Illicit gold trade and the ARGOR case - Conference summary report

ARGOR gold

SARW would like to thank all the participants who took an active part in the work. The Minister of Mines participation showed the Government's willingness to engage in the regulation of an important activity for the country's economy and to improve the living conditions of the populations.

Southern Africa Resource Watch (SARW) held a Conference on the Illicit Trade of Congolese Gold at Hôtel du Fleuve Congo, in Kinshasa on 29-30 September 2015. The conference was jointly organized with the New York Open Society Justice Initiative Programme, in collaboration with TRIAL, an NGO from Switzerland. The conference was opened by the Minister of Mines, Martin Kabwelulu, whilst of his cabinet members were in attendance, the Secretary General of Mines, Diplomats, the representatives of specialised services from the Ministry of Mines, two provincial Ministers of Mines (South Kivu and former Eastern Province), as well as the representatives of mining companies and civil society. In total, nearly 50 participants took part in the conference.

The context in which this conference was organized coincided with an economic situation characterised by fraudulent exports of gold produced in the DRC.

The quantities of these fraudulent exports are estimated at over 15 tons of gold from the Congolese territory every year, particularly from the Provinces of North Kivu, South Kivu and the Eastern Province (Ituri).

Furthermore, it is reported that extensive gold mining with the use of dredges in different river streams, controlled mainly by Chinese nationals, whose production is not covered by any regulation or control of the State. According to estimates made by the participants, nearly 6 tons of gold are produced each year through these dredgers in the South Kivu Province alone.

One of the reasons that made SARW organise this conference is the case known as Argor, a Swiss Gold rafiney. The Argor Case, in fact, is a case in which it refined nearly three tons of Congolese gold between 2004 and 2005 without complying with the due diligence principle or wondering whether the gold was legally or illicitly traded. Argor was taken to the Swiss Confederation Court by international NGOs. After years of investigation, the case was dismissed in March 2015, as the Congolese State failed to appear as plaintiff. This case exposes regrettably the inability of the Congolese State to claim on time, even when the conditions are in its favour, its property rights over its own property that has been illegally traded.

Main objectives and themes

The overall objective of the conference was to promote lawful and transparent artisanal trade of Gold produced in the Democratic Republic of the Congo, while the specific objectives were, among others:

  • To engage in discussions regarding the Case of three tons of Gold refined by Argor, a Swiss company, and to try and understand what the ruling by the Court of the Swiss Confederation meant for the DRC;
  • To discuss all artisanal Gold mining operations in the DRC and  propose appropriate supervision measures;
  • To encourage the Congolese Government to take formal steps to put an end to or reduce fraudulent exports of Gold;
  • To fight against fraud in Gold mining in the East of the DRC and to encourage the Government to take action against the perpetrators.

The following themes were developed during the conference:

  • The case of three  tons of refined gold in Switzerland: context, process, actions, milestones and future prospects;
  • The fight against fraud, money laundering and corruption;
  • Causes of illegal and fraudulent exports of the Congolese Gold and the State’s weakness;
  • Institutional mechanisms for monitoring gold mining and gold collection in the DRC;
  • Strengthening regional cooperation on gold trade between the DRC and its neighbouring countries.

Characteristics of Artisanal Gold Mining

The artisanal and small scale mining sector of the DRC represents an important segment of its mining industry, not only because it produces the largest volume of mineral substances throughout the whole of the Republic, especially in its eastern region, but also because of the number of people, who depend on the sector, estimated at 10 million.

Artisanal mining is a source for livelihood for hundreds of thousands of Congolese. It covers the provinces of Eastern Kasai, Western Kasai, Katanga, Maniema, North Kivu, South Kivu and Eastern Province (Ituri). According to some estimates, the artisanal production represents more than 80% of mineral production exported by the DRC. Largely informal, gold mining and trading in the artisanal sector are beyond the control of the State which is extracting low tax revenues, insufficient to significantly contribute to public finances.

Total anarchy has taken place in the artisanal sector, despite the existence of the SESSCAM (Assistance and Small Scale Mining Supervision Service). This anarchy is characterised by non-identification of stakeholders in the production chain, the uncontrolled movements of minerals, the presence of military and unidentified elements that inflict chores and extortion from miners, child labour and women in mines; the enslavement of miners by the CEO (Chief Executive Officer) and other people funding the digging operations and lastly, massive fraud at the borders of the DRC with its neighbouring countries.                                    

The conference examined the challenges facing SESSCAM. The meeting agreed that it lack of resources, weak technical capabilities of its staff, which make impossible to properly fulfil its mission to regulate artisanal miners.

