6 AUG 2021

TRT World

Congolese gold has become a profitable source of foreign currency for Kampala, with devastating and bloody consequences for the people of DRC.

According to a new United Nations report that discusses the so-called ‘conflict minerals’ devastating the Democratic Republic of Congo, 95 percent of the 27.7 tonnes of gold Uganda exported in 2019 was of non-Ugandan origin, likely smuggled from the DRC, in violation of the UN and African Union (AU) Charters.

As I read the report, I could not help but wonder just how many of the DRC’s estimated 10 million people who depend on the mining industry directly or indirectly to survive might have been killed, raped, tortured, abused or displaced in the process.

Africa’s second-largest country, the DRC, is home to one of the world’s largest reserves of minerals, including gold, very much prized by the electronics industry. Estimated to be worth $24 trillion — that’s almost twice the GDP of the EU-27 — these reserves are of immense global importance.

Around 80 percent of DRC’s 90 million citizens live below the poverty line. Over two decades of Uganda- and Rwanda-sponsored proliferation of ‘conflict minerals’ have had devastating, perhaps irreversible, effects not only on the Congolese people, but also on the worsening climate crisis in the country.

Exactly 20 years ago, the UN published its first report on ‘conflict minerals’ devastating the DRC. The report concluded that the governments of Uganda, Rwanda and Burundi, whose troops had occupied parts of the DRC since 1996 under the pretext of security, were looting and exploiting Congolese minerals to benefit their economies and treasuries.

A 2009 Congolese Senate report estimated that 40 tonnes of gold were smuggled out of the DRC each year, depriving the DRC over $2 billion annually.

Gold, of course, does not fall from the trees like mangoes do.

For Uganda to ‘loot’ the volumes of gold the UN and NGOs have documented in impressive detail, Ugandan soldiers and their local militia used brutal violence, including the killing and otherwise abusing of anyone who stood in their way, including the local population.

Official figures from the Bank of Uganda indicate that Ugandan gold exports jumped from $12.4 million in 1994-95 to $110 million in 1996 – the year Uganda’s troops began occupying parts of the DRC.

In 2000, Rwandan and Ugandan troops fought each other three times in the mineral-rich Congolese province of Kisangani over minerals, killing thousands of Congolese people and destroying roads, schools, hospitals, markets and public buildings.

Understandably, the DRC authorities took Uganda to the UN’s highest judicial body, the International Court of Justice, first in 1999 and again in 2005, seeking $13 billion in reparations for victims and wildlife damages. The DRC legal team demonstrated how the Ugandan president’s brother, Lt-Gen Salim Saleh – in tandem with other Ugandan and Rwandan ‘godfathers of conflict’ in the DRC – have been involved in the conflict minerals that devastated the DRC between 1998 and 2003.

In 2005, the ICJ awarded the DRC the first $6 billion of the $13 billion, saying that Uganda had violated international law by occupying parts of the eastern DRC and supporting local militias. The final verdict is expected this November.

Yet in the absence of meaningful international pressure, coupled with ever-increasing gold prices, the illegal exploitation of Congolese gold by Uganda – which possesses negligibly small gold reserves of its own – has only gotten worse.

In 2018, for instance, Uganda’s reported domestic gold production was just 12 kg, worth around $500,000. Yet in 2019, when the rate of 1 kg of gold reached $45,000, Uganda miraculously exported over 25 tonnes of gold, meaning, to paraphrase UN experts, that over 95 percent Uganda’s gold exports were “looted” from the DRC. Where else would such a large volume of gold come from?

Accompanying the exploitation of Congolese gold is the killing, impoverishment and displacement of Congolese people. According to the New York-based International Rescue Committee’s 2007 mortality report, these wars killed Congolese people at a rate of roughly 1,500 a day, Around 1,100 women and young girls are also raped every day.

The report did not explicitly accuse the Ugandan president Yoweri Museveni of profiting personally. However, the violence and instability that have been killing Congolese people actually serve Uganda’s economic interests, as Congolese gold has become a profitable source of foreign currency for Uganda. Unsurprisingly, the UN report also documents the smuggling of guns and recruits from Uganda into the DRC to kill Congolese people.

You have to wonder, as I have been, just why the UN and AU haven’t imposed a temporary embargo on the import and export of Uganda’s gold, not only to prevent conflict minerals from reaching the international market, but also to end the ongoing suffering of Congolese people.

