The Federal Prosecutor’s Office has opened an investigation into Swiss refiner Argor-Heraeus, accused of laundering huge quantities of conflict gold from northeast of the Democratic Republic of the Congo (DRC). The firm rejects the charges.
“After examining Trial’s criminal complaint, the Federal Prosecutor’s Office has decided to open criminal proceedings against Argor-Heraeus over allegations of money laundering related to a war crime and complicity in war crimes,” Jacqueline Bühlmann, spokeswoman for the prosecutor’s office, told swissinfo.ch by email on Monday.
Trial, a Geneva-based NGO, accuses Argor-Heraeus of having refined almost three tons of gold between 2004-2005 which had been mined by an armed group in the DRC’s Ituri region and was then shipped via Uganda to Switzerland.
The NGO filed a criminal complaint on November 1 with evidence it says “seals the deal”, proving how the refinery, based in Mendrisio in canton Ticino, knew, or at least should have assumed, that these raw materials were the proceeds of pillage, which is a war crime.
The charges of “aggravated laundering” of assets against the firm fall under Article 305bis of the Swiss Penal Code, which could mean prison sentences for anyone found guilty of money laundering and a fine of up to CHF5 million ($5.49 million) for the firm, according to Trial.
Since the late 1990s the DRC has seen some of the world’s bloodiest conflicts, resulting in almost six million deaths. The fight for control of the country’s rich natural resources – gold, diamonds, oil, tungsten, copper and coltan – is one of the primary causes.
The north-eastern part of the DRC has been the focus of massive and ongoing human rights violations committed by combatants, including armed rebel groups, the national army and the armed forces from neighbouring countries, according to reports by the United Nations and human rights organisations.
The gold route
In 2004, the United Nations Security Council convened a group of experts to investigate illegal exploitation of natural resources in the DRC. The group documented the role of several organisations and individuals involved in the pillage and smuggling of gold from the north east of the country.
According to Trial, based on information provided by the UN experts, in 2003 an armed group known as the Front des nationalistes et intégrationnistes (FNI) set up with the support of Uganda, took control of the town of Mongbwalu in Ituri district. The FNI illicitly mined gold from the area and used proceeds from the sale of the gold to finance its operations and to buy arms in breach of the arms embargo established by the UN Security Council.
The gold was allegedly mined in appalling conditions, then, with the help of a Congolese gold trader and owner of an air transport company, most of it was sold to a Kampala-based firm, Uganda Commercial Impex Limited (UCI), which in turn sold the gold on to a British company, Hussar Services Limited, based in Jersey.
In July 2004 Argor-Heraeus took over the refining of the gold from South Africa’s Rand Refinery, and continued to do so up until May 2005. The gold, in the form of ingots, was then apparently sold to banking institutions.
“Bolt from the blue”
On Monday the Swiss refiner categorically rejected Trial’s allegations, which it said were like “a bolt from the blue”.
In a statement the firm said an investigation by the UN, the Swiss State Secretariat for Economic Affairs (Seco) and the Swiss Financial Market Supervisory Authority (FINMA) had “confirmed that the company was in no way directly or indirectly involved in the alleged claim”.
Expert reports to the UN Security Council in July 2005 and January 2006 named Argor-Heraeus as the refiner of this pillaged gold. But the Security Council sanctions committee later declined to sanction either Argor-Heraeus, defended by the Swiss authorities before the UN, or other European companies accused of buying gold of dubious provenance. By contrast African businesses were subject to heavy sanctions.
Argor-Heraeus maintains that in 2005 it ceased to refine gold from Uganda and stopped commercial activity for Hussar Ltd when it became aware of problems in the region.
It added that as a founding member of the Swiss Better Gold Initiative, it engaged in serious “due diligence for responsible supply chains of minerals” and practiced full transparency.
Argor-Heraus is one of the world’s most important refiners and is partly owned partly by German company Heraeus, Commerzbank International of Luxembourg, and by the Austrian Mint of Vienna. Former Swiss cabinet minister Adolf Ogi sits on the board of directors.
It is one of four of the world’s major gold refineries located on Swiss soil. In addition to Argor-Heraeus the others are Valcambi in Balerna, Pamp in Castel San Pietro, and Metalor in Neuchâtel.
In an average year, Switzerland refines about 70 per cent of the world’s gold.
In 2011, over 2,600 metric tons of raw gold were imported into Switzerland, to a value of over CHF96 billion ($102 billion), according to figures from the federal customs administration. This is the highest figure ever recorded.
The year before, imports had reached 2,326 metric tons (CHF70 billion).
Between 1990 and 2007, Switzerland imported between 1,000 and 1,600 metric tons of gold per year, with a value varying between CHF15.7 billion (1994) and CHF32 billion (2007).
The gold industry in Switzerland
Six Swiss companies belong to the Good Delivery List of the London Bullion Market Association, which means that they meet all the standards set by this London-based industry watchdog.
Valcambi SA of Balerna, founded in 1961 and now owned by the US group Newmont Mining Corporation, has an annual refining capacity of about 1,400 metric tons. It has a staff of 165.
Pamp SA of Castel San Pietro (1977 – MKS SA Geneva) has an annual refining capacity of 450 metric tons. It has a staff of 160.
Argor-Heraeus SA of Mendrisio (founded 1951) has an annual refining capacity of 400 metric tons. It has a staff of 230 in Switzerland, Germany, Italy and South America.
Metalor Technologies SA, located in Neuchâtel, has existed since 1852 under the name Martin de Pury & Cie. Today, the group has a staff of 1,650 around the world. It has an annual refining capacity of about 650 metric tons.
Other than the four large refineries, Cendres + Metaux SA in Biel and PX Précinox SA in La Chaux-de-Fonds are also affiliated with the LBMA. These two firms have not disclosed annual refining capacities.