$$$M paid for fail-safe Gold Board system but only half working

Nov 12, 2017 News

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– officials see need for purchasing role

With gold mining expected to continue its growth in the coming years, officials believe that the Guyana Gold Board (GGB) should continue its role in buying and monitoring.
On Friday, Chairman of GGB, Gabriel ‘GHK’ Lall and General Manager (ag), Eondrene Thompson, during a press conference were questioned about the future of the Gold Board.
According to Thompson, the entity should continue buying and monitoring the sector as its gives the government some leverage.
While initially hesitant, the Chairman believed, too, that the state must have a “presence” in the buying of gold.
As of now, the laws mandate the Guyana Gold Board to buy once a miner comes. However, there are some legislative reforms that will be presented to Minister of Natural Resources, Raphael Trotman, in a few weeks for study. The officials did not say what the proposed law changes would be.
The question of Gold Board’s performance would be pertinent.
A special investigation into the Gold Board’s financial operations found a number of things that would have made a case for the entity to stop buying gold because of the market uncertainties.
After the price slumped from a high of over US$1,800 per ounce a few years ago, Gold Board was left hanging onto to gold that it had bought. The losses were enormous.

According to a key report on the entity’s financial performance and functioning, prepared by auditor, Ram & McRae, over the three years -2012 to 2014- the Board made losses totalling $10.077B. Of this, the Board recorded a gross loss of $9.716B in 2013 compared with a gross loss of $281.4 million in 2012 and $79.6 million in 2014.
Ram & McRae said that it found that losses as a result of the fall in gold prices amounted to $9.994B.
“From our inquiries, the Board seemed uncertain as to how to respond to the changing market conditions and continued to hold large quantities of gold even as the price declined further.
At May 2015, the Gold Board owed the Ministry of Finance $8.731B for advances received in
September 2012.
“At the same date, the balance on the Gold Board’s current account with the Bank of Guyana was an overdraft of $8,820 million, making a total of $17.552B.
At the same date, the Gold Board had gold valued at weighted average cost of $7.775B which exceeded market value by approximately $72 million.
The auditor said in the report dated March 2016 that it does not seem that the Gold Board would be able in the foreseeable future to discharge its obligations to the Ministry of Finance or to liquidate its overdraft with the Bank of Guyana.
“Moreover, the Gold Board Act is silent on how permanent losses are to be dealt with and consideration needs to be given for a re‐capitalisation of the Gold Board. We recommend that the law be amended to set the purchase price at the real time price on the international market.
This will require a change in the law and the subscription to an international online market service. To avoid any manipulation in the computation of the price paid, the software being used would have to be modified to include the price prevailing at the time…”
Meanwhile on Friday, the Chairman was upset when questioned about the systems of Gold Board. He described it as “benign” and “open-ended”.
The “inherited” system, he said, was one that was supposed to be specially tailored to ensure that the entity was protected and its transactions above questions.
However, despite the millions of dollars paid, it is only “half” working. In fact, Lall said that when he raised the matter with an official, a complaint was filed against him to a Minister for allegedly threatening the official.
Lall admitted that persons were familiar with the weaknesses of Gold Board systems or as he described it…the “unchanging nature”. He also disclosed that persons, especially in the Accounts Department of GGB, would be aware of the limitations of the system.
The disclosures would come as the Gold Board continues investigating how two staffers, one of them its accountant, allegedly oversaw a scheme where fabricated assay documents were used to increase the purity levels of gold sold.
Gold Board, of course, lost money.
The two staffers sent home recently have been there for decades, it was disclosed.
Officials insisted on Friday that miners’ gold was not under threat and that it was pulling out the stops to ensure that there is confidence, accountability and transparency.
The evidence against the two staffers was said to be conclusive.
Earlier this year, three officials including the General Manager and her deputy were sent on leave pending a collusion and money laundering probe. The licence of a dealer who was implicated was reportedly revoked or not renewed.

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