According to a recently released Global Witness report ‘City of Gold’ and a former partner at Ernst & Young, the firm turned a blind eye when major audit failures at Dubai’s biggest gold refinery went unpublished. The report alleges that the Dubai Multi Commodities Centre (DMCC), changed its audit guidelines after becoming aware of negative findings in an Ernst & Young’s audit, meaning that damaging results were not released. Dubai trades more than 20% of the world’s gold and is thought to be the main destination for Congolese conflict gold. Ernst & Young was auditing Kaloti Jewellery International and found that in 2012 the company failed to report potentially suspicious cash transactions worth over US$5.2bn; knowingly accepted gold bars painted silver by suppliers who had used falsified paperwork; and failed to do adequate checks on gold bought from high-risk suppliers pointing to an increased risk of money laundering, and of dirty gold from the DRC’s conflict zones entering the refiner’s supply chain during 2012. Annie Dunnebacke, Deputy Campaigns Director at Global Witness said: “The unregulated trade in gold is fuelling wars and brutal human rights in places like eastern Congo. The actions of Ernst & Young and the Dubai regulator, while perfectly legal, undermine trust in the industry at a critical time when progressive new laws to tackle conflict minerals have come into force. This is why it was important that this story came to light.” The Global Witness report is available here.
Dubai’s first conflict gold audit never saw the light of day
Feb 27, 2014