TORONTO (miningweekly.com) – About 17 500 oz of gold remains “unaccounted for” at the Royal Canadian Mint (RCM), after a third-party review by Deloitte & Touche of a difference between the RCM's rolling inventory and a physical count of precious metals at the year-end.
At current prices, the discrepancy, which represents some 0,32% of the RCM's throughput during 2008, would be worth around $16,4-million.
Canadian Minister of Transport John Baird and Minister of State Rob Merrifield said on Monday the situation was "inexcusable".
"The mint will be held accountable. We have ordered the mint to call in the Royal Canadian Mounted Police and instructed the mint to immediately commission an independent and comprehensive review of security procedures," the Ministers said in a joint statement on Monday, after the results of the accounting review were made public.
The difference between stockkeeping records and the physical amount of gold counted was discovered during the mint's annual reconciliation, and Deloitte was signed up to determine if the discrepancy was a result of an accounting mistake.
After an investigation that lasted from March to mid-June, the Deloitte study concluded that the discrepancy did not appear to relate to accounting or bookkeeping errors during the 2008 fiscal year.
“Based on our procedures performed, we have not found an accounting or transaction recording error which would explain the unaccounted for difference between gold actually on hand and the amount of gold recorded as being on hand in the RCM's records.”
This, of course, means that theft remains an increasingly possible, if astounding, explanation for the unreconciled tallies, although the mint has emphasised that it is not clear at this stage whether any physical gold is actually missing from its inventory.
Deloitte recommends that a technical review be conducted to determine whether the metal may have been lost during the refining process, an accounting review of periods prior to the 2008 fiscal year - although this may prove tricky - and a more in-depth review of security systems.
The security review should include “an assessment of potential inappropriate activity by both internal and/or external parties”.
“The unaccounted for difference in gold does not appear to relate to an accounting error in the reconciliation process, an accounting error in the physical stock count schedules, or an accounting error in the recordkeeping of transactions during the year," Deloitte said.
RCM chairperson James Love said on Monday that the mint intends to continue to “vigorously” pursue a resolution of the discrepancy.
"In response to the report's recommendations, the mint has engaged third parties to assist the corporation in its review of specific aspects of its operations, including refinery processes and internal controls," CEO Ian Bennett added.
Police have also been asked to assist in the investigations, and the RCM is cooperating “fully” with the Royal Canadian Mounted Police, he said.
All possible explanations for the inventory difference need to be investigated, the mint said in a statement.
It has suggested previously that the discrepancy could be attributed to the "unprecedented demand for gold" during 2008.
“The mint will aggressively continue its efforts both internally and with outside experts to determine the sources of the unreconciled difference,” said Bennett.
The mint has notified its insurance carriers that it plans to file a claim “which, if successful, will largely offset the amount of any unreconciled difference”.
Ministers Baird and Merrifield have instructed the RCM board to withold all bonuses to executives "until this matter is resolved to our satisfaction", they said.
Going forward, the mint will also be required to report on inventory levels of all precious metals on a quarterly basis.
Liberal critic of crown corporations Joe Volpe said that the discrepancy "points increasingly towards a heist".
He criticised the government for waiting until this month to notify the police.
"All along, the mint has left open the possibility that gold has been stolen – a startling admission that seems more likely, given this report,” he said.
“Instead of immediately chasing down all possible leads, the government may have given those responsible the equivalent of a headstart for their getaway.”
The RCM's operations include vault storage of precious metals, sampling and assay services, refinery of gold and silver and coin production, including for foreign governments.