The main destination of Uganda’s illicit gold is reportedly the United Arab Emirates and east Asia, supplying local jewellery markets that are not regulated by the US or EU anti-conflict minerals regulations, but an array of reputable Western companies and financial institutions have also been directly or indirectly involved in conflict minerals in the DRC.

Is this why the world is ignoring this catastrophe? Or is it because Museveni is one of the US’s staunchest African allies?

Uganda’s Illegal Gold Market Is Bustling

http://www.worldpoliticsreview.com

Oct. 8, 2021

KAMPALA, Uganda—Cars and motorcycle taxis rocket over the uneven pavement, while church sermons blare from loudspeakers. Vendors hawk bananas, cakes and chapatti. Brightly colored shops sell stationery and advertise printing services. But amid all the mundane, quotidian commerce here on Nassar Road in Uganda’s capital city, it is widely rumored that traders can buy false certificates to disguise the provenance of gold that has been smuggled over the border from the Democratic Republic of Congo and South Sudan, both of which face international sanctions on their gold trade due to its role in funding their internal conflicts. The false certificates allow the smuggled gold to be refined in Uganda and sold on the international market.

The gold trade here is booming, even as other businesses have been forced to close amid the coronavirus pandemic. The precious metal has overtaken coffee to become Uganda’s most important commodity in recent years, with gold exports totaling $1.7 billion between November 2019 and December 2020—44 percent of its total exports.

But the East African nation itself is not rich in resources. Much of this gold comes from neighboring countries, spirited across the border by shadowy smuggling networks. Uganda’s central bank estimated in 2019 that only about 10 percent of the gold flowing out of Uganda was actually mined in the country.

This bustling illegal market, and the challenges related to properly regulating it, have been a source of both fascination and frustration for years, within Uganda and internationally.

The pace of Uganda’s gold trade shot up after the establishment of the African Gold Refinery, which officially opened its doors in 2017. AGR, founded by the Belgian tycoon Alain Goetz, is located on the shores of Lake Victoria in Entebbe, near a major United Nations compound and Uganda’s international airport.

Goetz, one of the richest men in Belgium, was reportedly given a sweetheart deal to establish the refinery by Ugandan businessman Barnabas Taremwa, brother-in-law to Salim Saleh, himself the brother of—and adviser to—President Yoweri Museveni. Under the terms of the agreement, AGR reportedly received a five-year monopoly on Uganda’s gold trade and an export-tax exemption for at least 10 years, according to an investigation by journalists at the Belgian newspaper De Standaard. Now, Uganda exports some 50 times more gold than it did a decade ago.

AGR has long been scrutinized by watchdog organizations like The Sentry, which published an extensive investigation in 2018 accusing the firm of dealing in smuggled gold, citing documents and interviews with multiple gold traders and government officials in the region. This alleged smuggling potentially fuels conflict in nearby and even in other parts of the world. AGR landed in some hot water in 2019, when a 3.6-ton consignment of gold was briefly confiscated by Ugandan police after the government found that it may have been smuggled from Venezuela; 3.8 tons of gold from the same shipment had already been processed and sold before the police acted. Uganda’s attorney general ultimately ordered the confiscated gold returned to AGR, but he also ordered the refinery to stop importing gold from Venezuela due to U.S. sanctions on the country.

AGR has long flatly denied all allegations of smuggling. “It is untrue that African Gold Refinery is in any way involved in illegal smuggling of gold from the Congo, South Sudan or any other jurisdiction,” a company representative wrote in an emailed statement to WPR. “AGR has stringent due diligence procedures that all of its customers undergo.”

Uganda has emerged as a hub for the illegal gold trade, but the problem extends well beyond its borders.
The company’s denials have done little to dispel the cloud of suspicion around it, however. Goetz himself no longer has a stake in AGR, but he wasconvicted alongside his brother, Tony, on unrelated money laundering chargesin Belgium last year, with both of them receiving 18-month suspended prison sentences.

AGR and other refineries operating in the region also remain under scrutiny. A reportreleased last year by the U.N. Panel of Expertsmonitoring sanctions enforcement against Congo found that gold from the country was being secretly routed “to regional refineries and other international destinations.” These refineries, the experts found, “acted as brokers, used cash payments, undertook refiner-to-refiner trading and used corporate networks to obscure ownership, thereby inhibiting supply chain accountability.”

