Preserving Its Membership Certification Value Beware of Slanted Stories on Arbitration

Diamond Intelligence Briefing By Chaim Even-Zohar Vol.33 No.886 N9 March 2017 Signet ChairmanIN SSIDpeaksE out Fiscal 2017 Sales by Stores (Page 12) (Page 13) THE RJC’s STERLING IMBROGLIO: Preserving Its Membership Certification Value Beware of Slanted Stories on Arbitration or better or worse, journalists are not the most appreciated species today. We are under pressure, we are vilified, and epitaphs like “fake news”, “alternative facts” are becoming household words. I was deeply bewildered by the rapidly unfolding Washington Post revelations that “hundreds of former employees of Sterling Jewelers claim that its chief executive and other company leaders presided over a corporate culture that fostered rampant sexual harassment and discrimination.” Within hours the story was recycled in general Fand financial media, and the share price of Sterling’s parent company Signet Jewelers took a further plunge. Then yesterday, the New York Times (NYT) followed with a headline “Jeweler’s policies hid abuse, suit says”. Writes the New York Times: “In 2004, a female employee said in a claim that she had witnessed the rape of her roommate by a Sterling manager at an outing sponsored by Sterling in 2003. Sterling fired the man, who ultimately pleaded no contest to sexual battery. But the female employee, who went by Jane Doe in court papers, said ‘the company set out to investigate, intimidate and discredit her and the assault victim after the company got notice that the victim might sue the firm.’” A few things troubled me. First of all the timing. Today, Signet and Sterling are publishing their annual reports – generally a festive event, with press releases, presentations and press conferences. Was the press being manipulated? Virtually every paragraph in the NYT story sketches a quid pro quo harassment workplace - a situation where a manager or other authority figure allegedly offers or merely hints that he or she will give the employee something (a raise, a promotion, or a position in another store) in return for that employee’s fulfillment of a sexual demand. But that’s not what the suit is all about. The second thing that troubled me: the NYT addresses issues which were mentioned in affidavits that dealt with unequal pay issues. The arbitration, as we shall discuss later Diamond Intelligence Briefing 1 RJC›s Sterling Imbroglio more in depth, is solely about gender-discrimination in 249 signed affidavits counting a total of 1,309 pages. Nor wages. Men earn more than women in equal jobs. That’s was it difficult to find NYT’sJane Doe’s signed affidavit. She a nation-wide, highly disturbing, situation throughout the signed with her real name. The rape wasn’t actually in the United States. Gender discrimination is illegal. This is the outing, but in the bedroom of her roommate. The assailant issue to be addressed in the arbitration. was a drunk male colleague whom they had driven If there are no more “rape” stories, why cite something home [from a restaurant] to her roommate’s apartment that may have happened 15 years ago? It upset me. As “so he could get home from there, since he lived in the a journalist I feel that something isn’t right. next apartment complex. However, he wouldn’t leave, and we told him he could sleep it off on the couch. [The DIB Conducted its Own Fact-Checking colleague] would not go to sleep, and another friend What exactly did the Washington Post write? Citing that was with us, gave [the colleague] more drinks in an arbitration document it obtained, it reports that sworn an attempt to get him finally go to sleep. …… [Then her “declarations from roughly 250 women and men who friend told Jane Doe] that when she woke up, he was worked at Sterling, filed as part of a private class-action on top of her and she couldn’t push him off.” Let me arbitration case, allege that female employees at the spare you the rest. company throughout the late 1990s and 2000s were The colleague was fired [a few years after this event] routinely groped, demeaned and urged to sexually cater and the conduct of the female employee, and the to their bosses to stay employed.” The New York Times veracity of her story, was questioned. Sterling informed says its evidence came from “more than 1300 pages” an Ohio court that “the plaintiff had engaged in lewd documents. and lascivious behavior.” That court case had nothing As the Arbitrator had released a redacted version of to do with the “class action” which supposedly is the documents (with some names blacked out) the subject of the NYT story. it wasn’t difficult to get the I have read most of 1,309 pages, which is horrifying reading. But I found no “other” so called rape – and the NYT, if it had given more details on the story – would