Columnist Rawle Lucas has criticised the mines commission and the gold board for their failure to detect what government and law enforcement officials have said has been major smuggling of gold to the US and other countries including Brazil.
A major investigation is now underway and encompasses collaboration between Georgetown and Washington on tracing shipments of gold and their declaration in the US.
The disclosure of the smuggling will up the pressure on the gold mining industry which had been stating that lower declarations over the last two years had been a result of a decline in production triggered by the slide in the international price of the metal. There have been incessant appeals from the miners association for more concessions to spur gold production and these were granted in the recent 2015 budget.
Thus far neither the Guyana Geology and Mines Commission (GGMC) nor the Guyana Gold and Diamond Miners Association (GGDMA) have said anything about the smuggling reports.
In his Sunday Stabroek column yesterday, Lucas said “One gets the impression from the massive amount of smuggling reported in the daily and online sources that the variance and risk analysis of the GGMC is weak. This is an important metric that ought to be tightened if losses from gold production are to be reduced significantly. GGMC has been in business for over 35 years. Its failure to recognize that gold production did not match gold declarations to the Guyana Gold Board or reported export sales in a timely manner calls into question the integrity and effectiveness with which that body conducts its work. As such, the leakage of the precious metal from the Guyana economy is not only a big blow to the people of the country who have come to depend on the spending by operators of the mining sector, but an indictment of the performance of GGMC as a regulator.”
He also noted that the GGDMA had conducted a study which suggested that the lower declarations were driven by a decline in production.
“The disclosure about smuggling comes at a time when the government saw it as prudent to assist small-scale miners who were struggling to meet expenses for their operations. The belief that the tax-free concessions would help to stimulate production and discourage underreporting might be mistaken. Many thought the concessions might be the answer to the downward trend of gold declarations. Now Guyana knows that that was only part of the problem”, Lucas, an economist, said.
Lucas, recently appointed as Chairman of the Guyana Revenue Autho-rity, said the reported smuggling is also about the loss of the integrity in the revenue collection system. “This aspect of the story is more troubling than the lost revenue. The complaints by the PPP/C government last year should have led to heightened surveillance of the industry. This action apparently was not taken by the two agencies, GGMC and the Guyana Gold Board, closely charged with this responsibility. One must wonder if either of the two is doing a good job at managing the industry”, he declared.
Last week, head of the Special Organised Crime Unit (SOCU) Assistant Superintendent Sydney James told Stabroek News that there is evidence of a large-scale network involving several locally-registered mining companies in the smuggling of gold out through the country’s major ports. “Based on information gathered we suspect a number of major networks/individuals are engaged in this practice…there are hundreds of people… some are well-established businesses licensed to export gold,” he said.
Minister of Governance with responsibility for natural resources management Raphael Trotman had told Stabroek News that after the APNU+AFC government took office in May it found evidence of rampant gold smuggling particularly to Brazil, Suriname and the United States and has made tackling it a priority,
“There was gold smuggling when we came into office and we found it was quite extensive. We decided to make it priority,” he said while adding that the issue is of serious concern as every bit of ore or gold that leaves Guyana undeclared means less revenue for the country.
The issue of large-scale, organized gold-smuggling does not come as a surprise to some who have been involved in the sector.
“I am not surprised at the volume that is said to be moved,” former head of the GGMC board Major-General (retd) Joe Singh told Stabroek News yesterday. Singh has spoken out about gold smuggling in the past and pointed to a study done by the World Wildlife Fund (WWF) – Guianas in 2011 which highlighted the extent of gold smuggled to Suriname. Singh recounted that this figure was put at about eight tonnes of gold with about 70 to 80 percent coming from Guyana. This is substantial, he emphasised.
“I don’t know that any serious action was taken,” he said while adding that persons find various ways to do so. Singh said that there is “no doubt in my mind that smuggling continues including to Brazil” even as he highlighted Guyana’s vast, porous borders and said that it would be a mammoth task to be able to cover these areas.