Gold from Uganda is often flown first to Dubai in the United Arab Emirates and from there to markets around the world. Impossible to track once it is melted down, illicit gold from conflict zones could easily be mixed with legally sourced metal. “The difficulty in tracing gold is a major hurdle in establishing transparency,” said Marcena Hunter, an analyst focusing on gold at theGlobal Initiative Against Transnational Organized Crime. A necklace bought at a high-end jeweler in Geneva, for example, could contain Congolese conflict gold that was smuggled out via Uganda.

Uganda’s Ministry of Energy has been tasked with regulating the gold trade, but its commitment to doing the job properly has been questioned, with senior government officials allegedly benefiting from illicit gold flows. “While on paper there may be a very serious commitment to disrupt the trade, in practice there is very little incentive to do so,” said Joanne Lebert, director of IMPACT, a Canadian nonprofit focused on resource management.

Uganda’s Financial Intelligence Authority also helps to monitor the gold trade, but has not been able to do much to control smuggling networks. According to the FIA’s director, Sydney Asubo, some of the blame lies with eager international buyers.

“The source countries, the transit countries do have weaknesses, but the problem is accelerated by willing buyers in the destination countries,” Asubo told WPR. “Our argument has been that if there are no ready buyers then the motivation to engage in illegal activity will reduce. But there are ready buyers in certain places. Ready buyers don’t concern themselves with whether ethical standards have been met or not.”

The problem has only been exacerbated by the COVID-19 pandemic, which made it difficult for local mines and traders to continue operations. Artisanal miners struggled to sell gold to local buyers, who in turn struggled to move it. But with gold prices climbing on the international market, the appetite for smuggling gold only increased.

Meanwhile, as the economic impact of the pandemic lingers in Uganda and across the region, more people have been driven to pan for gold, according to Simon Longoli, the executive director of the Karamoja Development Forum. Located in the far east, Karamoja is one of the few places where Uganda has its own gold deposits.

“This pandemic has increased the dependence of people on natural resources for survival,” Langoli told WPR. But most artisanal miners, in Uganda and outside of it, see few of the benefits from the country’s soaring gold exports. “The sector really doesn’t reward [the miners],” Langoli said, adding that miners in Karamoja make about $1 a day.

Uganda has emerged as a hub for the illegal gold trade, but the problem extends well beyond its borders. In February, The Sentry estimated that $4 billion in high-risk gold, mined in war-torn countries like Congo, South Sudan and the Central African Republic, flows through the international market annually. A U.N. investigation in August also implicated traders in neighboring Rwanda of dealing in gold and coltan from Congo, despite reported efforts by Rwandan authorities to stamp out the illicit mineral trade.

There have been some attempts at international regulations to address the issue, including anew responsible sourcing reportfrom theLondon Bullion Market Association, written in an attempt to encourage transparency in the mining industry. U.S. Senators Cory Booker and Benjamin Cardin in April sent a letter to the U.S. Treasury Department, urging it to impose sanctions on gold traders and refinery owners dealing in conflict minerals.

The overarching goal, experts say, is to better regulate the industry and support legal operations at the local level. Yet with gold smuggling and trading networks in countries like Uganda deeply entrenched, and a long line of willing buyers around the world, regulators face steep challenges ahead.

How ‘blood mineral’ traders in Rwanda are helping fund Congo rebels – and undermining global supply chains

AUGUST 4, 2021

The Globe and mail

New evidence from a United Nations report and a high-profile investor arbitration case is casting a spotlight on Rwanda’s role in sophisticated smuggling networks that extract gold and coltan from Congolese conflict zones and funnel the strategically important minerals illicitly into the global supply chain for consumer products such as cellphones, computers and jewellery.

The smuggling is also fuelling military and human-rights abuses in Central Africa, while damaging the region’s corporate-supported efforts to regulate the minerals trade, the evidence suggests.

Experts have been aware of the smuggling for many years, but fresh details from UN researchers and filings in the case have revealed how these networks are flourishing in Rwanda and the Democratic Republic of the Congo (DRC), even as governments claim to be cleaning up the underground trade.

