Affidavit brings new insights into illegal corporate gold trading

28 May 2017

On 18 May, a high-level delegation, including Peru’s attorney general, the head of the judiciary, the finance minister and the US ambassador, overflew the key area of illegal gold mining in Madre de Dios. They sought to observe the most visible dimension of abuse: the environmental damage from illegal gold mining. The trip followed one by the US science envoy, Thomas Lovejoy.

Ilegal gold production is thought to constitute about 30% of Peru’s total gold production. http://globalinitiative.net/organized-crime-and-illegally-mined-gold-in-latin-america/ The informal sector is not only mostly illegal, but it is where workers suffer the most horrendous health and safety conditions, often in conditions near to slavery. It is also where people suffer other forms of exploitation, such as prostitution. http://www.perusupportgroup.org.uk/files/fckUserFiles/file/Artisanal%20and%20Small-scale%20Gold%20Mining%20in%20Peru.pdf

The other end of the gold mining saga – and crucial to its control - is how illegal gold gets fed into the international gold market, in the process laundering it into ‘clean’ gold. In March 2017 Bloomberg described many of the mechanisms https://www.bloomberg.com/news/features/2017-03-09/how-to-become-an-international-gold-smuggler.  and the extensive ongoing criminal proceedings.

Insight Crime has now published a report on a further pending legal case. http://www.insightcrime.org/news-analysis/peru-us-gold-case-shows-how-importer-shifted-gears. Published in full is the 30-page affidavit of Colberd Almeida, special agent for Homeland Security, dated 10 March 2017. It concerns the case being brought against Juan P Granda, 'aka flecha', and two former colleagues. Granda, who has an Ecuadorian passport, worked for the Dallas-based metal refining company NTR (he has since been sacked) and, along with his two colleagues, is being charged with money laundering.

The charge centres on the role that illegal gold and drugs play in this activity. The affidavit includes evidence from encrypted WhatsApp conversations. With detailed documentation it asserts that he worked with two other employees, named elsewhere but here referred to as ‘sales person 1’, described as NTR's vice-president for Latin America, and ‘salesperson 2’, the, director of sales for Latin America. The company itself is not being charged. The case details are published at
https://www.unitedstatescourts.org/federal/flsd/503493/

The document describes how when the Peruvian authorities clamped down in 2013 and 2014 on exports of illegal gold through Callao, purchases by the company from Bolivia, Colombia, Ecuador and Chile appeared to rise; this effect is well-known. It is revealing to read how simple the mechanism was.

The affidavit reports how an unnamed confidential source 2 (‘CS2’) describes how he would fly to the Chile/Peru border where he would drive across the frontier from Chile with cash (often US$1 million or more) hidden in the door panels of his car, to meet his smuggling contact in Tacna. There he would exchange cash for gold, and return with the gold in the door panels. It is claimed that CS2 smuggled gold from Peru to Chile in this fashion five to ten times during the summer of 2014, moving a total of approximately 300 kg of gold worth around US$10 million and then selling it to another for export from Chile. Such a person is described as a 'collector'. When the Chilean authorities took measures against such activities, CS2 found a contact in Argentina to sell to.

The document is clear on the human rights dimensions of this illegal activity. It describes and cross references to the many accounts of abuse, prostitution and what is effectively slavery, the results of people's desperation and the total lack of any regulation (p3). The environmental abuse, which the delegation has hopefully observed and been impressed by, damages livelihoods both for this and future generations, and opens the way to other forms of abuse.

Implicit in the document is the need for regional coordination as the trade moves between countries through chains which are used to disguise the original source. In the affidavit ‘sales persons 1’ and ‘2’ describe how they could use NTR's offices in numerous European countries to disguise movement of gold from Africa to the United States (p.25).

 

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    The Peru Support Group exists to promote social inclusion, sustainable development and the observance of human rights in Peru. To that end the PSG highlights shortcomings in observance of established norms, whether international or local in nature, in its research, advocacy and publications. In so doing, it underscores the relationships that exist within the political system, how institutions work, and the effectiveness of policies that aim to reduce poverty and inequality within the context of sustainable development.

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