Category: Legislation

On October 17, 2023, the criminal court of Papeete delivered its verdict in a pearl fraud case that shook the pearl farming industry.

A 70-year-old retiree, a former OPT employee, was sentenced to three years in prison, including six months without suspension, for illegally purchasing pearls without the required dealer’s license. His accomplice, an experienced jeweler, received a six-month suspended sentence for receiving stolen goods.

Between December 2018 and February 2019, the retiree had acquired several batches of pearls worth over 20 million Fcfp (XPF) from Polynesian producers. Tempted by a previous highly profitable investment, he ventured into the pearl trade without authorization, using deceptive tactics: promises of bank transfers that never materialized, partial cash payments, fake transfer orders, and even involving an accomplice on the phone to reassure sellers.

These fraudulent maneuvers left several pearl farmers in financial distress, with some unable to afford their children’s schooling. Meanwhile, the Chinese merchant, active in the sector for years, was found guilty of purchasing pearls from this fake dealer without verifying the legality of his operations.

The prosecutor denounced the case as the “tip of the iceberg,” referring to a parallel market that is difficult to regulate. The court ordered joint restitution of over 18 million Fcfp to the victims.

An amendment to the Pays (Territory) law of July 18, 2017, recently revised, introduces a new framework for determining individual production quotas for pearl farmers.

From now on, the quota will be calculated using the following formula:

Q = R × S (1 + p)

Where:

• Q = Individual production quota
• R = Maximum yield per hectare
• S = Authorized farming area per operation
• p = Specific weighting factor

For 2023, the maximum yield (R) has been set at 2,500 pearls per hectare, in accordance with decisions made during the Pearl Farming Council meeting on June 10.

Objectives of the New Regulation

This updated framework aims to:

• Better regulate pearl production in French Polynesia
• Balance quotas based on production capacity and available farming areas
• Integrate adjustments that account for the specific characteristics of each pearl farming operation

The reform seeks to ensure sustainable and equitable growth in the sector while maintaining the high quality of Polynesian pearls.

The French Polynesian government faces a mounting financial crisis over its controversial destruction of hundreds of thousands of pearls—a policy now deemed illegal, with compensation claims potentially exceeding 100 million Fcfp.

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1. Background: A Flawed Policy

• 2017 Mass Destruction: The Direction des Ressources Marines (DRM) seized and destroyed thousands of “imperfect” pearls, citing a 2005 regulation banning their sale.
• Ruled Illegal: Courts later determined the policy violated property rights, opening the door for pearl farmers and traders to sue for damages.

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2. Escalating Legal Battles

• Early Victories (2021): Two pearl farmers won compensation, setting a precedent.
• Expanding Claims: 15 additional producers are now demanding reparations for 585,000 destroyed pearls.
• Hidden Scale: Lawyers estimate millions of pearls may have been unlawfully destroyed since 2005, suggesting even greater liability.

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3. Valuation Dispute: From 575 Fcfp to 250 Fcfp per Gram

• Initial Ruling (2021): The Papeete Administrative Court set pearl value at 575 Fcfp/gram.
• Appeal Reduction: Paris’ Administrative Court of Appeal slashed this to 250 Fcfp/gram, drastically lowering payouts.
• Pending Awards: The public rapporteur recommends 1–37 million Fcfp per case for the remaining nine claims.

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4. Total Financial Exposure: ~100 Million Fcfp

If courts uphold the rapporteur’s guidance:

• Current Claims: 96.5 million Fcfp for nine cases.
• Cumulative Total: Combined with earlier settlements, the government could owe over 100 million Fcfp.

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5. Sector-Wide Fallout

• Regulatory Distrust: Pearl farmers accuse authorities of arbitrary enforcement and unfair destruction of their stock.
• Compensation Lifeline: Payouts could help producers recoup losses but won’t undo years of lost revenue.
• Systemic Reforms Needed: Calls grow for clearer pearl-grading standards and transparent policies.

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6. Next Steps: June 7 Decision

The final ruling (expected June 7) will determine:

• The total financial hit to French Polynesia’s budget.
• Whether the government must adjust pearl industry regulations to prevent future disputes.

