appearance of such a diamond at auction is a very special event. The successful buyer will have the additional privilege of naming this unique stone which will certainly take its place among the most famous diamonds in the world.

CHF 11,000,000-14,000,000
US$ 8,000,000-10,000,000

Back to the action. “We’ll be opening the bid at seven million, eight hundred thousand.” (These are Swiss Francs) “Eight million, do I hear eight point five million. Thank you. Eight point eight million. Nine. Nine million, two hundred thousand. Do I hear…9 million, eight hundred thousand!”
The crowd was silent for the briefest of moments, then, “Ten million.”
“Sir, would you like me to counter. It’s going to close, sir. Would you like me to counter?”
“No. No, I’m done.” It had gone over my client’s limit by two hundred thousand francs! Two hundred thousand…it can’t be done here! It has to go more, I thought to myself. If we’re going to lose this magnificent stone, let’s lose by a large margin!
“Ten million. Final warning.”
“It’s done, sir. Goodbye,” said David. The line went dead.
We had lost out by two hundred thousand Swiss Francs—US $153,291.94. The diamond had sold for $7,721,441 plus commissions for Sotheby’s.

I got home about ten minutes after six and my wife had pork chops and green beans waiting for me, (delicious). Regardless of the blaring T.V. that wouldn’t shut up about Michael Jackson, or a wonderful home-cooked meal, I couldn’t get my mind off that diamond. After dinner I went upstairs and flipped up my lap top to see what had gone on in the world while I had been focused on the high powered E-bay experience. What I noticed almost immediately was something I was expecting to see, but didn’t—the news release on the super-duper diamond. I checked MSNBC—nothing. I checked Sotheby’s web site results—typed in the sale number, lot number—nothing. They had no listing for a lot 606 ever being sold! What gives?! How can they not be listing the auction result on this item? All the other prices for all the other items were there, so where was the lot 606 result? I called the New York auction results number (kind of like trying to find out what the winning lottery numbers are). When I entered all the required information, a computer generated voice informed me that there was no lot 606. I then went back to MSNBC, but this time I checked MSNBC Europe. It was there I found my answer.
“Huge diamond fails to sell in Switzerland as bids fall short of asking price.

Most jewelry sold at auction has a hidden reserve that nobody knows about. I believed it to be the opening bid of seven million, eight hundred thousand Swiss Francs, making every bid after that a potential winner—how wrong I was. The next morning, I had but one question for Michael Hart; okay, maybe two. Was the diamond still available?
“Yes, Monsieur Cuellar, the diamond is still available.”

Dear Reader: The final bid was entered by the auctioneer himself. It’s not uncommon that the auction house can act like it has received a bid in order to get the price of the item where the seller wants it to be.
The next question was obvious. “Will you ask the owner if they want to go one on one with me over the sale of the world’s largest D color, Internally Flawless diamond ever auctioned?”
Michael said he would call back. I didn’t have to wait long for an answer.
“Fred, there is a Patti Wong on the telephone from Geneva. She’s with Sotheby’s.”
“Thanks Julie. Fred Cuellar here.”
“Mr. Cuellar. This is Patti Wong. I am in direct contact with the seller and we would like to open discussions with you on the sale of the 103 carat diamond.”
“Great! Now that the sale is over, what’s your client ready to take?”
“They want X plus Y. (X=a particular number of millions, Y=a particular number of hundreds of thousands)
“Patti, I’m not authorized to go any higher than X. Since X plus Y isn’t that much more that X, let’s sell a diamond!”
“Mr. Cuellar, I’ll go back to my client and tell them you made an official offer of X, but I’m sure they are going to want X with a little Y. I’ll be back in touch.”
Within ten minutes, Patti Wong was on the phone declining my offer of X and countering with X plus Y/2. I asked her since Y/2 was so small a percentage of the overall purchase price, why was the seller trying to nickel and dime my client? She only reiterated that X was declined and X plus Y/2 was the offer on the table.
The whole deal was officially over less than an hour later. My billionaire client felt insulted, as I figured he would, (his offer was more than fair) and pulled out of the negotiation altogether. I won’t discuss my final conversations with Sotheby’s, but what I will say is they did everything within their power to help the two parties come together. In the end, any client can sometimes be their own worst enemy. For the first time in my life, I truly understand the saying “penny wise, pound foolish.”

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®