Key facts
- Over 30 people are accused of smuggling 141 shipments of diamonds worth $57 million into Vietnam.
- The smuggling allegedly involved hiding diamonds in shoes and clothes to traffic them into Vietnam starting in 2024.
- Three prominent jewelry businesses in Ho Chi Minh City, Kim Ly, Ngoc Chau Au, and Ngoc Tam, are implicated.
- Owners of these businesses have been charged in connection with the smuggling network.
- Stores operating under these brands have temporarily closed, impacting diamond resale for consumers.
- A grading company, P-Lab, is accused of issuing fraudulent certificates for smuggled diamonds.
A significant diamond smuggling scandal has rocked Vietnam, leading to the prosecution of owners of three prominent jewelry businesses and sparking panic among consumers. The alleged transnational network, reportedly operated by Indian nationals from Hong Kong, involved smuggling diamonds worth an estimated $57 million into Vietnam, with shipments hidden in shoes and clothing.
Authorities have charged the owners of Kim Ly, Ngoc Chau Au, and Ngoc Tam jewelry businesses. In response, stores operating under these brands have temporarily closed, some for up to a month, severely limiting options for customers seeking to resell their diamonds. Several other diamond stores in Ho Chi Minh City have also scaled back operations or shut down, exacerbating the liquidity challenges.
The crisis has highlighted the inherent fragmentation and lack of transparency in the diamond market, particularly in Vietnam. Unlike standardized commodities like gold, diamonds are valued subjectively based on carat weight, color, clarity, and cut. Retail prices are heavily influenced by branding and individual business policies, with buyback prices typically much lower due to the absence of a centralized secondary market. Most jewelers only agree to repurchase diamonds they originally sold, often rejecting stones from competitors.
Further complicating matters, allegations of fraudulent grading certificates have emerged. Police claim that Đặng Ngọc Thảo, director of P-Lab, a grading subsidiary wholly owned by PNJ (Vietnam's largest jeweler), ground off original inscriptions from smuggled diamonds and issued new P-Lab certificates. This practice, which violates Vietnamese regulations barring certifiers from trading the products they grade, effectively gave smuggled diamonds a legal identity and undermined the trust placed in certification bodies like the Gemological Institute of America (GIA) and the International Gemological Institute (IGI).
Legal experts note that consumer protection in the resale of diamonds is limited, as retailers are not legally obligated to buy back products sold by competitors. Transactions have traditionally relied on the reputation of individual businesses, leaving customers vulnerable if a retailer faces legal issues or ceases operations. Large diamonds, in particular, present greater resale challenges due to their high value and limited buyer pool.