A recent report by the Territorial Audit Office (CTC) has exposed widespread undeclared labor in French Polynesia’s pearl industry, demanding immediate implementation of a targeted action plan. The findings, published by Tahiti Infos, focus on employment conditions in the sector and prioritize establishing anti-fraud measures by 2021.

Shadow Workforce Revealed

The report highlights systemic challenges in tracking pearl industry employment. Without specific occupational codes distinguishing pearl workers from general aquaculture laborers in official statistics (ISPF), estimates remain unreliable. After excluding shrimp/pisciculture workers, the CTC calculates an annual average of 894 pearl sector jobs from 2015-2019 – a figure deemed grossly inadequate given the scale of operations.

Discrepancies in Employment Data

• 648 professional card-holding producers were registered in 2020
• Only 445 employees formally declared in aquaculture/pearl farming that year
• President Fritch’s estimate of 2,500-3,000 actual jobs underscores the gap

Alarming Labor Conditions

Over 50% of workers lack employment contracts or social protections, a situation authorities acknowledge but have failed to rectify. The CTC urgently recommends:

1. Immediate creation of a specialized pearl worker classification
2. Mandatory 2021 action plan against undeclared labor
3. Enhanced sector transparency measures

“This isn’t just about fraud prevention – it’s about protecting vulnerable workers and legitimizing our signature industry,” the report emphasizes. As Polynesia’s pearl sector celebrates its 60th anniversary, these findings demand urgent governmental response to safeguard both workers and the industry’s international reputation.

The French Polynesian government may face another costly legal setback over its destruction of reject pearls.

The administrative court recently examined a claim by Toanui Pearls, whose 14,175 pearls were destroyed in March 2017—just before new legislation authorized their commercialization.

This case mirrors January’s ruling that ordered the government to pay 30 million Fcfp in compensation after destroying over 120,000 pearls previously deemed unsellable. Both judgments found the destruction orders lacked legal basis.

While Toanui Pearls seeks 14 million Fcfp in damages, the court’s rapporteur suggested 7.5 million Fcfp as appropriate compensation, noting the pearls held verifiable market value once commercialization became permitted.

A final ruling is expected by March 16.

The repeated cases highlight growing legal uncertainty for pearl industry professionals, compounding pressures on a sector already weakened by years of economic challenges.

A legal setback for French Polynesia: The Paris Administrative Court of Appeal has ordered the government to pay 30 million Fcfp (French Pacific francs) to the company Raipoe International following the destruction of over 120,000 low-grade pearls in March 2017.

At the time, the destruction was justified under a 2005 resolution prohibiting the sale and export of pearls deemed imperfect. However, the court ruled that this regulatory basis was “entirely lacking legal foundation” on this matter.

The court determined that the government had no right to seize and destroy goods belonging to a private company, thereby violating its property rights.

Initially, Raipoe International had sought 86 million Fcfp in damages. The court ultimately awarded 30 million, taking into account a key factor: the enactment, just months later, of a new law legalizing the sale of such pearls. This legislative change caused market prices to drop, thereby limiting the financial harm suffered.

The ruling highlights a paradoxical situation: The government has been penalized for acting on an illegal regulation, while subsequent legalization of pearl sales ultimately mitigated the economic consequences.

On May 6, 2019, the Syndicate of Small and Medium-Sized Pearl Farmers of French Polynesia (SPMPF) raised urgent concerns during a press conference about the consequences of the 2017 pearl industry reform. SPMPF President Mia Williams warned the legislation could damage Tahitian pearls’ global reputation.

The Core Controversy
The reform introduced a problematic “Category E” classification with ambiguous quality standards. Professionals argue this vague category threatens to undermine the exacting criteria – color, luster, shape, and nacre thickness – that historically guaranteed the gems’ value.

Industry Demands
Supported by the Toaura Economic Interest Group (led by Marcelle Howard), the SPMPF demands:

1. Complete elimination of Category E
2. Strengthened export quality controls
   These measures are deemed essential to protect the integrity of Polynesian pearls in international markets.

Additional Concerns
Pearl farmers fear the reform’s reduced nacre thickness minimum could:
• Encourage sales of immature pearls
• Trigger harmful overproduction
• Further strain an industry already facing declining Chinese demand (Tahitian pearls’ primary market)

Divergent Perspectives
Aline Baldassari of the Professional Pearl Producers’ Union acknowledges the reform’s imperfections but argues it represents necessary progress toward industry restructuring.