most likely have agreed with question marks on the relevant allegations. There is plenty of troubling behavior in these affidavits. But no rape. Inflicting Public Relations Damage Signet Jewelers has worldwide an average of 29,000 employees, some 16,140 of which work in the Sterling Jewelers division. The affidavits which constitute the basis of the class action were signed by 0.8% of the total work force. Many of these affidavits seem like a template, where mostly dates, names and 2016 | annual report amounts may differ. Probably that’s Celebrate Life. the normal way that class actions Express® are managed. I wouldn’t know. Love. My instincts tell me that the current publicity was artificially created to poison the atmosphere sufficiently to force Signet and Sterling to the negotiating table before the trial commences in the fall. It might even work. Diamond Intelligence Briefing 2 RJC›s Sterling Imbroglio The managers of the class action know full well that in America (and not only there), one must assume one’s innocence until proven guilty. They also know that the fate of Sterling will not only be decided in a court of law or in an arbitration behind closed doors. The fate of Sterling is in the hands of its customers. Consumers react to perceptions. Unquestionably, the adverse publicity - the bad situation - may damage consumer confidence. RJC’s Auditing Practices Let me now turn to RJC and auditing standards – which is really the focus of this DIB. Signet Using the RJC to Be Signet Jewelers is not only the largest specialty jewelry a Global Preacher of Ethics? retailer in the US, UK and Canada, but with $6.4 billion The alleged gender-payment gap situation is in annual sales (2016), it is unquestionably the dominant exceptionally damaging because Signet has assumed global polished diamond buyer. In the last decade, it has the role of Global Preacher of Ethics. Undoubtedly, Signet’s used its purchasing power to convince, cajole, pressure flagship is the 2005 establishment of the Responsible (and in some instances threaten) the diamond value chain Jewellery Council (RJC) of which it is one of the 14 original into participating in a host of global initiatives to embrace founders and a certified member.The RJC is dedicated to and adopt auditable social, ethical and environmental the objective of reinforcing consumer confidence in the governance frameworks. diamond and gold supply chain. Signet takes considerable At the same time, however, it has jumped in the pride in its stewardship of the RJC – which has become an advertising vacuum created when De Beers ceased invisible part of the company’s “corporate business card.” its generic promotions. Sterling’s parent company It literally counts its “success” in recruiting RJC members. spends some $200 million or more on preserving and Says Signet’s website: “Since RJC’s founding, Signet has growing our key consumer markets. It is now facing a strongly encouraged its suppliers and other members publicity campaign against itself on a subject where it is, of the industry to join the RJC and eventually become indeed, vulnerable. Let there be no doubt: Sterling faces certified members which more than 300 have done.” some serious challenges in its retail stores Signet is almost synonymous with the RJC. That’s not management and staff just the way it is; that’s also the way the parties want it relations. to appear. Today, the RJC has over 900 From The New York Times March 8 2017 issue. members from mine to retail. Academic research has confirmed what every diamantaire knows: hardly anyone joined because he “was dying to do so,” or because he saw a tangible benefit in RJC membership. No, instead, RJC membership has become a precondition to becoming eligible to buy rough from certain suppliers or to sell polished to certain jewelers. Even today, Signet’s subsidiary Sterling will drop you off their list of vendors if you are not an RJC member. In terms of “ethics” – Signet can truly claim to be the “global preacher….” But RJC must deliver tangible “value” to its members. Consumers to Decide Sterling’s Fate The Signet Group was not always called by that name. Before 1993 it was called Ratners. Its Chairman was Gerald Ratner, the British tycoon retailer, who headed the group, which then Diamond Intelligence Briefing 3 RJC›s Sterling Imbroglio already had some 1,000 stores in the United States. Then Protection Act to promote the financial stability of the came the Chairman’s notorious speech at the Royal U.S. by improving accountability and transparency in Albert Hall in April 1991. Asked why some of Ratners’ the financial system, the“conflict minerals”section was wine glasses and silverware could be sold so cheaply, he attached to it in the “miscellaneous” section.

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