THE secretive world of diamond dealing has been rocked by a bribery and corruption scandal that has shattered the authority of the Gemological Institute of America, the body responsible for grading and valuing the world’s most precious gemstones.

The GIA, which values almost all diamonds on the market from the giant Hope Diamond to the quarter carats in a pair of earrings, was accused in a lawsuit of issuing false valuation reports for two stones bought for $15 million (£8.5 million) by a member of the Saudi royal family and an associate.

After an investigation, the GIA found that at least two clients were paying bribes to four GIA staff members to issue false valuation reports on stones worth millions of dollars. The staff members have since been fired and the unnamed clients blacklisted.

But The Times learnt last night that the US Attorney’s Office in Manhattan is investigating the corruption scandal after being handed boxes of documents by a GIA executive.

Ralph Destino, the chairman emeritus of Cartier, the jewellery house, and president of the GIA, told The Times that he was “shocked and outraged” by the discovery of corruption within the GIA. “To my knowledge there has never before been any stain of any kind on the GIA’s reputation,” he said.

Grading and valuing diamonds is a tricky business. It is impossible with the naked eye to tell the difference between the various grades of diamonds at the upper end of the valuation scale.

The GIA employs experts in its American laboratories who use laser measuring equipment to test the colour and clarity of a stone. Along with size and cut, these are the factors that determine its value. Tiny differences in clarity and colour, which could never be seen outside the laboratory, can alter the price of a stone by thousands or millions of dollars, depending on its size.

The GIA is the lone guardian of these almost immeasurable differences and trades solely on its reputation for issuing honest reports. Mr Destino said the GIA was confident that it had rooted out the problem, which centred around “a handful of people and a handful of stones”.

“The trade and the public can rest assured that there is no reason to question the integrity of any report from the GIA,” he said.

But the scandal is likely to broaden in coming weeks as investigators from the US Attorney’s Office in Manhattan are preparing indictments against the GIA clients and the former GIA staff alleged to have exchanged bribes in the case.

A source close to the GIA confirmed that the authorities had been handed all the evidence gathered during the internal investigation.

It is also understood that the GIA will this week sign a seven-figure settlement with the diamond dealer who brought the lawsuit against it as a first step toward repairing its tarnished reputation.

Max Pincione, an independent diamond dealer who travels the world seeking buyers for large, rare diamonds, is expected to be paid at least $15 million to abandon his legal claims against the GIA.

JEWELLERY BOX

Diamonds are graded and valued using a scale based around the so-called four Cs

Carat: the carat is the unit of weight used to measure the size of a diamond. Bigger diamonds are scarcer than smaller diamonds, meaning that the carat is also a measure of a diamond’s rarity.

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