HRD Antwerp is under investigation by Belgian authorities following allegations that for every Gemological Institute of America (GIA) stone, which entered their lab for certification an automatic upgrade would be given two colours up and one purity up, according to a local newspaper De Tijd citing HRD’s erstwhile Turkish partner, Enstitü İstanbul Bilim Akademisi Yönetim Danişmanliği that made these allegations in court.
Although HRD won the court case it is not yet off the hook.
HRD former managing director Peter Meeus told Rough&Polished’s Mathew Nyaungwa in an exclusive interview that the allegations were shocking.
He said an automatic double upgrade is a questionable practice and could be even considered systemic fraud.
Below are excerpts from the interview.
What is your reaction to allegations that HRD Antwerp regularly ‘upgraded’ diamonds?
In the media, I read that HRD Antwerp was under an ongoing judicial investigation. First of all, I am and have always been a big fan of HRD. It is where I took my polished grading course in 1990. It is the company I lead from 1999-2006 and which grew 400% and had 260 staff with super profits although we worked under an umbrella of a non-profit structure. It was also the company I tried to buy in 2019 because I valued the brand and the potential, but it was refused by the parent holding AWDC for reasons which are still unclear and on which there is still an ongoing dispute between myself and them.
So, I learned about all this with sadness in my heart. From the evidence provided by De Tijd it was confirmed that inside the HRD, an instruction/ protocol stands that for every GIA stone, which entered the lab for certification an automatic upgrade would be given 2 colours up and one purity up.
On its website, HRD Antwerp claims to be committed to setting best practice standards, transparency, and trust. It presents itself as the leading European certification Institute. It also mentions that each diamond will be examined by expert graders.
From my professional experience, this kind of protocol which provides for an automatic double upgrade is a questionable practice and could be even interpreted as systemic fraud.
Presenting yourself as the equivalent of the most renowned lab in the world, the Gemological Institute of America, you mislead consumers into believing that you grade up to the same highest possible standards.
Of course, diamond grading will always be a bit subjective, but you cannot incorporate into your company's procedures a methodology that automatically upgrades results.
So, what HRD here is doing with this protocol would be equivalent if a Moody’s A3 rating would automatically be upgraded by its competitor S&P to an AA+ rating. As part of S&P's internal protocols. I suggest you ask them if they think that American SEC and authorities would not take immediate action if such a practice would be revealed.
Next, grading results are also linked to a price. For example, let's take a GIA-graded 2carat diamond F colour and VVS1 which in HRD protocol with an automatic upgrade would turn into a D IF. The first diamond would cost around $40,000 while the second diamond would cost around $70,000 when graded by GIA.
If HRD, as it says, is so committed to setting best practice standards, transparency and trust then it should make it also clear to the consumer that it does this automatic upgrade. Not doing this is an abnormal trade practice and possibly even a punishable crime, that the judicial investigation will tell.
So, no it’s not regular, it’s not best practice, it’s not transparent and last but not least it’s not ethical.
HRD Antwerp CEO Ellen Joncheere allegedly warned that if they moved to different stricter standards than those of GIA or even stricter, they will have to close down the company. What is your response to this assessment?
“It goes back to my days when I was CEO between 1999 and 2006 that the GIA and HRD had almost similar grading standards. Sometimes we were even stricter. We had 260 staff when I left, now they have 26. Today arguing that GIA-HRD would be a close call is totally beside reality. Further, nobody says that they have to be the same. The most important is that you are transparent about what you do. Further, it can never be an argument that you have to mislead to remain competitive or not make a loss or stay in business. This is simply unethical and not done."
HRD Antwerp is said to have been too lenient when it assessed diamonds with reports suggesting that it adjusted cut grading standards so that more diamonds received an excellent grade; what are the best standards?
I believe this is a semantic discussion, and I also understand HRD’s position in this matter back down in 2017. For many years HRD for the highest grade in certain aspects of the 4th C "CUT" used only the words "very good" whereas most other labs in the world for the same stone would give the word "excellent".
HRD changed then that terminology but didn't do that in agreement with the IDC to which it adhered. HRD should have been transparent about this towards clients and not referred anymore to the IDC.
Again, this is the same issue of transparency in which HRD regrettably failed. On the principle itself in my opinion they were right. There is no reason to downgrade yourself compared to other, often less stringent and commercial Labs. But they should have disclosed it.
Why is it important to uphold higher standards of grading?
Well, that's simple. We live in the age of the consumer; it is the consumer who dictates how the quality of our products needs to be. It is for the consumer that does not want blood diamonds. It is the consumer that insists on knowing the origin of diamonds; it is the consumer that does not accept products made in labour conditions which do not comply with a certain standard or with minimal wages, which are far below acceptable norms.
Nobody argues that HRD Antwerp has to have the highest standards in the world. However, what is questionable is that you are not transparent about your standards and that you create the perception that you are a AAA Lab equivalent to the GIA, whereas in reality, you are simply taking over their results automatically and you give a double upgrade. That is deceiving the consumer, which in today's norms is a very questionable practice.
How are diamonds graded?
In diamond grading, there are the 4 C’s. So, every laboratory grades according to the 4 C’s. The Rapaport price list is based on these 4 C’s.
Of course, laboratories will have to own grading standards, and obviously, they will differ whether you are grading loose diamonds, or when you are grading diamonds set in jewellery.
The first will always be more stringent than the second because, with loose diamonds, you can use a microscope which allows you to see the entire stone whereas when set in jewellery you cannot.
What is however of the utmost importance is that the consumer, and in his place the retailer knows who you are and can trust the results of your laboratory.
So again, it all comes down to transparency. If like HRD Antwerp you present yourself as the leading European certification institution, then you create the perception with the retailer and the consumer, that you are indeed strictly and objectively and consistently grading each diamond that enters your lab up to the highest possible standards. So, if in reality, you are not doing that and you are just giving automatic upgrades then you are not a laboratory anymore, but you are a printing company. I can only call upon the Board of Directors of AWDC-HRD to take appropriate measures, including revoking the protocol, and this is pending the judicial investigation and possible liability claims.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
