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The Rapaport Group banned certificates from the European Gemological Laboratory (EGL) on its RapNet trading network (an interdealer online market) several months ago.  The purported reason for doing so was the supposed widespread, consistent overgrading of diamonds by EGL.

Now it is important to understand that EGL USA is not the same company as EGL International or EGL Israel.  It is widely believed within the diamond industry that EGL overgrades on clarity but also to some extent on color.  By overgrades, I mean that they will issue a report with a clarity grade of VS2 or maybe SI1 on a diamond that would be graded SI2 by the Gemological Institute of America (GIA).

Martin Rapaport rather huffily condemned EGL for not grading to GIA standards in his letter, published in the Rapaport magazine, explaining why EGL certs were being banned from Rapnet. This might be a tad disingenuous from a man who publishes prices for the SI3 clarity grade, which, of course, is not recongnized by the GIA.  He is not immune from the charge that he is part of the overgrading problem if we are to believe that GIA standards must be maintained.

EGL Israel is especially egregious in the overgrading of clarity. EGL USA is less so.  In my experience, I have seen EGL USA reports in which the diamond is graded exactly as it would be at GIA.  But there is truth to the conventional wisdom in the industry that the grading standards at EGL are more lax than at GIA.  All of the dealers know that if they buy a borderline stone and want the best price for it when they sell, they get the lab report from EGL.  And it is not just dealers.  I have had many educated retail customers who decline interest in diamonds (sometimes very beautiful ones) if the lab report is from EGL.