By Katrina Manson in Nairobi, James Shotter in Zurich and Jack Farchy in London
4 November, 2013
@ Financial Times
Swiss authorities have opened a criminal investigation into one of the country’s biggest gold refiners to determine whether it committed war crimes by knowingly buying gold from a militia group in eastern Congo.
The legal proceeding is the strongest yet by Switzerland against one of the companies key to the country’s multibillion-dollar gold industry. It is the first time that anyone has attempted to deploy against a business the charge of “pillage” – to describe stealing and illegally removing natural resources in the context of war – since the aftermath of the second world war.
Illegal armed groups that have terrorised parts of eastern Congo for decades have financed their activities through smuggling conflict minerals for years. Gold is the hardest and most valuable of all the conflict minerals to track.
The decision was prompted by a complaint from a Swiss non-profit organisation, Trial, following a nine-year investigation. It claims Swiss gold refinery Argor-Heraeus knowingly bought nearly three tonnes of gold sold by an armed group in eastern Congo via traders in neighbouring Uganda in 2005.
“The federal public prosecutor has examined the complaint and decided to initiate criminal proceedings against the company concerned for suspected money-laundering in connection with a war crime, and for complicity in war crimes,” the federal prosecutor in Bern said in a statement on Monday.
Argor-Heraeus strongly denied the claim on Monday, saying the accusation came like “a bolt from the blue”. It said an in-depth investigation by Swiss authorities had already cleared it of similar allegations dating back to 2005.
The refiner, which is part-owned by Commerzbank, was previously recommended for sanctions in 2006 by UN investigators over gold purchases the group said originated from an armed group in Congo. It was not prosecuted for any crime at the time and its name was subsequently deleted from the UN’s main report, published in 2005. Since then, investigators who work for Trial believe new evidence warrants a criminal case.
The proceeding marks a new legal effort to hold accountable any western companies that benefit from illicit trading that funds rebel groups in eastern Congo.
“The most important deterrent would be a war crime of pillage – that is what is going to make corporate actors stop doing what they’re doing,” said Kathi Lynn Austin, an investigator whose work has been taken up by Trial and who was a member of the UN team that produced the 2005 report.
UN investigators said a militia in eastern Congo, FNI, illegally mined gold in the country’s troubled Ituri province to finance its operations and buy weapons in breach of a UN arms embargo, selling it on via traders in Uganda and eventually to Switzerland. Argor said at the time it stopped buying the gold in June 2005, and claimed it had never known it came from Congo.
Ms Austin said that new evidence clearly indicated the gold came through Congo.
“The gold came through the DRC [Democratic Republic of Congo]. It’s very clear on the documentation . . . which illuminates the entire chain,” Ms Austin. “I went back to collect a lot of the originals – it was a really long, exhaustive and methodical process to be sure that you have every single part of the pipeline.”
In 2003, the UN Security Council imposed an arms embargo on Congo, imposing a ban on sourcing minerals from armed groups that might trade them in for weapons.
Switzerland is intimately involved with the commodities industry. It is host to four of the world’s biggest gold refiners, as well as a number of leading trading houses.
In the past it has been criticised for not scrutinising these groups vigorously. In recent months, however, it has moved to try and deflect some of the criticisms levelled at the sector, and in March a government report recommended several measures to boost transparency. An interdepartmental group will provide an update on progress in spring 2014.
In the past two years western gold traders and refiners have introduced measures in an attempt to ensure that all the metal they handle is “responsibly” sourced. The tighter procurement system is in part a response to new US regulation under the Dodd-Frank Act.
But the gold continues to flow, often via the Middle East and Asia.
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