Vulnerable community representative organisation Impact’s newest report, 'The Intermediaries: Traders Who Threaten the Democratic Republic of Congo’s Efforts for Conflict-Free Gold', reveals that the country's illicit gold trade is thriving despite efforts to clean up the sector.
The report shines a light on traders and exporters, who are legally registered in the Democratic Republic of Congo (DRC), Rwanda and Uganda, but who continue to operate without apparent fear of sanction, even after being publicly named by the United Nations and international organisations year-after-year as contributing to the illicit trade of artisanal DRC gold, states Impact.
In its report, Impact documents how registered traders and exporters provide a “sheen of legality” by declaring a small percentage of their gold exports, while “pocketing massive profits” from the illicit trade.
In addition, the report reveals that they thwart attempts to disrupt their scheme by reconfiguring their operations across the region when necessary or by creating phantom entities.
As such, Impact states that gold smuggled out of the DRC and which flows into the legal international gold market, and ultimately into consumer products, is potentially tied to criminality, money laundering, armed groups and human rights abuses.
Impact executive director Joanne Lebert says 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.
Further, Impact found that, despite efforts by the DRC government and international actors to introduce traceability and due diligence for artisanal gold supply chains in the DRC, the illicit trade appears to be booming – only a fraction of gold production is exported legally, being declared to authorities with all duties and taxes paid.
Impact’s investigation also takes a closer look at Rwanda as a transit point for DRC gold and the recent growth in Rwandan gold exports. The organisation says research suggests that Rwandan authorities are failing in their due diligence on gold entering from the DRC into Rwanda.
Meanwhile, in light of its conclusion that traceability and due diligence systems for DRC gold cannot make a dent in the scale of illicit trade until the intermediaries’ systems are dismantled, Impact is calling on the government of the DRC to investigate, bring to account, and expose well-known intermediaries, including by revoking or denying any trading, exporting, or refining licences of individuals and companies tied to the illicit trade.
It is also requesting the DRC government to streamline the steps for legal gold exports, ensuring they are clear and not arduous, and that related costs do not discourage legal trade.
Impact also calls on the governments of Rwanda and Uganda to foster cooperation between law enforcement agencies to identify trade discrepancies and enhance regulatory controls on any gold that is declared as DRC gold.