European Gemological Laboratories (EGL) Diamond Certification Guide

The European Gemological Laboratories (EGL) is one of the most interesting gem labs, partly for the controversies it has generated in the diamond trade. While this article will focus primarily on EGL as it is constituted today, it’s important to know something of the recent disputes that have tarnished the brand and spurred major changes to EGL operations. Understanding the problem that occurred is pretty straightforward, but what has happened in the aftermath is a bit unclear.

Diamond grading problems at EGL started showing up in the early 2000’s and can fairly be attributed to the business model of this laboratory ‘brand’. EGL was at this time a collection of many affiliated labs each working with considerable autonomy. That is, they were not under a central control structure. As a result, bad practices - including what are considered by many to be ethical breaches by some of the affiliates - have tarnished the reputation of the EGL name and by extension all the affiliated labs.

Over-grading of diamonds was the main issue that brought about the precipitous downturn for EGL. In some instances, diamonds were shown to be over-graded by as many as five grades. Prices for diamonds with EGL reports became increasingly discounted in the trade for this reason. In 2014 the Rapnet diamond trading platform, the largest in the world, banned all EGL diamonds from being listed in their system. There were also major lawsuits filed against EGL International and some retailers who promoted EGL International graded diamonds. At that point, EGL had an existential crisis.

In response, the family who inherited EGL on the death of its founder Guy Margel appointed Menahem Sevdermish to reorganize and hopefully resuscitate the brand. Sevdermish is a highly respected gemologist who opened the first EGL lab in Israel in 1981. In 2016 he was tasked with managing and realigning the grading practices of the affiliates in Europe and Asia that had gone under the umbrella of EGL International (EGL USA was not directly connected to the problematic practices – more on EGL USA below). It appears that his effort to rehab the EGL International group of labs was less than successful, and the only lab in his group of significance today is his own in Israel which was re-branded “EGL Platinum”. EGL USA is an entirely separate entity, not connected with the EGL International group, and is functioning robustly today.

The EGL can best be thought of as a “brand” of gemological laboratories spread out across the globe. Each is an independent business operating under the EGL banner, obtaining permission from the trademark owners to use the EGL name. The labs in Europe and Asia (formerly EGL International) are now grouped together under the EGL umbrella, while EGL USA is the group comprised of North American labs located in Los Angeles, New York, Miami (GHI).

Subsequent to the delisting from Rapnet in 2014, several of the formerly EGL International labs were closed or had their activities significantly curtailed. At this time it is difficult to know for sure to what extent the remaining labs in the group are functioning, though several still have websites visible online.

Like most other gem laboratories, EGL adopted most of the grading methods and nomenclature created by GIA in the 1950’s. The most prominent exception to this was the introduction of the SI3 grade by EGL in 1992. EGL felt that the GIA category was too broad and needed to be further segmented to account for diamonds on the border of SI2 and I1. While this made sense, it added to the perception that EGL was ‘soft’ on grading by issuing many reports for SI diamonds that would have been I1 at GIA.

Another difference that may have given rise to more lenient grading is the practice of EGL labs to give weight to the color appearance in the face up position. GIA grades color from the side so that the reflections and light return do not impact their assessment of body color. A well cut round diamond, for example, may look whiter than its true body color and thus get a higher color grade at EGL.

Perhaps a bigger potential issue is the master color stones used in color grading. It is doubtful that there was any uniformity among the EGL labs in terms of their master stones. This may very well have contributed to inconsistent and inaccurate color grading in some of the network labs.

One of the unfortunate aspects of the scandal involving EGL International is the unfair collateral damage done to the reputation of EGL USA, a separate entity with connection to EGL International in name only. EGL USA was specifically excluded from any legal actions brought for over-grading.

Mitch Jakubovic, director of EGL USA explained, “There is no connection between EGL USA and EGL International, or between EGL USA and any other EGL overseas entity. EGL USA is a completely different company with a completely different character. We are committed to safeguarding our legacy of nearly four decades of exceptional gemological analyses. And we will continue to protect our reputation and the interests of our customers.”

To be clear, there is also concrete evidence that grading at EGL USA is regarded as ethical and trustworthy by professionals in the diamond trade. In a 2014 survey of diamonds listed on Rapnet, diamonds of similar quality but graded by different labs were compared by price. The deeper the discount the more dubious the trade is about the accuracy of the grading. Using GIA as a standard and pegged at a value of 1.0, the list prices of diamonds bearing other lab reports were compared for relative premiums or discounts. The most heavily discounted diamonds were those from the EGL International group. EGL USA on the other hand, had a score comparable to IGI in terms market confidence.

EGL USA launched two significant initiatives in response to the EGL International scandal and dissolution. One was to be a trading platform similar to Rapnet as a result of their being banned from listing there. The other was a new laboratory call GHI with headquarters in Miami. This had been an existing research facility for EGL USA but was rebranded in an effort to disentangle the company from the EGL controversy.

EGL USA was never implicated in the over-grading scandal and continues to operate out of offices in Los Angeles, New York and Miami. The Miami lab and research facility was rebranded as GHI Laboratories as a way to provide some distance from the EGL name which had been sullied by the practices of the offending labs that were part of EGL International, of which EGL USA had no part.

