Museveni defends ‘fake’ gold dealer

Museveni has been keen to protect Goetz from when he launched the AGR facility in February 2017. At the time, he warned that officials who would not support the company would be dealt with ‘harshly’.

Museveni intended to protect AGR, which is the first refinery in East Africa and the second largest in sub-Saharan Africa, insiders say, because he hoped the facility would increase the legitimacy of the gold trade in Uganda.

But accusations against Goetz suggest that the reverse could be happening.

For instance, in an on-going fight, AGR has allegedly snubbed directives by the FIA intended to prevent money laundering and promote transparency.

Uganda’s Anti-Money Laundering Act conditions dealers in precious metals and gems to register with the FIA as accountable persons.

In accordance with this law, on 24 August FIA wrote to AGR directing the company to provide a copy of their operating licence and to register with them as an accountable person.

When AGR did not respond, FIA wrote again making the same demands on Sept. 25. AGR ignored this request too.

When AGR delayed to respond, FIA boss Sydney Asubo wrote to the DPP on Oct.11 requesting for the prosecution of AGR for flouting the law.

FIA issued these letters to ensure the company complied with international anti-money laundering laws. Non-compliance, in 2014, landed Uganda on the Financial Action Task Force (FATF) watch list of risky countries.

Danger to Uganda

FATF is an inter-governmental body established to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

To be on the FATF’s list of risky countries makes a country unattractive to international investors and lenders.

The FATF only removed Uganda from the list in November last year but cases like AGR’s alleged crimes could reverse this gain. It is possibly why Asubo and other government agencies are cracking the whip.

According to the International Monetary fund (IMF), trade in precious metals, and particularly gold, has strong links to illicit financial flows. A study on gold trading and export in Kampala by Gregory Mthembu-Salter, Phuzumoya Consulting, revealed that gold dealers in the DRC and Dubai have often claimed that Kampala-based traders purchase gold with illicit funds for the purpose of money laundering.

Insiders say FIA has evidence, which raises concerns over money laundering and illicit financing.

When AGR responded to FIA queries on November 7, 2017, the company declined to furnish FIA with the required details.

Instead, AGR noted that Uganda’s anti-money laundering law does not oblige them to comply with its requirements and that FIA has no jurisdiction to compel them to comply with its directives.

AGR noted in its response to FIA queries that the law being cited only obliges mineral dealers and that it would be erroneous to assume that it (AGR) fits the description of a dealer given that it only refines the raw material into a finished product.

Uganda’s mining law established in 2003 does not provide for a refining license. Basing on this, AGR argues that it is not obliged to disclose its dealings under the existing laws.

But government officials insist that AGR has a mineral dealers’ license, which it received on January 2016 from DGSM.

The DGSM Commissioner, Edwards Kato, in a letter dated January 2017 to the global transparency body, Global Witness (GW) noted that that the DGSM “has not issued any export permits” to AGR.  By implication, gold exports by AGR would seem illegal.

GW also quoted Taremwa, a former AGR director saying that some of the gold processed in the refinery comes from the neighboring DRC and South Sudan, which critics have jumped on to claim there is a risk of using the money from the gold sales to fund conflicts and foment human rights violations.

Richard Kaijuka, a founding board chairman, who the company fired this November, told The Independent that he has been raising these issues and suspects Goetz possibly fired him to keep the lid on, among others. Kaijuka has also expressed concerns over “gold sourcing in the region” which experts say should not be swept under the carpet.

Official data shows that on some occasions, Goetz has severally exported over 100 Kgs on a single day. Uganda’s gold mines, critics say, cannot raise 10 kilos a week.

To get to the bottom of the puzzle, The Independent secured data from the Uganda Revenue Authority (URA) and DGSM.

URA data shows that between October 2015 and September 2017, AGR had traded in gold worth Shs. 1.16 trillion.  Data from DGSM, on the other hand, shows that between July 2016 and June 2017, AGR had exported gold worth Shs 2.13 trillion.

Last year the Auditor General (AG) raised concerns about conflicting figures issued by the DGSM and URA. While DGSM assessed royalty and awarded export permits for only 93kgs of gold worth Shs11.8b, in the same period, the Customs and Excise Department of Uganda Revenue Authority indicated that 5,316 kgs of gold had been exported with a total value of Shs698 billion. Critics say this discrepancy could be because of under reporting.

The AG also raised concerns that while gold grew into Uganda’s second largest export product after coffee in 2015/16, the royalties paid to government didn’t reflect that growth.

During that year, the country exported 5, 1316 kgs of gold valued at about Shs700 billion, the bulk of which was by AGR. But for the same year, the AG noted, only Shs360m was collected instead of Shs41.88 billion going by the applicable rates of 1 per cent and 5 per cent for the imported or locally mined gold respectively according to Mining Act 2003.

Away from this are claims Goetz is concealing his operations by using multiple companies.