The UN report uses photos, interviews with smugglers and other sources to document the trafficking of minerals across the border into Rwanda, where they are exported into the world’s supply chains. The arbitration case has included testimony from mining company executives who confirm the smuggling.

The illicit trade would explain how Rwanda has become one of the world’s biggest coltan exporters, despite having few producing mines of its own. The smuggling also jeopardizes efforts to ensure consumers can make ethical decisions on avoiding “blood minerals” – as the conflict-linked minerals are sometimes called.

As a result, Western consumers of tech gadgets and jewellery have no assurances their purchases aren’t contributing to conflicts and abuses in Congo. And the new evidence adds to doubts about Rwanda’s much-touted economic miracle, which has attracted billions of dollars from donors and foreign aid budgets over the past quarter century.

Rwanda’s mining sector, with revenue officially listed at US$412-million annually, is the country’s second-biggest export earner and one of the key industries it has claimed as proof of a diversified economic boom. Industry revenue has increased steadily for years, adding to Rwanda’s soaring GDP.

But recent studies in academic journals have questioned the country’s economic statistics. The new reports of smuggling could spark questions from investors and donors about the true state of Rwanda’s economy.

The latest report by the UN Group of Experts on the DRC, submitted to the UN Security Council in June, describes how gold and coltan are smuggled across the border from the DRC to Rwanda, where taxes are much lower. The coltan is often concealed in canoes and other boats on Lake Kivu, which straddles the border between the two countries, or hidden in secret compartments in trucks.

In one incident in March, a truck crossing the border from the DRC to Rwanda was found to be carrying 24 sacks of smuggled coltan. The UN report includes photos of 10-kilogram and 20-kilogram bags of coltan in the eastern DRC, sold by unregistered traders to Rwandan buyers on smuggling routes. It also contains interviews with mineral smugglers who talked openly about the illicit routes across Lake Kivu to Rwanda.

“It is Rwandans who use these kinds of boats a lot,” one smuggler told the UN researchers. “This is how they cross to Rwanda and no one controls them.”

UN experts have been reporting on the illicit trade of minerals in the region for the past two decades. Despite some improvements, the smuggling continues to fuel conflict and instability in the DRC, they said in their latest report. Mining in the region “remains hazardous, exposed to violence and abuses and often lacking proper and transparent governance by all parties,” the report said.

The UN researchers cited the Rubaya area of the eastern DRC, which provides an estimated 15 per cent of the world’s coltan supply. Despite regulations aimed at guaranteeing that global coltan supplies are not fuelling conflict, researchers found evidence of armed clashes, weapons distribution and other abuses at coltan mining sites around Rubaya.

Machetes and Kalashnikov assault rifles were among the weapons distributed to diggers at mines for use in clashes, the report said. Armed men – including police – set fire to shops and houses, imprisoned some diggers and beat some of them, with two deaths confirmed. Mineral trafficking and fraud were common at the mines.

The UN report is backed up by evidence from a U.S. mining investor, Bay View Group, in an arbitration case at the International Centre for Settlement of Investment Disputes, a World Bank institution.

Bay View, one of the biggest investors in Rwanda’s mining sector from 2006 to 2016, is now seeking US$95-million in damages from the Rwandan government, alleging the regime seized the company’s assets because it refused to participate in the “rampant illegal smuggling” of coltan and other Congolese minerals to Rwanda. One company concession was near the Congolese border, which would have made it “an ideal staging ground for smuggling minerals,” Bay View says.

The company estimates the value of the true production from Rwandan mines is only about US$20-million annually – a small fraction of the US$412-million the government has claimed in its export figures.

“It is believed that upwards of 50 per cent of all minerals exported from Rwanda originate in the DRC and that upwards of 90 per cent of the coltan exported from Rwanda originates in the DRC,” the company told the arbitration centre in its claim.

Bay View noted that Rwanda discloses only the amount of minerals the country exports, not the amount it produces. This allows Rwanda to pretend the smuggled DRC minerals are actually from Rwanda, boosting its economic statistics, the company said.

The company also said Rwanda’s official mineral exports have increased dramatically since 2013, despite its low levels of mining production. “The only way this could be possible is if Rwanda is smuggling minerals from the DRC, tagging them as Rwandan and exporting them to the world as Rwandan.”

