The issues of fracture filling and low industry profits dominated the World Federation of Diamond Bourses and International Diamond Manufacturers Association Congress, held in May in Tel Aviv, Israel.

At the last Congress in 1993, WFDB and IDMA enacted tough sanctions on diamond traders who fail to disclose that their goods are treated to improve clarity (fracture filling) or color (irradiation). This time around, the concern was how to prevent a public relations nightmare from erupting over undisclosed treated diamonds sold outside of the diamond bourse networks.

Delegates from both organizations called on gem laboratories to continue their policy of not issuing grading reports for treated or synthetic diamonds. They also asked De Beers to help the trade develop a simple device to detect fracture-filled diamonds.

Martin Cooper, research director for De Beers, said the company has developed a simple device to detect synthetic diamonds (see July JCK, page 32A), but that fracture-filling is another story. “There is no way to develop a simple instrument that can detect all fracture fillings,” he said. The two main problems: different companies use different materials to fill cracks and mounted diamonds are very difficult to evaluate for fracture fillings.

While a simple device hasn’t been created, De Beers has sophisticated methods in place to test rough coming into its Central Selling Organisation for fracture filling. “We are quite certain we do not sell treated rough,” Cooper said.

He added that De Beers funded a Gemological Institute of America videotape on detection of fracture filling and said the trade has the ability and responsibility to police itself.

More work urged: WFDB President Eli Izhakoff asked De Beers and delegates from major gem labs in attendance to try harder to develop a simple detection device. “If everyone cooperates, we should be able to come up with something that can detect these things,” he said.

Meanwhile, Alan Kleinberg of New York, N.Y., addressed the issue of shrinking profits. He blamed the problem on a contracting of the diamond pipeline. Many large retailers now buy direct, he said, and computer trading, the Rapaport price list and lab grading reports all put downward pressure on profits. He also noted that big retailers and banks want to deal only with major suppliers.

Also at the congress, the Antwerp Diamond Club tried unsuccessfully to prevent Izhakoff from running for a third term as WFDB president. The club said he shouldn’t run for president of the world body because his term as president of the New York Diamond Dealers Club would expire in June. Delegates from the other 20 bourses declined to support the move, and Izhakoff was reelected unanimously.

WFDB also considered a proposal to grant bourse members in good standing open access to all WFDB-affiliated clubs. The issue was raised by Dr.Ernesto Colombi, president of the Borsa Diamanti D’Italia in Milan, Italy, within the framework of the WFDBPromotionCommittee’s report. Tibor Stern, president of the Diamond Dealers Club of Florida, represented Colombi’s position to the congress. Stern said the presidents of all the bourses except the Israel Diamond Exchange favored an open-door policy regarding buying and selling. He urged the congress to adopt an unequivocal motion on the issue. “The traditional trading floors are dying a slow death,” he said. “We need to move merchandise freely so we will all benefit.”

The problem isn’t that simple, said Meir Wertheim of the Israel Diamond Exchange. “There is a money problem because of membership dues,” he said. “We favor a liberal policy, but if we accept that you can run away from payments, we will have some people based in Florida [where dues are lower] doing most of their business in Israel.”

David Woolf, chairman of the WFDBJudiciary Committee, noted the Tokyo Diamond Bourse and theBangkok Diamonds and Precious Stones Exchange have already adopted an open-door policy. Izhakoff reiterated his support of the idea, but said it requires the consensus of all WFDBmember bourses.

In the end, WFDB granted a watered-down resolution giving each bourse the option of limiting visitors’ rights to buyers only.

WFDB also admitted the Bangkok Diamond and Precious Stones Exchange as a member. India remains a conspicuous problem, however. WFDB still awaits a membership application from the Indian diamond bourse now being built. But India’s manufacturers’ delegation, which already is a member, boycotted the IDMA meeting, saying it wasn’t sufficiently informed of the agenda. Izhakoff said the manufacturers’ boycott disappointed him and that no slight was intended. He promised to make an effort to bring an Indian delegation into the group. “I have made it clear on a number of occasions they would be welcome,” he said.