The Golden Laundromat: Conflict Gold May Be Entering US Through Gold Trading Network – New Investigation

New investigative report by The Sentry raises serious concerns that gold mined from conflict areas in the Democratic Republic of Congo may wind up in the supply chains of 283 U.S. publicly listed companies, including Amazon, Sony, and General Electric, through a global gold trading corporate network controlled by Belgian tycoon Alain Goetz.

Washington, DC – A new investigative report released today by The Sentry, an investigative initiative co-founded by George Clooney and John Prendergast, spotlights how gold mined from conflict areas in eastern Democratic Republic of Congo may be reaching international markets, including the supply chains of major U.S. companies and in products that consumers use every day. According to the United Nations, conflict gold provides the largest source of revenue to armed actors in the conflict in eastern Congo. An estimated 4.5 million people are displaced as a result of conflict in Congo.

Documents reviewed and interviews conducted by The Sentry for the report, “The Golden Laundromat: The conflict gold trade from eastern Congo to the United States and Europe,” raise serious concerns that the corporate network controlled by Belgian tycoon Alain Goetz has refined illegally-smuggled conflict gold from eastern Congo at the African Gold Refinery (AGR) in Uganda and then exported it through a series of companies to the United States and Europe, potentially including Amazon, General Electric (GE), and Sony.

According to documents reviewed by The Sentry, AGR exported approximately $377 million in gold in 2017 to an apparent affiliate of the Belgian gold refinery Tony Goetz NV, based in Dubai. According to 2018 U.S. Securities and Exchange Commission filings, 283 publicly-traded companies in the U.S. listed the Belgian refinery as an entity that may be in their supply chains, despite the fact that the refinery failed a major international conflict minerals audit in 2017. Those same filings indicate that AGR itself, opened in Uganda in 2016 and owned by Goetz, may also be in the supply chains of 103 publicly traded U.S. companies, including GE and Halliburton.

The Sentry conducted over 100 interviews with gold miners, traders, and civil society groups in Congo and the region for the report.

Sasha Lezhnev, Deputy Director of Policy at the Enough Project, said: “The conflict gold trade sustains ruthless armed groups and army units that commit major human rights abuses on the population of eastern Congo. The U.S. government and U.N. Security Council need to take action against corporate networks that traffic conflict gold and move it into the global economy.”

It is illegal, according to Congolese law, to export gold from non-certified artisanal mines in Congo. With an estimated 96 percent of artisanal gold mines in Congo not certified at present (60 out of an estimated 1,499 mines), there is a substantial risk that AGR is exporting illegally-mined gold and then moving it through the supply chain to electronics and other companies based in North America and Europe. The activities of the network appear to be noncompliant with both international supply chain due diligence guidance and international anti-money laundering safeguards as the network’s companies buy, refine, and then sell the gold.

Furthermore, Goetz has recently set up a major gold trading hub in neighboring Rwanda, exporting approximately one ton of gold per month since November 2017 (the equivalent of $500 million per year).

The investigation found that AGR exported over 9 tons of gold in 2017, far beyond Uganda’s domestic production, while acknowledging sourcing from Congo. Two major gold smugglers in Congo told The Sentry that they illegally trafficked gold from eastern Congo to AGR, and other regional gold traders confirmed their accounts. Furthermore, several regional traders told The Sentry that major gold traffickers who have been named in several UN Group of Experts on the DRC reports as purchasers of conflict gold, supplied gold to AGR in 2017. AGR denies sourcing from these traffickers or sourcing conflict gold.

John Prendergast, Co-founder of The Sentry and Founding Director of the Enough Project, said: “Gold from conflict-ridden eastern Congo is entering the United States. The US Treasury Department should combat money laundering associated with that gold through the full panoply of anti-money laundering measures, and banks purchasing gold need to apply enhanced scrutiny. These actions should target specific launderers, but not discourage the legitimate, conflict-free gold trade.”

AGR steadfastly maintains that it is committed to refraining from any action that contributes to the financing of conflict and that its due diligence systems are based on international guidance. Further, Tony Goetz NV asserts that it follows strict procedures to avoid sourcing conflict minerals and that it follows all laws and international guidelines.

• Click here to read the full report: “The Golden Laundromat: The conflict gold trade from eastern Congo to the United States and Europe”

REPORT RECOMMENDATIONS:

1. Targeted network sanctions. The United States, U.N. Security Council, and European Union should investigate and, if appropriate, sanction gold refining and trading companies and their beneficial owners discussed in this report. This should be done based on findings of support to persons, including armed groups, involved in activities that threaten the peace, security, or stability of the Congo through the illicit trade in natural resources, for example purchasing gold sourced from areas controlled by armed groups. A conclusion that any of the companies have failed to implement U.N. Security Council and OECD due diligence guidance for conflict and high-risk gold should factor into the analysis of how sanctions are applied.
2. Anti-money laundering measures (AML). The U.S. Department of the Treasury and financial intelligence units (FIUs) in Europe and East Africa should issue advisories to alert financial institutions on conflict and high-risk gold from East and Central Africa, highlighting in particular the significant risks presented by the trade in illicit gold from Congo, Uganda, and Rwanda, as described in this report. The advisories should build on the 2015 Financial Action Task Force (FATF) typology report on gold and money laundering by identifying ways in which gold is used to finance conflict and requesting increased reporting of suspicious activity. The U.S. Department of the Treasury should also investigate and, if appropriate, issue a finding, pursuant to Section 311 of the Patriot Act, that the trade in conflict and high-risk gold with certain traders is a “class of transactions” that constitutes a primary money laundering concern. These actions should be specifically worded to target launderers, but not discourage the legitimate, conflict-free trade.
3. Prosecutions. The United States and European Union should urge the Ugandan government to vigorously pursue an investigation of AGR for potential money laundering and, if the investigation concludes that an indictment is warranted, prosecute those responsible for violating the law. Belgium, the United States, and the United Arab Emirates should investigate potential breaches of relevant mining, customs, anti-money laundering, and anti-corruption regulations in relation to AGR, Goetz Gold, Tony Goetz NV, and Uganda Commercial Impex.
4. Use of AML red flags by banks. Banks and other gold purchasing companies should conduct enhanced scrutiny and refer to the red flags in the 2015 FATF typology report to assess risks when dealing with the gold refining and trading companies and their beneficial owners identified in this report to ensure that they are not inadvertently aiding in laundering the proceeds of conflict gold. They should also ensure to take measures to support the responsible, conflict-free gold trade from Congo.
5. Due diligence review and delisting/withdrawal of membership. The Dubai Multi Commodities Centre (DMCC) should immediately review whether to de-list Tony Goetz NV from its “Good Delivery” list.
6. Improved AML implementation. The U.S. Department of the Treasury should convene key gold refiners and traders, industry associations, and banks to highlight the need for better implementation of the red flags in the FATF typology report on gold. The United States and European FIUs should follow up with the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) on next steps for implementing the FATF typology on gold, including through future mutual evaluations.
7. Stopping smuggling by plane. The International Civil Aviation Organization (ICAO) and the World Customs Organization (WCO) should develop rules for airlines to prevent the smuggling of gold by hand on commercial airlines, and donor governments should provide assistance focused on detecting smuggled gold to airlines with routes that service key smuggling airports in the Great Lakes region.

• Click here to read the full report: “The Golden Laundromat: The conflict gold trade from eastern Congo to the United States and Europe”

For media inquiries or interview requests, please contact: Greg Hittelman, Director of Communications, +1 310 717 0606, [email protected].