After four months of investigation, El Colombiano found out how every one of the links in the chain works in the trading of illegal gold, and where they park their profits
Investigated by Olga Patricia Rendón Marulanda El Colombiano, September 1, 2019
(Translated by Eunice Gibson, CSN Volunteer Translator)
From Ancestral Mining to Illegal Mining
Having patience, persistence, being able to endure high temperatures and developing a nose that can find the correct point that finds gold among stones and mud; these are the only inheritance that these men and women have received for generations, and that’s why they are known as ancestral miners. Even though this practice is traditional, in the light of the laws, there are only two kinds of mining: one with land title and environmental license, requirements that are impossible to get for those who don’t have economic resources, and subsistence mining that looks for gold in rivers and in what the licensed miners throw away, without any type of equipment.
Back hoes, dredges, and tunnels that have no permits are illegal and, generally, are financed with irregular capital. That explains why the operation is so expensive and why the real miners are as impoverished as the people where the metal is exploited. In 170 of the 300 municipalities in this country where there are mines, there are illegal armed groups that are financed either by gold or by extortion. The criminal groups can earn more than three billion pesos a year (roughly USD $3,000,000), according to the Attorney General’s Office.
The Army and the Police carried out 276 operations in 2018. In every one of them, they invested at least 210 million pesos (roughly USD $70,000) but illegal mining goes on untouched; it’s even increasing.
The gold is traded by cheating and deception.
The business doesn’t function unless the gold is turned into money. That’s why once it’s extracted from the rivers or from the entrails of the earth, there begins a chain of trading to give it the appearance of legality. In the municipalities there are local traders who impersonate or falsify the identities of subsistence miners that previously were registered by the Mayors with the National Mining Agency. They maintain a silence that demonstrates complicity. There are people who don’t even know that gold is being traded in their name; others are pleased to participate, in exchange for an insignificant sum of money.
Another portion of the illegal gold enters into the registry of unproductive mining titles or titles for mines with minimal operations. Another smaller portion enters with junk gold: the jewelry that supposedly was sold in junkshops and is melted to sell the metal.
There is a percentage impossible to calculate of illegal gold that is smuggled to Panama. Some studies find that some ends up in Peru and Venezuela to pay for weapons.
The precious metal goes to foreign countries
The local traders sell the metal to international traders who are in charge of exporting it to the United States and Switzerland, mainly. They furnish it to the banks that use gold for coins, they sell it to the big jewelry stores or for factory technology, a down payment on their royalties.
In the chain they say that the international traders know about the practices in the local market and they cover for them, and so the government controls have become more strict. Because of that the Organization for Economic Cooperation and Development (OCDE in Spanish) states that every supply chain has to be certain of the origin of the gold and where it is going. That is not done in Colombia.
The Attorney General’s Office has opened 26 investigations of exporters and four prosecutions of trading companies for money laundering. There is a pending suit, still in the prosecution stage, for criminal conspiracy. The National Tax and Customs Office (DIAN in Spanish), for its part, has charged the falsification of eight export processes for more than a ton of gold. The proceedings implicate the Gutiérrez international trading company, the biggest gold exporter in Colombia. Last year it sent more than ten tons of gold to foreign countries. The agency has also charged Anexpo, another international gold trader. Both are located in Antioquia. El Colombiano understands that these charging decisions by the DIAN may not be final.
The money ends up with the banks.
When the illegal gold arrives at its destination, the foreign buyer pays for it and the money that comes from the foreign financial system then goes into the Colombian financial system. The effect is money laundering.
Once the payment is made and enters Colombia, the trader returns the money, leaving a cut for the local trader, using bank accounts or checks. The banks are reluctant to open new accounts in the mining areas. They want to avoid being used for money laundering or financing of terrorism, even though, as we have seen, they don’t succeed in escaping that.
The local trader pays in cash and it is therefore impossible to trace the money to its origin from gold. That is how the illegality prevails, and the money ends up in the pockets of the criminals, while the illegal gold is dispersed throughout the world.