US$ 3.6bn of Gold Smuggled From January 2014 to January 2016

More than US$3.6 billion worth of gold has been smuggled to India in the last two years, causing the country to lose about US$360 million in tax revenues to the state.

Checks by the Graphic Business show that a series of carefully spun web of illegal shipment of a total of 101,179.00 kilogrammes of gold valued at US$3,607,415,756.36 were smuggled out of Ghana to India without official documentation.

Statistics from Zauba Technologies and Data Services of India show trails of smuggled gold from Ghana to India.

In a bid to curb the rising spate of gold smuggling, the Bank of Ghana issued new directives instructing gold exporters to channel all their exports through the Precious Minerals Marketing Company (PMMC).

The requirements were to ensure that all licensed gold exporters would secure new documents from the Bank of Ghana to aid their exports.

The directive was in line with its foreign exchange Act to streamline gold exports.  It asked all exporters to contact the BoG of Ghana with proof their licence before they are given the necessary access credentials.

It warned that gold exporters who failed to comply with the new measures on or after the effective date would not be able to export gold out of Ghana.

Court reverses BoG decision

But an Accra High Court in December last year reversed the BoG directives, which gave the gold exporters a field day to export sometimes without the necessary documentation.

The Managing Director of the Precious Marketing Company, George Abredu-Otoo, told the Graphic Business in an interview that the actions of the gold smugglers had contributed largely to the depreciation of the cedi.

Though the law calls for 80 per cent repatriation of money realised from gold exports, the smugglers, most of whom have shops in Ghana, rather keep the foreign currency in their offshore accounts and then use the cedis realised from their shops to buy more gold for export, thus in putting pressure on the few dollars in the system.

Cedi depreciation

“There is something that is now called Dubai rate; there is a Dubai rate and there is Ghana rate, so they call the small scale miner and tell you that we are offering you Dubai rate, which is higher”, he said.

“When they export the gold, they keep it offshore, call their colleagues in Ghana and say, ‘here look, I have US$1 million or US$500,000, what is your rate? The person says, ‘I will give you this, the bank rate is [let’s say] GH¢3.28, I will give you GH¢3.4’. They transact the business; he gives him cedis, and the foreign currency remains abroad,” he added.

The PMMC, established in 1953, as a Limited Liability Company operating with the Government of Ghana as the sole shareholder, according to George Abradu-Otoo, is handicapped presently as it is struggling to compete with these foreigners, who mostly storm the country illegally to engage in the buying and transporting of precious minerals, a job reserved for PMMC.

System loopholes

He added, “there are loopholes in the system for people to bribe their way out. For instance, somebody goes to the airport and he or she has 50 kg of gold but will pay his or her way out by declaring 10 kg. Meanwhile, we also don’t have any means of checking them.”

The practice of illegal gold export started about four years ago when the Lands Commission granted permission to some private companies to be able to export the commodity.

Recently, security officers at the Kotoka International Airport (KIA) busted a smuggling syndicate as they attempted to smuggle gold weighing about 480 kilogrammes (valued at US$18,000,000`) out of the country. The ounces of gold had been hidden in boxes at the time of the arrest.

These foreign gold traders, who have illegally entered the mining communities, are purchasing gold directly from the small-scale miners and exporting the gold themselves and as a result, denying the country of several millions of dollars annually.

Source: Daily Graphic