Plans by the
National Gem & Jewellery Authority (NGJA) to set up an
international standard gem laboratory have run into a
huge storm with allegations and counter allegations
threatening the intent of the project even before it has
started.
At the heart of the
problem is the approximately Rs. 100 million fund that
the NGJA collected in the form of a levy from exporters
starting way back in 2001. The collective intention –
that of the NGJA and the various trade associations –
was that the NGJA would impose a levy of 0.25% from each
export and would hold it in a fund until such time as
sufficient monies accrued in order that a laboratory of
consequence would be purchased.
Unfortunately for
the trade as well as the incumbent chairman, way back in
2001 when the levy was imposed and when it was
collectively but tenuously agreed between associations
and the NGJA, no legal advise was sought as to whether
in fact the NGJA’s remit included any provision to hold
monies inter-alia in "trust."
In light of the
number of public interest litigations that have been
moved in the Supreme Court, citing fundamental right
violations, there appears to be a prima facie
case for concern. The NGJA was set up by an Act of
Parliament. The Act deals with the scope and remit of
the NGJA. Imposing upon it a very comprehensive and
detailed brief of the scope of its work, parliament
subjected it to Government Financial Regulations but
crucially omitted a provision for the NGJA to act as –
even inter-alia – a trustee.
Idea shelved
Over the years, the
monies accrued and earning interest, soon accumulated.
An attempt was made to start the gem laboratory some
years ago but due to conflicting legal opinion at that
time, the idea was shelved. The levy, however continued
to be imposed. The NGJA, to be fair by it, has
consistently shown the value of the fund as a liability
in its published accounts and the intent has always been
to establish a state of the art laboratory facility.
The NGJA sought an
opinion from the AG’s Department on the legality of
setting up a separate company, the possible liabilities
that may accrue to the NGJA and the impact on
non-members. Crucially it is not known as to the opinion
in respect of the members. The AG’s opinion some members
say, is not comprehensive – it does not address the
issue sufficiently especially with regard to the fact
that the NGJA has no provision to hold monies as a
"trustee" for anybody – either members or non-members.
Therefore, they
charge, that the monies – however honourably collected
and maintained by the NGJA – belongs to the NGJA.
Sections of the trade are urging the NGJA to hold on to
the ownership and divest the management to the various
associations in order that the important aspect of the
lab’s ‘independence’ can be maintained.
As some traders
charged that the NGJA has already lost some Rs. 7
million, they say that the action of the NGJA in handing
over the latest (and final) tranche of Rs 92.5 million
to a "private" company causes them concern.
Need to ‘privatise’
Milton Fernando, of
Deepthi Jewellers, a leading exporter of gems to the
United States, questioned as to why there was a need to
‘privatise’ the ownership of the laboratory. Especially,
he said, after the fiasco of the loss of some Rs. 7
million in the past. They say that the trust they have
is with the NGJA and not elsewhere.
We spoke to a
number of persons in the industry who all felt
comfortable with the notion of the NGJA being in
control. Equally a number of the traders felt that there
was no harm and in fact it was better for the management
to be in private hands. Parakrama Soysa, the manager of
Soysa Gems, another exporter of gemstones mainly to
Europe, said it was essential that transparency
prevailed.
Chanaka Ellawela, a
prolific exporter of gems, said that the consideration
of a privately held company for the laboratory would
ensure the long term survival of the gem laboratory –
free of political influence and for the commercial
aspect of the business to be sustained as well. He told
The Sunday Leader, that the decision to arrive at
the door step of a private company, was not lightly
made. Much thought and consideration went into this
process and many possibilities were looked at.
A former Chairman
of the NGJA, Rusiripala Tennekoon said that the
commercial aspects of the gem trade were of paramount
importance. By not having immediate access to a
certification process that would be internationally
acceptable – where the veracity and the independence of
certification were accepted – the Republic of Sri Lanka
was losing extremely valuable foreign exchange. This was
as he pointed out, because the gemstones would not fetch
the market price without an "accepted independent,
sophisticated and verifiable certificate."
No value
Rusiripala, a
personality well renowned amongst the leading
international gem laboratories and former chairman of
the Bank of Ceylon, added that in his view, a private
company was certainly not a replacement for the National
Gem & Jewellery Authority. The input and value the NGJA
brings with it, he said, could not be valued enough.
Members of the
trade spoke with unison of the need for a laboratory.
Lakshman Waragoda, the president of the Dealers
Association at the World Trade Centre, where the NGJA
has a 50-shop presence including a laboratory, said,
"There is no doubting the need for a laboratory. However
we already have a laboratory but it is not
sophisticated. We need a lab that is fully equipped with
the latest technology. Most important is a need to have
the laboratory affiliated or associated in some way with
one of the world’s top three laboratories – like Gubelin,
Perrati or the GIA. That is the challenge for the NGJA
now."
Sri Lanka despite
having some of the most bountiful yields of natural
gemstones in the world, lacks a sophisticated laboratory
to be able to authenticate the gems. Buyers all over the
world from the trade through to the end user, have
become more sophisticated and knowledgeable in their
purchases of gem stones.
A sophisticated gem
laboratory will be able to indicate the origins of the
stone, whether it has been heat treated – in essence a
sophisticated gem lab provides each stone with its own
DNA. In an increasingly competitive world, the
availability of such cutting edge technology can mean
the difference between success and failure.
(faraz@thesundayleader.lk)
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A young Sri Lankan
gem merchant based amongst the oil-fields of Saudi
Arabia may well be the most high profile exponent for a
state of the art laboratory with international
affiliation. He purchased in Sri Lanka a 62-carat blue
sapphire which the laboratory certified as natural
corundum. At the time with no facilities to test if the
stone was "heat treated" to enhance colour etc. the
price was set at USD 99,200. Before he paid for the
stone locally, he took it to a Mystic who lives near
Embuldeniya Junction, in Colombo. The Mystic chanted,
handled the stone and declared it to be "Victorious."
Our young merchant
finalised the deal immediately. He took it back to his
client, a member of the Saudi nobility. The Prince
agreed to pay the asking price of USD 146,000 provided
that the stone was natural – without heat treatment
(thermal enhancement). The stone, the merchant and the
Prince’s agent flew to Switzerland and asked the world
famous Gubelin Lab for a report.
At great cost
(approx USD 4,000) the team got their report: the stone
was, despite the trade and the ecclesiastical
warranties, said to be natural but displaying evidence
of thermal enhancement. A dejected Saudi Prince parted
only with his condolences to the young Sri Lankan
merchant who it is now reported, does not even mention
the Mystic’s name. Happily, both the merchant – who took
six years to recover his losses – and the Mystic are
both still in business. But the laboratory is still
missing in Sri Lanka.