Among the key factors that undermine the the fight against illicit Gold trade in the East of the country, participants identified the following:

  • Lack of a control and supervision policy of the artisanal mining;
  • Lack of supervision of  production from artisanal sector;
  • Absence of sanctions for perpetrators of mining fraud;
  • Existence of illicit gold trade outlets (non-accredited);
  • Lack of banks on mining sites;
  • Uncontrolled foreign funding of artisanal gold mining in the east of the DRC;
  • Lack of effective cooperation in the region to fight against illicit cross-border trade;
  • Money-laundering.

Fraud: great challenges of artisanal gold

The conference identified fraud as one of the great challenges of artisanal gold mining. Mining fraud is closely related to artisanal mining. Despite the entry into production of some companies such as Banro and Kibali Gold, gold remains largely extracted by artisans throughout the entire DRC. Unfortunately, the control of this activity is weak due to a number of factors, including the destruction of of wars the country has suffered, weak state, corruption, political influence peddling of some public figures, a lack of resources and the expertise of the State agents responsible for the supervision of this sector and the militarisation of the operating areas.

Mining fraud means exploitation, possession, transport, commercialisation of mining products in violation of the Mining Code and its implementing measures, the Customs Code, the Tax Code and the regulations of the exchange. It is an unlawful act to try and benefit at the expense of the State.

An estimated 15-20 tons of gold from artisanal production fraudulently leave the DRC annually. This is justiciable because it is estimated that there are about 100,000 miners in the eastern region of the country. It is assumed that each miner produces at least from 150 grams to 200 grams per year.

Gold is a mineral that can easily be illegally traded. Hence, the obligation for all stakeholders to seek durable solutions on how to combat fraud which deprives the DRC 450 kg of gold every 6 months in sites known to be red zone in North and South Kivu. The conference proposed four solutions::

  • Given the large geographic size of the country, measures should be taken to encourage the procurement of Congolese gold locally closer to the sites of production, in order to capture the bulk of the production. For this to be efficient,it was proposed that the DRC consider the establishment of a bank for gold at national, provincial and local levels.
  • The implementation of OECD principles and the downward revision of the export rates. Of nearly 1106 artisanal mining sites currently identified, 80% or 860, relate to gold mining. Half of these sites is occupied by armed groups and the regular armed forces that impose illegal taxes on the miners. The fight against fraud should reflect this reality. The production from these 860 sites is unknown.
  • The state must take steps to initiate legal actions against the perpetrators of economic crimes documented in various United Nations reports and other non-governmental organizations, at international courts.
  • The living and working condition of state employees', those who are supposed to enforce the regulation and to deal with this massive fraud, musy be improved to reduce corruption.

However, it was recognised that there are many initiatives, at the national and regional levels,  that the Congolese government has initiated to fight against the illicit trade of Gold, but all have shown serious limitation, and often they are not enforced. Government initiatives include:

  • The reduction of export duties for gold ( but it is still high compared to neighbouring states);
  • The accreditation of supervisory diggers cooperatives;
  •  The creation of the National Commission for the fight against fraud;
  • The traceability of artisanal gold Initiative (ITOA);

There are three periods of gold fraud in the history of the DRC.

From 1908 - 1960, estimates of fraud provided by the Administration of the Colony, were within 2 percent of production at the time. This performance was due to the strict control of population movements, increased monitoring of the assets of the inhabitants of the colony and the repressive legal regime applied rigorously.

From 1961 - 1981, estimates of Gold fraud rose to 45 percent of official exports. The rise was due to the social unrest which followed the independence of Congo and the illegal exploitation of mining concessions by illegal dealers.

From 1982 - 2003, gold fraud shout up to 98 per cent. This situation continues to date.

The reasons for this massive fraud include continued situation of war, massive presence of armed conflicts in the East of the country, the increased dependency of the eastern part of the DRC from outside for the supply of essential goods (Gold being "currency" of transaction), high rates of export duties and, finally, the lack and poor public services in parts of the Republic. All these causes largely explain the persistence of gold fraud scourge in the east of the DRC.

The case of three tons of gold illegally refined in Switzerland

The conference focused extensively on the three tons of gold that have been illegally exported and refined in Switzerland. Indeed, between 2004 and 2005, 2950 kg of gold bullion arrived in Switzerland to be refined at Argor. It appears from the documents seized during the search, Uganda registered company Commercial Impex resold pure gold to Hussar" name="_ftnref1" title="">[1] between July 2004 and June 2005. Hussar ordered Uganda Commercial Impex to deliver the gold by air from Uganda to Argor-Heraeus in Switzerland, to be refined.

