DRC, Kenyan Probe Come Up Empty-Handed

The co-operation between the governments of the Democratic Republic of the Congo and Kenya in tracing about 2 1/2 tonnes of gold smuggled out of the conflict-torn eastern part of the former country has reached a dead end. No gold has been found.

The team of detectives from Kenya and the Democratic Republic of Congo (DRC) have called in computer experts, documents examiners, mines and geology officials and other government officials to assist in the investigations.

Under probe are eleven companies and nine individuals named in a list handed over to President Kibaki by his DRC counterpart Joseph Kabila recently when he visited the country over the smuggling of the Sh8 billion worth of gold. (READ: Joint team to seek smuggled gold)

The article also notes that local con men have been defrauding foreigners by sales of fake gold. Gold smugging may be romantic, but the atmosphere of illegality does mean that outsiders have to watch out. Local con men who defraud outsiders in lawless regions tend to be not hated.

As DRC, Keynian Investigation Continues, Most Of Seized Gold Disappears

The probe of the conflict gold market in the eastern part of the Democratic Republic of the Congo continued, but in the midst of it much of the gold seized last month is gone.

The tip-off led intelligence agents to an American jet loaded with half a ton of gold, a Houston diamond merchant, and a car chase that produced $6.8 million.

But since the Feb. 5 bust on gold smuggling in Congo, more than $5 million and 198 pounds (90 kilograms) of the gold have disappeared, according to official and banking sources who would not speak on the record for fear of reprisals.

The region isn't exactly a exemplar of law and order:

Eastern Congo in many ways resembles the old Wild West of the United States – only wilder, and much more dangerous.

Tribal tensions exploded after French troops allowed Rwandan genocide perpetrators to escape across the border in 1994. Tribal conflict segued into a civil war that soon ballooned into what some call Africa’s World War – armies from eight African nations and 25 local militias and foreign rebel groups fought above all for control of Congo’s massive mineral reserves. Millions died.

It looks like that probe, even if it extracts useful information about the habits of gold smugglers, won't lead very far.

Kenyan, DRC Presidents Meet Over Smuggled Gold

The subject of the meeting was more than $110 million worth of gold smuggled from the conflict-ridden eastern part of the Democratic Republic of the Congo to Kenya.

The two leaders, whose countries are members of the International Conference on the Great Lakes Region (ICGLR), have instructed police officials in their respective countries to share information on suspects in this case, as well as commodity traders regularly recorded in the two countries.

They stressed the need to implement the Lusaka and Nairobi Protocols on the management of mineral resources and agreed that the Kenyan authorities should "vigorously" pursue ongoing investigations to its conclusion.

There's a fair bit of action, or perhaps theatre, over that smuggled gold. Maybe it resulted from the Kenyan tax collector who got shot over the gold.

Columbia Hot Spot For Conflict Gold

That's due to the effort of paramilitary groups and the FARC guerilla movement, who are beginning to co-operate. As cocaine get cracked down on by the Columbian government, warlords are moving into gold production. Typically, they either operate the gold mines or demand extortion money from miners. FARC especially is becoming sophisticated with extortion, setting a payoff schedule with different demands for different minign activities.

The result is a gold rush unlike any now under way in South America, both feeding off Colombia’s evolving conflict and keeping it alive. Up and down the sweltering river basins around Medellín, miners from across Colombia are flocking to sites where backhoes are tearing up forest and tree canopies, leaving behind lunaresque landscapes.

Some of these small mines have existed for decades, echoes of frenzies that stretch back centuries to the plundering by conquistadors in search of fabled gold deposits. Newer mines emerge on almost a weekly basis, reflecting efforts to find gold while its price remains high.

One coca farmer turned miner said illegal mining is the only way for him to turn a decent buck. Unlike cocaine, gold is a legal product.

Kenyan, DRC Governments To Form Joint Task Force Looking Into Gold Smuggling

As reported by Reuters Africa,

Kenya and the Democratic Republic of Congo have formed a joint team to investigate gold smuggling from eastern Congo, both nations said after a meeting of their presidents on Thursday.

Three provinces in Congo's conflict-wracked east are subject to a mining ban imposed last year by President Joseph Kabila to weed out what he called the "mafia groups" controlling the mineral trade....

The rest of the report indicates that, despite stories of large seizures, little had changed. The trouble is, those "mafia" groups tend to be military or military-affiliated.

DRC, Kenyan Governments Investigating Rumours Of Smuggled Gold

About 80% of gold exported from the Democratic Republic of the Congo (DRC) is smuggled. Right now, the DRC and Kenyan governments are investigating rumours that 2.5 tonnes of gold were smuggled into Nairobi.

Kenyan President Mwai Kibaki agreed to allow a team of Congolese experts to stay in his country to investigate claims that a shipment of Congolese gold had arrived in the East African nation illegally, Congolese Mines Minister Martin Kabwelulu said in an interview today in the capital, Kinshasa.

“There are documents saying there was 2.5 tons of gold but they were false documents,” he said. At today’s price in London, 2.5 tons of gold would be worth about $113 million.

80% is a lot, and suggests the DRC government isn't that effective in cracking down. International pressure, linked with the new publicity blitz for "FairMined" gold which eschews conflict gold, is the most likely reason for this investigation. It remains to be seen whether publicized sweeps like this one will change anything.

Strange Story From The Congo

One of the reasons for "ethical gold" is to foil armed groups in Third World countries who profit from gold by selling refined metal from mines they seized by force. Governents are trying to crack down on the practice with varying success. One of the worst areas for "blood gold" is in the confines of the Democratic Republic of the Congo. The Houston Chronicle has the story of an intercepted mission to buy conflict gold:

A Houston diamond dealer with a sketchy past is one of four businessmen being held in the Democratic Republic of Congo after being stopped shortly after arriving on a private jet with more than $6 million in cash that apparently they were to exchange for gold under the protection of a general indicted for war crimes....

The Provincial Governor Julien Paluku told the Associated Press that the four passengers on the plane had a "special mission of buying gold." Mineral trade and mining exports were banned by the government in eastern Congo last year to deter the armed mafia-like groups that control the industry....

A U.N. panel of experts on Congo reported in 2010 that virtually all mining deposits in the eastern portion of the country are controlled by armed groups. It said that demilitarizing Congo's mine sites was needed to clean up the trade, hence the new law, but there is little evidence that the ban has put an end to the efforts of rebel groups and senior Congolese commanders to profit from what are considered by some experts conflict minerals.

"There are a bunch of armed groups in this neighborhood, and they get preferential access to minerals by force," Stearns told the Chronicle...

The story's a bit confusing; it's not clear as to whether the group was double-crossed by Congolese Gen. Bosco Ntaganda or whether he rolled with the punch by claiming his men intercepted the buyers after themselves being intercepted by government forces. Needless to say, the marketplace there is a lot more perilous than the NYMEX.