Other witnesses, who provided statements in the arbitration case in support of Bay View, gave further evidence of smuggling. Christophe Barthelemy, former managing director of Phoenix Metals Ltd., a Rwandan trading and smelting company, said it was widely known in the mining community that “relatively large quantities of minerals” from the DRC were tagged as Rwandan, and illegal traders faced no consequences.

“Rwandan traders/miners would sell coltan from the DRC to Chinese buyers, who were not interested in the origin of the minerals,” he said in his statement.

Jerry Fiala, an Australian geologist and miner who has worked in Rwanda since 2003, told the arbitration case he agrees with Bay View’s estimate that 90 per cent of all coltan exported from Rwanda originates in the DRC.

“The minerals from the DRC are smuggled into Rwanda either by truck or across Lake Kivu,” Mr. Fiala said in a witness statement. “The minerals are then tagged at ‘dummy mines’ in Rwanda where no actual mining occurs.”

He cited the example of a small Rwandan mining company where he had worked. Government records in 2012 and 2013 hugely inflated the mine’s production, making it easier for Rwanda to conceal the minerals smuggled from DRC, he said.

Mr. Fiala later provided internal company documents to The Globe and Mail to support his allegations about the inflated production figures.

“All this trade is fuelling killings, it’s fuelling rebels and armies in Congo,” he told The Globe in an interview. “The Congolese people are suffering because of this money.”

The Rwandan government, in its own statement to the arbitration case, denied Bay View’s claims and insisted the company’s allegations are “utterly contrived and without any merit.”

The statements about mineral smuggling are “baseless and scurrilous” and were made “only in a misguided attempt to embarrass Rwanda,” the government said. It said Rwanda is “at the forefront of efforts to prevent smuggling of minerals from the DRC.”

The evidence of smuggling, however, goes beyond the coltan trade. The UN report and other studies have documented the extensive smuggling of Congolese gold through Rwanda to overseas markets.

The UN researchers detailed, for example, how gold is taken to Rwanda from a large mining site controlled by the Congolese military and its militia allies in Walikale, in the eastern DRC, despite a law banning the presence of soldiers at mining sites. At least 2,500 artisanal diggers are working at the mining site, the UN report said.

Mining authorities in the eastern DRC told the UN researchers almost all the gold produced around Walikale was omitted from official records last year. Only a “tiny fraction of actual production” was formally recorded, and the gold produced in the area was usually smuggled to Rwanda or Uganda, the report said.

The report also detailed how Congolese exporters had used Rwanda as the smuggling route to send gold to Dubai and Hong Kong from places in the eastern DRC where gold production was controlled and taxed by an armed militia known as Mai-Mai Yakutumba.

The Rwandan government has not commented on the latest UN report, but earlier this year it complained the UN Group of Experts had a “lack of good faith” and a “lack of rigor.” The government said it had provided the group with evidence of its anti-smuggling efforts, including seized minerals. It also told the group it had detected no cases of smuggling from November, 2020, to April, 2021.

The UN report reinforces the findings of an earlier study by an Ottawa-based non-profit group, IMPACT, which concluded the illicit gold trade in the DRC and Rwanda is booming. Illicit exporters are “operating without apparent fear of sanction” even after they are identified in the UN reports, the group said in its report last September.

The traders “provide a sheen of legality by declaring a small percentage of their gold exports while pocketing massive profits from the illicit trade,” IMPACT said. Its report documented how some traders have evaded controls by creating phantom entities – fictitious companies – to hide the scale of their activities.

In one example of the fraud, IMPACT said Rwanda officially exported just 2,163 kilograms of gold in 2018, yet the United Arab Emirates alone reported it imported more than 12,500 kilograms of gold from Rwanda that year. In reality, Rwandan mines are producing only about 300 kilograms of gold annually, it said. Some experts have estimated that Rwanda’s true production of gold is as low as 20 kilograms a year.

“Gold smuggled out of DRC and flowing into the legal international gold market – into consumer products – is potentially tied to criminality, money laundering, armed groups and human rights abuses,” IMPACT’s report said. “Research suggests Rwandan authorities are failing in their due diligence on gold entering from DRC into Rwanda.”

The Sentry, a U.S.-based research group, reported in February that Rwanda is a major smuggling hub for the DRC’s gold. “Gold is now one of Rwanda’s largest exports, despite the country’s low annual production capacity,” it said in the report.