Jakubovic advises: "The text alternately refers to EGL USA as the 'US arm' and 'branch' and 'counterpart' of 'European Gemological Laboratories'. All of these labels are incorrect. Our name is simply EGL USA Gemological Laboratory. (We are not 'European'.) And EGL USA is in no way connected or affiliated with any EGL-named laboratories outside of North America. EGL USA is a highly regarded, independent gemological laboratory. The recent delisting of EGL USA by RapNet is not a reflection of the quality of our work. It is an unfair penalty, imposed upon us solely because of our name."

Regarding the initiative to launch a trading platform to compete with Rapnet, it appears that effort did not bear fruit. There is no indication that it ever went live.

The EGL labs offer a range of services including diamond grading (natural and lab grown), colored diamond reports, gemstone and pearl identification and grading. In addition to loose gems they also offer jewelry reports. They issue appraisals through a subsidiary called Universal Gemological Services (UGS).

EGL USA Reports

EGL USA offers cut grade reports on rounds and princess cuts and reference “light performance” in some of their messaging, however there is no information provided pertaining to the basis for this analysis. It appears to be nothing more than 2D parameter based grading. According to their website:

“A diamond’s cut grade is based on the combined analysis of its proportions, polish, and symmetry — factors that determine the way light interacts with the stone.”

And the following table of parameters is listed for rounds:

EGL USA also offers a Hearts and Arrows report. They describe hearts and arrows this way: “The precise cut of a hearts & arrows diamond creates a unique, romantic facet pattern. Viewed through its pavilion, the stone shows a circle of hearts. And through its crown, it reveals arrows. Cut is rated on a scale from very good to ideal plus (the most symmetrical).” However, there is no indication of exactly how the pattern is assessed or what the grading methodology is.

EGL USA has been among the vanguard in screening for and identifying synthetic diamonds (also known as lab grown diamonds). They also issue grading reports on lab grown diamonds that are distinct from their natural diamond reports.

EGL USA describes Universal Gemological Services as an independent “affiliate”. They state that “Each report is completely objective — free of any conflict of interest with wholesalers, retailers, or auction houses.”

However, many members of the trade take a dim view of labs that also perform valuations as these documents are designed for insurance purposes and are often inflated. They can be misused by unscrupulous sellers to persuade buyers that their offering is a “deal”.

Each full report EGL USA offers for a loose diamond includes a complimentary UGS Appraisal Summary.

Menahem Sevdermish founded EGL Israel in 1974 and has operated the lab and gemology school ever since. He is a highly respected gemologist. In the aftermath of the Rapnet delisting in 2014 he was appointed to try to bring grading into consistent alignment with original EGL standards across the EGL International labs located in Antwerp, South Africa, Asia. It is uncertain what happened to those efforts but he rebranded EGL Israel as EGL Platinum and continues to operate today, but EGL International as a brand was shut down.

The reorganization plan was supposed to be rolled out in several phases. Gemologists from all EGL labs are trained to adopt and implement EGL Platinum standards, which were originally set by Guy Mergel, founder of EGL in 1974, and in line with World Federation of Diamond Bourses (WFDB) guidelines.

In addition, EGL Platinum was to check the master stone sets of each affiliate to ensure tighter grading standards. All labs were supposed to be issuing the same EGL Platinum report, using uniform standards and the same professional language.

It is unclear what exactly happened to those plans or if any of them were actually implemented. It appears that the efforts to bring all of the labs into uniform compliance was either unsuccessful or were abandoned. EGL Platinum appears to be the only lab with any significant presence today.

EGL Platinum performs a variety of services for the trade including gem identification and the grading of loose diamonds, including natural fancy colors.

EGL Platinum reports for Round brilliant diamond feature an overall cut grade.

Cut grades are assigned based on parameters. An additional statement that is referred to as “honorary” includes an Ideal Plus and a Hearts and Arrows designation.

All major gemological laboratories screen for synthetic diamonds (also known as lab grown diamonds). Only by doing so can they reliably issue reports for natural diamonds. Interestingly, there is no indication on their website that EGL platinum issues reports on lab grown diamonds.

EGL Platinum also offers reports on natural fancy color diamonds.

EGL Platinum offers appraisal valuations from a “sister” company called EGA (European Gemological Appraisals).

EGC College, formerly known as GIPS, is the longest established gemological institute in Israel, since 1975. Over the years, the college has trained more than 4500 students, many of whom joined the world gem industry. The EGC College is a recognized educational institute by the 'Ministry of Industry, Trade and Labor'

Students successfully graduating both the Diamond Grading and the Gemology courses at the E.G.L. College are awarded with a fellowship diploma title known as E.G.L. Graduate Gemologist (E.G.G.)

The EGL laboratory network at one time was very significant in the diamond industry. Following the revelations of wild grading disparities coming to light around 2014, and the subsequent delisting of all EGL reports from the Rapnet trading platform, EGL has never fully rebounded. EGL USA suffered collateral reputational damage from the problems created within the EGL International network, even though they were a completely independent operation and were not implicated in grading scandal.

EGL USA continues to operate and serve the trade in North America. EGL Israel continues to operate under the brand of EGL Platinum. Both labs offer a wide variety of services to the trade including diamond grading (both natural and synthetic diamonds), colored gemstones, pearls and jewelry. They also offer appraisals. In Israel EGL operates a gemology school known as European Gemological College (EGC) that over many years has trained thousands of jewelry professionals working in the industry.