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Ghana Formed Committee to Stop Gold Smuggling – at a Time the Country Lost $9b

Gold has been mined in Ghana for more than 100 years.  At the end of June 2022, Ghana’s earnings from gold rose by 13.1 per cent, bringing in $3 billion.

Ghana government officials say the mining sector contributes approximately 41 per cent of the country’s total export earnings, 14 per cent of total tax revenues, and 5.5 per cent of GDP.

They also say gold contributes over 90 per cent of the country’s total mineral exports and makes up 49 per cent of total export value.

But the country is bleeding from the activities of gold smugglers – who seem to be having a field day smuggling gold out of the country with ease. The country was reported to have lost $9 billion worth of gold through smuggling in 2019 – only four years ago.

In response to the activities of smugglers, the Ghana government inaugurated a committee in October 2021, tasked with the responsibility to halt gold smuggling in the country. Available data shows that Ghana is losing large volumes of its gold through smuggling.

The committee formed by the Ministry of Lands and Natural Resources – the Ministry with the responsibility for the mining sector has Mr George Mireku Duker, a Deputy Minister of the Ministry in charge of Mines as the Chair – and representatives from the Minerals Commission, Precious Minerals Marketing Company, National Intelligence Bureau, Ghana Police Service, Ghana Immigration Service, Ghana Boundaries Commission, Ghana Revenue Authority and the Sector Ministry are members.

At the inauguration of the committee, it was charged to ‘ensure the integrity of the gold export value chain and increase the government’s revenue on gold trade.’

The trade data on gold export between Ghana and countries including India, United Arab Emirates and Switzerland in 2019, showed that more than $9 billion worth of gold exports are unaccounted for. In other words, Ghana lost more than $9 billion worth of gold in the year under review to smuggling, it was stated at the inauguration.

In the last three weeks, an undercover investigation of the gold smuggling ring in Africa, by the Al Jazeera Investigative Unit called ‘Gold Mafia’ has thrown light on the main actors responsible for smuggling several tons of gold out of resource-rich African countries including Ghana.

One of the subjects caught on hidden cameras and described as a ‘Financial Architect’, on record in the video to have laundered money for Russian criminals, one Alistair Mathias was heard saying in the video that he used to smuggle between $40 million to $60 million worth of gold out of Ghana every month.

“In Ghana, I was the biggest at one point,” he said to undercover reporters posing as Chinese criminals looking to launder money.

The revelation in the Al Jazeera investigation further linked Mathias to a Ghana registered gold exporting company, Guldrest Resources, reported on by Ghana Business News in a global collaboration with the ICIJ in the project known as ‘FinCEN Files’.

FinCEN Files was the result of work based on leaked US Department of the Treasury leak of suspicious activity reports (SARs) from banks around the world. In the report, Guldrest and four other gold exporters from Ghana received an amount of $124 million from Dubai-based gold refiner, Kaloti. Kaloti also featured largely in the ‘Gold Mafia’ investigation.

The SARs reviewed by Ghana Business News and ICIJ describe an amount of $2.8 billion in suspicious payments connected to gold transactions with Kaloti. Of the amount ($124 million) $124,208,560.00 was directly linked to transactions involving companies in Ghana.

The FinCEN Files show that from November 9, 2011 to August 28, 2012, Guldrest Resources received 58 transactions totalling $83 million ($83,040,000.00) from Kaloti for trading in gold and purpose of payment was stated as gold trading B/O Gold Diam Export. In another record Guldrest Resources was listed to have received 37 transactions totalling $30.3 million ($30,368,560.00) between November 5, 2012 and April 8, 2013 also from Kaloti for gold trading.

Fine Gold Impex Limited the SAR says received 55 transactions totalling $44.3 million ($44,343,467.00) which occurred from November 5, 2012 to April 10, 2013. Multiple banks were used to pay the funds, the SARs said.

Vital Insight Investments received $550,000 from Kaloti in two transactions between September 28, 2011 and October 6, 2011 and the purpose of payment was gold trading B/O Gold Diam Export.

Asanska Jewellery received 10 transactions within five months from January 23, 2012 to May 14, 2012 amounting to $10.2 million ($10,250,000.00). The funds were sent by JLM Trading FZE, according to the SARs.

In July 2012, for example, Standard Chartered Bank in New York City filed a SAR to report what the bank said were nearly $100 million in “suspicious wire transfers.” Within five months, the bank reported, Asanska Jewellery Ltd received $10.25 million in 10 transactions into accounts at Intercontinental Bank Ghana and Access Bank Ghana from JLM Trading FZE in Dubai. Almost half of the suspicious $100 million was sent by Kaloti to JLM Trading during the same period in 2012, according to Standard Chartered Bank.

Banks are obliged to flag suspicious transactions and file reports with Financial Intelligence Centres. But all those triggers were ignored and no actions were taken in most cases.

Ghana overtook South Africa in gold production

A Bloomberg news report on June 10, 2019, said Ghana had overtaken South Africa to become the largest gold producer in Africa.

The report which cited figures from the Ghana Chamber of Mines and the Minerals Council of South Africa, said Ghana produced 4.8 million ounces of gold in 2018 as opposed to South Africa’s 4.2 million ounces.

According to the report, Ghana increased its production by 12 per cent in 2018 as against its 2017 record.

The report attributed Ghana’s increased production to friendlier policies, lower-cost mines and new development projects while citing frequent strikes, high cost and geological challenges as reasons for South Africa’s declining production.

South Africa recovers position from Ghana

But Ghana didn’t last on top as Africa’s top gold producer ahead of South Africa. South Africa overtook Ghana and regained the position it lost to the country as Africa’s largest producer of the precious metal.

In June 2020, it was announced that gold production in Ghana dropped by 30 per cent in 2021 – the country’s lowest in more than 10 years, and that effectively knocked off the country from the top spot as Africa’s leading producer, sending South Africa back to the top spot.

Ghana also introduced a 3 per cent withholding tax on small-scale mining in 2020 – and the sector which contributes a third of the country’s gold production was hit hard. The miners started smuggling the precious mineral, reducing official gold production volumes. The miners were required to pay 3 per cent withholding tax on gold at the point of export through the Precious Minerals Marketing Company (PMMC).

The ‘Gold Mafia’ by Al Jazeera, which infiltrated the ranks of the top gold smugglers in Africa, has opened a window into the vexatious matters of Africa’s debilitating problems of economic malaise – Africa is natural resources endowed, but Africa’s resources are being stolen by a few, and as the ‘Gold Mafia’ investigation shows, including elected and appointed officials working with criminals facilitate the brutal exploitation and theft of what should belong to all citizens.

Despite being Africa’s second largest producer of gold, and endowed with large amounts of other resources like oil, Ghana’s economic is currently in deep crisis with a suffocating debt burden that has led to the shutting of the country out of the international financial market, effectively compelling the country to seek a bail-out from the International Monetary Fund (IMF) – that is yet to be approved by the IMF Board of Directors.

However, if the country’s natural resources were managed responsibly with transparency and accountability, Ghana wouldn’t need external aid to run its economy. As it is evident that the monies lost to illicit activities including gold smuggling, are far in excess of the money Ghana receives as aid.

Source : GBN