Following investigations led by organisations of civil society at the international level, particularly Track Impunity Always (TRIAL) and Open Society Justice Initiative (OSJI), a request was sent to the Swiss prosecution Service to probe Argor for complicity in fraud and money laundering.

Eighteen months after the start of the criminal investigation, the prosecutor of the Swiss Confederation decided to close the case on the grounds that Argor would have voluntarily provided assistance to the commission of war crimes by refining 2950 kg of pure gold having most likely been obtained through looting in DRC between July 2004 and June 2005 was unfounded.

The DRC government has been blamed for not being aggressive anough in the DRc’s efforts to claim reparation. It emerged during the discussions that the government took some initiatives, including the arrangement of official meetings in Kinshasa with lawyers TRIAL, sending agents of the specialised services of the state such as CEEC (Centre for Evaluation, Expertise and Certification of precious minerals and semiprecious) in mission to Switzerland and finally the initiation of field investigations to reconstruct the facts to develop appropriate strategies to begin a new case with the Switzerland Justice.

Conclusion and Recommendations

The conference was organized in an economic context characterised by high fraudulent export activities of produced in the DRC. The Congolese State loses more than a billion US dollars through fraud and illicit gold trade. It is estimated that between 15-20 tonnes of gold leave the Congolese territory illegally each year mostly from Ituri, North Kivu and South Kivu. On the three tons of Gold refined by the Swiss company Argor, whose criminal case was opened at the Swiss Confederation Court participants recommended that the Congolese Government should take all necessary steps to ensure that the Congolese State fully enjoys its rights.

Several recommendations were formulated by the participants to curb fraud. These recommendations:


 To the Congolese state

  1. Define the vision of the artisanal mining.;
  2. Formalise artisanal mining of Gold and create Artisanal Exploitation Areas (ZEA);
  3. Finalise the qualification of the artisanal mining sites of Gold in the provinces of Ituri, Haut Uele, Bas Uele, Tshopo and South Kivu, particularly in the Territories Mambasa, Shabunda and Fizi;
  4. Review the criteria for approving cooperatives and shorten the procedure of such approval and the downward revision of the rate of export duty of Gold, or from 2% to 1%, also including the ASSMSS compensatory fees;
  5. Facilitate the establishment of purchase counters, banks and cooperatives on the mining sites;
  6. Identify key players involved in the the illicit trade of Gold and bring legal action against them;
  7. The judiciary must detect infringements,  carry out investigations and prosecutions. Criminal penalties ranging up to prison sentences against all perpetrators of economic crimes in the area of the illegal exploitation of gold should be considered.
  8. Reforming and Strengthening ASSMSS's ability to regulate artisanal miners;
  9.  Disseminate to all stakeholders (miners, traders, buyers) tools related to regional certification mechanisms of the ICGLR and the OECD due diligence;
  10. Strictly control the use of dredges and ensure their compliance with national  regional and international standards for mining (including the obligation to realisation of environmental impact studies, respect for human rights, respect of the Labour Code);
  11. On the Argor case and other economic crimes cases, the government should involve civil society in the various discussions and actions to be taken so that it provides expertise and contribution;
  12. Collect statistic of gold production and encourage local processing of gold. The Congolese government must set up a refinery integrated with Gold jewellery, under the 2007 Ngurdoto Agreement signed between the DRC and Uganda;
  13. Establish the General Inspectorate of Mines,
  14. Accelerate the establishment of the One-Stop-Shop for foreign trade and authorize only the export of the Congolese gold in the form of bullion;
  15. Prohibit the presence of foreigners on artisanal mining sites. Foreigners must comply with the provisions of the Mining Code that reserves artisanal exploitation solely to Congolese Nationals.

To civil society

  1. Invest in the fight against illegal practices of mining companies in the DRC through the creation of a cluster of specialized civil society on issues relating to fraud and money laundering;
  2. Organize restitution workshops in the provinces affected by the illicit exploitation of gold;
  3. Raise awareness and enhance capacity of local communities and local stakeholders (miners and traders) on issues relating to regional certification mechanisms of the ICGLR and the OECD due diligence related to artisanal mining of Gold.

To the private sector

  1. Promote the practice of due diligence and implementation of the CIRGL Regional Certification Mechanism tools in the value chain of Gold.

" name="_ftn1" title="">[1] Hussar: would be  the owner of the refined gold by Argor in Switzerland, and is one of the major gold traffickers in the DRC