How smuggled DRC gold passes through Entebbe

Friday July 24 2020

A man works at an illegal refinery that

A man works at an illegal refinery that processes gold tailings in Uganda. Most of the gold exported from Uganda does not originate from here. PHOTO/DW.COM 

By FRANKLIN DRAKU

Uganda has continued to offer an exit route for gold smuggled from the war-torn Democratic Republic of Congo (DRC) despite international concerns of fueling conflict in the country.

Multiple reports seen by the Wall Street Journal (WSJ) and Daily Monitor have unearthed a racket that is at the core of smuggling gold from DRC, disguising it as Ugandan gold and exporting it to other countries.

A 2017 report by the Financial Intelligence Authority of Uganda indicated that gold from DRC was being rebranded in Uganda and exported as Ugandan gold mostly to the United Arab Emirates.

An investigative report published by the WSJ says at the deserted Entebbe airport on a recent night, police searched two cardboard boxes in a white pickup truck that were due to be loaded onto a cargo flight. The plane was bound for Dubai, United Arab Emirates, after bringing in Covid-19 aid.

The report adds that in the boxes, the police found the latest and largest haul of gold illegally smuggled from the DRC war zones containing 93kgs (205 pounds) worth $5 million (about Shs18b).

Shortly after the announcement of the lockdown in March when Daily Monitor reporters visited the airport, boxes were being loaded onto the Emirates flight that had brought in medical supplies for Covid-19 response. When we inquired what was in the boxes, airport officials said they contained gold but declined to state the origin of the mineral.

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In recent months, record amounts of gold dug from artisanal mines in the conflict zones of Eastern Congo have been smuggled across the porous border with Uganda, where it is being stamped with fake certifications before being shipped to international markets in Dubai, Mumbai, India, and Antwerp, Belgium, according to Ugandan officials.

The report says trade in conflict gold isn’t new, but it has perhaps never been more lucrative. Gold prices at illegal and unregulated Congolese mines, where supply chains have been disrupted by coronavirus shutdowns and renewed violence between militant groups, have dropped over 40 per cent since April, according to local traders, while on global markets, prices are up by almost a third.

Activists and UN investigators have long accused Uganda and several of Congo’s neighbours of being complicit in the plunder of the country’s gold. The US has since pushed electronics firms to prove that minerals used in products from laptops to smartphones are not from rebel-held mines.

The calls to end the illicit trade grew louder last year after Uganda’s gold exports overtook coffee to become the leading export commodity for the first time despite the country producing very little bullion. Ugandan gold exports have soared despite production reaching a peak of just 13kgs since 2015. Despite a near total lockdown of the economy, Uganda earned more than $120 million (about Shs440b) from gold exports in March and April, according to the central bank, equal to nearly half of total export earnings.

According to investigations, the gold is secreted in trucks that are allowed to bypass coronavirus restrictions to deliver “essential goods” from fuel to food supplies. Investigations by the Wall Street Journal indicate that the yellow bars, weighing between five and 20kgs, are stuffed underneath truck cabins, inside battery compartments and emptied gasoline tankers. Once inside Uganda, the truckers sell the bars to traders who purchase forged documents in Kampala that disguise the gold’s origin.

On Nasser Road, famous for forging documents, business is booming behind the storefronts of bodegas and grimy cafes closed because of the lockdown.

“We aren’t supposed to be here but we keep getting calls,” said a printer who called himself Dickens. “Demand for documents certifying gold is overwhelming.” It has emerged that the scramble is fueling violence in the eastern Congolese province of Ituri, complicating efforts to restore order in a region plagued by decades of conflict.
Dozens of other attacks have taken place near gold-trading routes, killing dozens of people since January, according to provincial authorities.

Lucrative trade
In April, armed bandits attacked a Chinese-owned mine site 40 miles north of the eastern city of Beni, killing three Chinese nationals before stealing an unspecified amount of gold.

Experts say business is turning from smaller legal traders into the hands of large-scale smugglers and criminal gangs. Three registered gold exporters in Beni have closed operations since April, activists and traders say.
In Kampala, smugglers and middlemen frequently meet inside closed restaurants and hotel lobbies to discuss gold prices, smuggling routes and modes of transport.

At Makutano restaurant in the suburb of Kansanga, Ugandan gold dealer George Kiwanuka sipped coffee in late June as he awaited a five-kilogramme delivery of gold from his Congolese supplier. The trader, who said he had an official gold-trading license, was nervous about the rising power of criminal gangs.

“I have been forced to boost my security” Mr Kiwanuka said, flanked by two guards in blue face masks. “I trust my suppliers, I don’t think they bring me conflict gold, but these newcomers are very greedy and dangerous.”

Across the city in Ntinda and Kamwokya, supermarkets and other shops owned by Chinese and other Asians with backing from the country’s powerful military and police officers have turned into lucrative gold business centres. Five star hotels within the city and its suburbs are also centre of business for the rich and affluent who use middlemen to deliver the smuggled gold.

Disquiet over the surge in smuggling has forced Uganda’s government to dramatically expand patrols and vehicle searches at Entebbe airport, impounding more gold. In late May, a 50kg gold consignment bound for Dubai in a black land cruiser was intercepted as it approached the international airport terminal. The driver was found with a falsified certificate of origin and an export permit.

Other smugglers expect the trade to strengthen when Entebbe airport reopens for passenger flights. This will allow traders to smuggle gold in hand luggage to refiners in Asia and Europe.

However, the Energy ministry insists that the gold trade is legitimate and that it ensures that all those in the industry are licensed. To stem smuggling, a specialised unit has been created to watch over gold flashpoints, notably the airport and along the eastern and southern borders, government officials say.

But experts say the smugglers are one step ahead: sidestepping restrictions, improving their forgeries of official documents and constantly changing smuggling routes.

A highly placed source at the energy and minerals ministry, who spoke on condition of anonymity for fear of being targeted by the powerful cartel, said most of the smugglers are known to the security circles, but cannot be arrested because of the connections with the powerful army generals.

“We know all of them and when you try to investigate, you become the target and you are eliminated. I have personally followed many of them and alerted the security forces, but nothing has happened, so what do you expect me to do,” the source asked, noting that “maybe one day systems will change and sanity will return. We are also tired of being implicated in illicit gold trade as a country.”

UN investigators estimate that each month between 2 and 3 tonnes of Congo’s conflict gold with a market value of about $100 million (about Shs370b) is crossing the Ugandan frontier, passing border crossings patrolled by heavily armed guards, with metal fencing and razor wire erected to reduce the flow of people.

While we were unable to speak to Mr Sydney Asubo, the executive director of Financial Intelligence Authority of Uganda, the 2017 money laundering and terrorist financing national risk assessment report indicated that there was significant money laundering and terror financing risks as Uganda has seen a significant increase in illegal gold mining activities in recent times.
Original story first published in WSJ

fdraku@ug.nationmedia.com

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