Across Africa, including the DRC, conflict gold is “fuelling horrific crimes against local populations and is filtering through the gold supply chain, creating major risks for multinational gold traders, refiners, banks and technology and auto companies,” the report said.

In total, as much as US$600-million in gold is smuggled from the DRC annually, much of it through Rwanda. “Conflict gold provides the largest source of revenue to armed actors in eastern DRC, including armed groups and many national military units that profit through illegal taxation, raiding of mines and collaboration with smugglers.”

A gold refinery was established in Rwanda in 2019 with a capacity that far exceeds Rwanda’s domestic gold production. The refinery is 50 per cent controlled by the Rwandan government, according to media reports. A report last year by the UN Group of Experts found the refinery’s purchases of Congolese gold had benefited “armed groups and criminal networks.” The refinery has denied the allegation.

The smuggling has begun to gain political attention. Three U.S. senators – Cory Booker, Richard Durbin and Benjamin Cardin – have called for sanctions on traders and refinery owners who are involved in the gold smuggling. “Gold mined from conflict areas in the eastern DRC is reaching international markets, including the supply chains of major U.S. companies and in products that consumers use every day,” the senators said in a letter to the U.S. Treasury Department in April.

In both the gold and coltan sectors, Western corporate buyers are often reluctant to demand tighter regulation of the mineral trade, experts say. Even after many years of evidence from reports by the UN Group of Experts, problems persist.

“Whenever these issues are raised, they’re swept under the rug,” said Joanne Lebert, executive director of IMPACT, the Ottawa-based group.

“Enforcement is really lax at all levels,” she told The Globe in an interview. “It’s not as sophisticated as the tactics of smugglers. There are weaknesses in the system that need to be corrected, and there’s a lack of political will.”

Alex Kopp, a campaigner at Global Witness, a British-based environmental research group, said official tracing systems for conflict minerals have been inadequate, leaving consumers uncertain of the origin of elements in their products.

The smuggling of Congolese minerals is well known to Rwanda’s key donors, Britain and the United States, yet they seem to accept it tacitly, which makes it easier for Rwanda to perpetuate it, he said.

“It’s happening on a massive scale,” Mr. Kopp told The Globe.

Illicit gold trade thriving in DR Congo: report

18.09.2020

Anadolu Agency

YAOUNDE, Cameroon

Illicit gold trade in the Democratic Republic of Congo (DRC) continues to thrive, despite efforts to clean up the sector, a report said Thursday.

The report by IMPACT, a global independent natural resources watchdog, said some traders and exporters legally registered in the DRC, Rwanda and Uganda are operating “without apparent fear of sanction,” even after being publicly pointed out by the United Nations for contributing to the illicit trade of artisanal DRC gold.

Some traders and exporters in the DRC are “pocketing massive profits” from gold smuggling, said the report, which noted it is time to bring these intermediaries out of the shadows they operate in.

“Much effort has been made to strengthen responsible artisanal gold trade in the DRC, but as long as these shady intermediaries between the miners and the market operate with impunity, all such efforts are futile,” said Joanne Lebert, IMPACT’s executive director.

IMPACT investigates and develops approaches for natural resources to improve security, development and equality.

Despite efforts by the DRC government and international actors to introduce traceability and due diligence for artisanal gold supply chains in the Central African country, the illicit trade appears to be booming.

“Only a fraction of gold production is exported legally, meaning declared to authorities with all duties and taxes paid,” according to the report.

‘’Gold smuggled out of the DRC and flowing onto the legal international gold market –into consumer products—is potentially tied to criminality, money laundering, armed groups and human rights abuses,” it said.

It added that neighboring Rwanda is the main transit hub of the golf traffic. The DRC’s South Kivu gold “is being smuggled across the border to Rwanda, then laundered into the legitimate international supply chain through its export to Dubai as supposedly Rwandan gold.”

The DRC has been rocked by violence for several decades.

The illicit exploitation of natural resources continues to be a root cause and driver of conflict in the east of the country, according to the UN.

Most of the militia groups have set aside their political demands and are involved in mineral trafficking.

At least 50 artisanal miners were killed when a gold mine collapsed in the eastern part of the DRC last weekend.