Gold smuggling…Industry calls for tighter border checks

Jun 12, 2014 News

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– dealer buys the most, declares the least

Stakeholders in the gold mining sector yesterday called on Government to tighten security at the country’s borders, including those with neighbouring Suriname, amidst shocking reports of a large-scale smuggling operation.
At the centre of the allegations is a dealer from the North Georgetown area who is being accused of buying hundreds of millions of dollars in gold from miners and instead of declaring it to authorities, which would attract a mandatory seven per cent tax and royalty charge, reportedly opted to sell it in Suriname.

That neighbouring country has a mere one per cent, making it an attractive market for smugglers. The gold is sold in Suriname to buyers in the US.
It is estimated that Guyana would have lost as much as $2.7B (US$14M) in taxes from the scheme, just for the first five months of this year.
However, stakeholders say they have been fearful of speaking on the issue because of the dealer’s close connections to the Office of the President.
Following the article yesterday, several medium scale miners also confirmed that smuggling is indeed taking place.
It is believed that the well-organised smuggling operation goes back over five years.
The dealer, according to officials of the Guyana Gold Board, only received his licence about two years ago.
Yesterday, following the report of smuggling allegations, several Government inspectors descended on the operations of city dealers.
However, stakeholders are emphatic that the inspectors are on a wild goose chase.
“What are they looking for? If I buy some gold and do not record it, how will they find it? They should instead be examining ways on how to better patrol the borders to stop the smuggling,” one medium scale miner said yesterday.
The issue of gold declaration took the limelight last week after Government expressed alarm over the poor showings.
Declarations dropped by 20 per cent to 165,595 ounces, for the first five months of this year, compared to the same period last year.
For the first half, ending June 30, Guyana had been projecting a target of 242,281 ounces, an uphill task.
Minister of Natural Resources, Robert Persaud, met the Guyana Gold and Diamond Miners Association (GGDMA), the Guyana Gold Board and the Guyana Geology and Mines Commission, among other stakeholders, after it became clear that the targets were way below expectations.
While poor declarations have been blamed on some level on hoarding, miners blankly refused to take the fall.
Instead, it was made clear that Government would have to start seriously looking at the smuggling angle.
Government would be worried because a drop in revenue would seriously dent the country’s projections on revenue for this year.
Gold has been the largest foreign currency earner in recent years, raking in US$600M last year.
The situation took a turn this week when complaints of the smuggling started pouring in, as police and GGMC readied for an extensive enforcement campaign.
According to officials of GGDMA, members complained that the dealer is being protected because of his close links to the Office of the President.
It is estimated that at least 150,000 ounces of gold was smuggled to Suriname by the dealer for the year. Using the seven per cent royalty and tax rate charged by Guyana and an average of US$1,300 per ounce, officials from GGDMA and the Gold Board believed that as much as US$14M in revenues was lost to Guyana.
According to figures supplied by the Guyana Gold Board, five of the 14 dealers made declarations last year.
Pure Diamonds and Excel Minerals, two Brazilian companies, declared 32,000 ounces and 8,770 ounces respectively.
El Dorado Trading records indicated 95,000 ounces, while Mohamed’s Enterprise was the largest buyer with 133,000 ounces. Dinar Gold was the lowest at 267 ounces.
The dealer in question has reportedly been aggressively approaching miners and offering as much as $230,000 per ounce, about $8,000 to $10,000 above the other dealers.
The US dollars from the Suriname sale had reportedly allowed the company to pay its customers with their gold in US dollars.
“Like we said before, this is a small society where everybody knows what is happening in the gold mining industry. We cannot pretend that nothing is happening and allow it to be swept under the carpet.
“There is a reason why our declarations fell by 20 per cent and we are saying that smuggling is the reason.
“We are hoping that President Donald Ramotar is taking note.”
Insiders have estimated that in total, as many as 250,000 ounces may have been smuggled to Suriname this year by the dealer and other parties.
“There is one other point to note. Small miners, especially because of the drop in gold prices, literally cannot afford to hoard. They have to sell. They live month to month.
“Business is not so good with equipment companies even starting to repossess their excavators. Naturally, the miners would sell to the dealer with the best price,” a senior GGDMA official said in confirming that its body is aware of the complaints.
This year, Government is targeting a recording breaking 484,562 ounces.
Last year’s gold declaration was the largest ever at 481,087 ounces. Gold export earning was a massive US$648M as at December 31, last.

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