Correlation
He also recalled that based on investigations done in previous years, there was very little correlation between gold declarations and the amount of material moved, the investment as well as the historical record of production in some areas. He explained that to sustain that level of operation, a computation could be done based on the machinery present, fuel being used among other variables and it could be reasonably determined what a miner had to produce to sustain operations. But declarations were not going upward and this suggested that all the gold being produced was not being declared, he said.
“When you look at the figures, it doesn’t seem to be a match,” he said.
Another mining industry official told Stabroek News that he would not be surprised if there is wrong-doing in any industry. He said that one feature of the gold smuggling is having to pay for “services.” It was explained that criminal organisations involved in cocaine or gun-running would have to pay for these “services” and would do so with gold and diamonds. While the precious metal and the gems would flow towards Brazil, Venezuela, Colombia or Suriname, it is not unheard of that it would go to the US as well, because some of these organisations have operations in the United States, the official said. “It’s not a trivial thing, it’s a big thing,” the source said.
Compressor
Another source said that another feature of the smuggling is by persons working here. The source related an instance where a Brazilian woman took a compressor through the Ogle Airport saying that she was taking it to Brazil for repairs but it was “packed with gold.” In some cases, planes are diverted, to, for example, Bartica where there are no checks, and then the smuggler transported to border communities where they easily slip across with the gold. “The porous border allow a lot of things to happen as well,” the source said.
In other instances, the authorities were paid to look the other way, the source said. “There is heavy corruption, it has been going on for years,” the source related while pointing out that in certain interior locations, police officers and other enforcement agents can be seen wearing thick gold jewellery and questioned how these could be obtained given their salary.
The source highlighted that while this large scale smuggling is continuing, the miners are asking for concessions. “They have not been fulfilling their responsibilities…and asking for concessions. It’s a double load on Guyana’s resources and the Guyanese themselves,” the source said. The source pointed out that the miners do not compensate for their environmental and social destruction that they inflict on the environment and interior communities.
Numerous attempts by Stabroek News to contact senior members of the GGDMA including its president Patrick Harding for comment on the matter proved futile.
There have been several instances over the past years when there were busts of smuggled gold. The biggest confirmation of the extent of gold smuggling from Guyana occurred in 2012 when 476 pounds of gold which originated from Guyana was stolen from a Guyanese fishing boat which was in Curacao. The gold was said to be worth US$11.5 Million.
Following this, in January 2013, the United States asked Curacao to probe years of gold smuggling between the two jurisdictions. Reports also surfaced of a dossier on illicit shipments from Guyana to Curacao over the previous 15 years.
The Curacao Chronicle had quoted a January 21, 2013 letter from Washington to Curacao in which the US asked authorities on the island to probe gold smuggling cases between Curacao and the United States. The report said that it appears that these cases have been going on for 15 years up to that point. The Curacao Chronicle said that one of the questions asked by the US was why the Curacao authorities were only probing the theft of the gold from a Guyanese boat in November 2012 and not the role of custom officials in the case which the US says it “finds very questionable in gold smuggling cases between Guyana and Curacao.”
The Curacao Chronicle had reported that the US is of the opinion that the local authorities were conducting a “selective” investigation. It added that Washington said that there seems to be no leadership coming from the Curacao Public Prosecutor’s office and even on some pivotal issues the authorities have failed. The Curacao Chronicle report said the US also suggested that documents have been forged.
According to the report, the US had noted that one point which illustrates that the Curacao investigation is selective is that there is information about a “dossier” which states that for 15 years there has been gold smuggling in Curacao with gold from Guyana.
Gold declarations and earnings have been on a downward spiral since last year following a record high in 2013. In 2009, gold declarations were 305,178 ounces, while in 2010 declarations rose to 308,438 ounces. In 2011, gold declarations amounted to 363,083 ounces increasing to 438,645 ounces in 2012.
The following year, 2013, the gold industry achieved total declarations of 481,087 ounces representing the highest level of production in the history of the industry. However, in 2014, gold declarations dropped by almost 20% compared to the previous year, ending at 387,508 ounces.
