HomeNewsBriefEcuador Emerges as Trafficking Hub for Peru’s Illegal Gold
BRIEF

Ecuador Emerges as Trafficking Hub for Peru's Illegal Gold

ECUADOR / 8 JUL 2016 BY JAMES BARGENT EN

An investigation in Ecuador has revealed how the country has become a major transit hub for illegal Peruvian gold exported to the United States, an evolution directly linked to Peru's attempts to crack down on gold trafficking.

Case files obtained by El Comercio have exposed the inner workings of the alleged illegal gold trafficking network exposed last month after a series of raids and arrests linked to two gold exporters, Clearprocess and Spartan.

According to El Comercio, prosecutors allege the two companies employed emissaries to strike deals with Peruvian gold smugglers on the border between the two countries. The companies then exported the gold. Prosecutors allege the precious metal's illegal and foreign origins were concealed using falsified documents and identities stolen from legally registered Ecuadorians, El Comercio reported.

After 2013, the two companies grew rapidly to become Ecuador's principal gold exporters, according to a statement issued by the government, which named their main customers as the US-based companies Republic Metals Corporation (RMC), Kaloti Metals and Logistics (KML), and Mvp Imports.

Police arrested seven executives from Clearprocess and Spartan in the June raids, and they have since been charged with money laundering, El Comercio reported.

InSight Crime Analysis

The emergence of Ecuador as a transit point for Peruvian gold is a direct consequence of Peru's attempts to introduce traceability into its supply chain and prevent illegal gold from being laundered into the legal supply.

Until 2012, there was little oversight of gold exports in Peru, but new legislation and a shift in security priorities to focus on illegal mining led to high profile seizures and investigations, and by 2014 half of all Peru's gold exporters had fallen under suspicion.

In 2015, Peruvian investigators told InSight Crime this had resulted in a shift in trafficking patterns, with illegal gold increasingly smuggled across the border into Bolivia then exported with false paperwork identifying its origins as Bolivian.

SEE ALSO: Coverage of Illegal Mining

This pattern now appears to be repeating itself in Ecuador, with both countries showing the telltale discrepancy between gold mined in the country and gold exported -- in Ecuador's case a $949 million gap in the period 2012-2014, according to government figures.

While the export patterns in the regional gold trade are changing, the same names continue to surface as the international buyers of this allegedly illegal gold.

RMC, for example has been embroiled in several illegal mining scandals in Colombia. The owners of one of its former suppliers, Goldex, are currently on trial for money laundering, while another, Giraldo y Duque is under investigation. As a result, the company has scaled back its operations in Colombia and now only buys from one mining company with a legal title.

KML, meanwhile, has been named as the intended recipient of allegedly illegal gold seized in Peru and has had ties to several exporters suspected of money laundering and linked to alleged organized crime kingpins. InSight Crime's reporting of these connections has led to threats of legal action from Kaloti.


RMC Responds: Following publication of this article, RMC contacted InSight Crime to request a clarification on the company's current gold buying policy, which was developed in response to the scandals in Colombia and growing concerns over gold trafficking and money laundering in the Americas. Jason Rubin, RMC's CEO, said:

"RMC has ceased doing business with any aggregators as part of its continuing efforts to prevent gold operations from being used for money laundering. RMC only deals with single source mining entities. RMC made this decision to address some of the problems you discuss in the Article, including exporters attempting to conceal the illegal and foreign origins of gold using falsified documents. RMC recognizes the challenges facing the gold industry and, as a responsible refinery, is attempting to lead by example when it comes to thwarting illegal gold trafficking networks."

share icon icon icon

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

Related Content

ARGENTINA / 23 JUN 2015

A former government advisor has asserted that corrupt officials have allowed a Peruvian-run criminal group to flourish in Buenos…

ENVIRONMENTAL CRIME / 20 APR 2017

A new investigation by the Associated Press has shed additional light on how corruption and lack of political will act…

PERU / 19 JUL 2012

In a two-day operation, Peruvian authorities destroyed 34,000 marijuana plants, reflecting a trend of increased seizures and destruction of the…

About InSight Crime

THE ORGANIZATION

Unraveling the Web of Elites Connected to Organized Crime

27 JUL 2021

InSight Crime published Elites and Organized Crime in Nicaragua, a deep dive into the relationships between criminal actors and elites in that Central American nation.

THE ORGANIZATION

InSight Crime’s Greater Focus on US-Mexico Border

20 JUL 2021

InSight Crime has decided to turn many of its investigative resources towards understanding and chronicling the criminal dynamics along the US-Mexico border.

THE ORGANIZATION

Key Arrests and Police Budget Increases Due to InSight Crime Investigations

8 JUL 2021

With Memo Fantasma’s arrest, InSight Crime has proven that our investigations can and will uncover major criminal threats in the Americas.

THE ORGANIZATION

Organized Crime’s Influence on Gender-Based Violence

30 JUN 2021

InSight Crime investigator Laura N. Ávila spoke on organized crime and gender-based violence at the launch of a research project by the United Nations Development Programme.

THE ORGANIZATION

Conversation with Paraguay Judicial Operators on PCC

24 JUN 2021

InSight Crime Co-director Steven Dudley formed part of a panel attended by over 500 students, all of whom work in Paraguay's judicial system.