At this critical juncture, the Polynesian pearl sector faces a fundamental choice: Will upcoming legal adjustments preserve Tahitian pearls’ premium status or enable a race to the bottom? The decisions made now may determine the future of this iconic natural treasure.

On December 31, 2018, just before New Year’s celebrations, Faa’a customs officers conducted a dramatic operation to intercept a major pearl theft. Acting on precise intelligence from the Border Police (PAF), authorities intercepted two Chinese employees of a pearl farm attempting to return to their home country via Japan.

A thorough inspection revealed both women were smuggling pearls on their persons. The first had concealed 561 pearls and 27 keishi pearls in her undergarments, while the second hid 346 pearls using the same method. These high-value, exceptional-quality pearls had been stolen directly from their employer’s pearl farm, causing significant financial damage to the business.

The confiscated pearls will undergo expert valuation. French Polynesia’s pearl trade operates under strict regulations ensuring traceability and protecting this vital economic sector. All pearl exports require specific documentation, with customs playing a key oversight role.

The pearl farm owner has filed theft charges, and judicial proceedings are underway with a formal report to the Public Prosecutor’s Office. This high-value pearl theft could lead to severe legal consequences for those involved.

The Tahitian Pearl Association of French Polynesia (TPAFP) has launched a new campaign under the theme “The Tahitian Cultured Pearl, the First Jewel of Polynesians,” aimed at (re)introducing this unique treasure to the local population.
This initiative is part of a major legislative reform adopted in July 2017, designed to revitalize French Polynesia’s pearl industry.

For years, the pearl sector had been facing a crisis that demanded a complete overhaul of its legal framework to better address industry challenges. The law enacted in July 2017 was crafted to regulate professional activities related to pearl and mother-of-pearl production and trade. Its primary goal is to ensure sustainable resource management while protecting the environment—a critical concern for the future of this industry.

Aline Baldassari, President of the Tahitian Pearl Association of French Polynesia, emphasizes the importance of this reform, which she considers an essential response to industry professionals’ demands and market fluctuations. The reform also seeks to streamline administrative processes, previously seen as a hindrance by pearl farmers.

The law, passed in July 2017 and supplemented by 12 decrees through September 2018, introduces several key measures to structure the pearl industry. These include:

• Mandatory production volume declarations
• Professional licenses for each trade
• Required reporting of stock levels, purchases, and sales
• Technical approval for nucleus imports to ensure quality and compliance

Other notable provisions:

• Mandatory oyster detachment before transfer
• Production quotas and ecological management caps
• New nacre thickness evaluation for cultured pearls to guarantee quality
• Establishment of a Pearl Farming Council and local management committees to strengthen sector governance

While the full benefits of this reform may take two to three years to materialize, it marks a true revolution for the industry. The goal is to revive the pearl sector and enhance the international reputation of Tahitian pearls. Its success hinges on industry professionals’ adaptability and the full commitment of all stakeholders to ensure the long-term sustainability and prosperity of this vital economic pillar for French Polynesia.

Chinese pearl farmers have developed a sophisticated technique to dye their freshwater pearls, passing them off as black pearls.
This practice poses a significant threat to the reputation and authenticity of the Tahitian Pearl. According to Aline Baldassari, President of the Tahitian Pearl Association of French Polynesia (TPAFP), these counterfeits have become difficult to distinguish, even for industry professionals, exposing consumers to a risk of confusion.

Although technological solutions have been explored to ensure pearl traceability, these initiatives face economic constraints. In response, the TPAFP proposes creating a distinctive label to protect the Tahitian Pearl in the international market. This label would certify the origin and quality of the pearls, with strict criteria such as the use of an authentic nucleus and nacre sourced exclusively from the Tuamotu archipelago.

This certification, which will be carried out in France and protected by European law, aims to reinforce the authentic image of Tahitian pearls and ensure consumer trust worldwide. Simultaneously, verification campaigns will be implemented in Hong Kong to prevent the misuse of the “Tahitian Pearl” brand by producers of fake black pearls.

Thus, this initiative seeks to preserve the integrity of Tahitian pearl farming and guarantee the provenance of pearls sold in international markets.