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A new investigation into illegal mining has revealed that Peruvian prosecutors are digging into a large Swiss refinery for buying suspect gold. The case is the latest against a multinational firm credited by the London Bullion Market Association, which has seen its member refineries accused of facilitating illegal mining.

The Swiss-based Metalor Technologies may have bought illegal gold from a Peruvian company that allegedly acquired ore of suspect origin, according to case files obtained by Ojo-Público, an investigative news website in Peru.

Metalor has long denied buying illegal gold, and there are currently no charges against the refinery. In response to InSight Crime’s questions about the case, a representative for Metalor claimed that the company is not under investigation by Peruvian authorities. But prosecutors are investigating its Peru-based supplier, with which the company had a contract until March 2018.

SEE ALSO: Coverage of Illegal Mining

Metalor processed some $3.5 billion worth of gold from the Peru-based firm Minerals del Sur (Minersur) between 2010 and 2018, according to the documents obtained by Ojo-Público. Prosecutors say Minersur sourced suspect ore from at least two companies under investigation for illegal mining, according to the report.

“Metalor was the exclusive importer of gold produced from illegal mining which was sold or sent through Minersur,” states one of the documents in the Ojo-Público investigation, which reproduced an image of that portion of the prosecutor’s report.

Minersur and its owner Fransico Quintano Méndez are under investigation for sourcing suspect ore from Sociedad Minera La Rinconada and Inversur PJ&R and D&J Ares Groups in Madre de Dios — a hotspot for illegal mining, according the Ojo-Público report. Both companies have been accused of illegal mining, and their owners have been accused of money laundering after authorities seized millions of dollars of unknown provenance.

Prosecutors say that Minersur was “established in order to collect gold of illicit origin, legitimizing it using the name of a company authorized [by the state] to export it overseas.” Méndez, Minersur’s owner, is also under investigation for money laundering. He has denied all charges.

In March 2018, Peruvian customs seized 91 kilograms of gold from Minersur that was destined for the refinery in Switzerland. That case is still under investigation.

Metalor stopped all imports from Minersur in the same month as the seizure, Jose Ramon Camino, a lawyer for Metalor, told InSight Crime in an email. He said the firm has reported the case to the Money Laundering Reporting Office in Switzerland, as is required by law, and that Metalor believes that the ore it has been importing “is not illegal gold.”

Metalor said that as part of Peru’s effort to formalize the mining sector in 2014, Minersur was awarded a three-year contract by a state-owned company. Under the terms of that contract, Minersur had to file reports on every gold shipment and undergo independent audits. The contract was renewed in 2018.

In a statement responding to a Swiss television report, Metalor said that Minersur is “running a legal mining activity in all respects.”

InSight Crime Analysis

After failing to drive out illegal gold mining, authorities have set their sights on the exporters and multinational refineries suspected of processing dirty gold. And recently the London Bullion Market Association (LBMA), which sets standards for the world’s biggest refineries, has come under fire for giving its stamp of approval to members accused of flouting basic sourcing standards.

Last year the Dallas, Texas-based company Elemetal LLC pleaded guilty to failing to comply with anti-money laundering protocols designed to stop illegally mined gold from being imported to the United States from South America.

Evidence against Elemetal included documentation that the company purchased $350 million worth of gold from four companies in Peru, but demanded little to no information about the source of that gold. The front companies buying the illegally mined gold engaged in bribery and associated with a “well-known narcotics money launderer,” according to court documents.

SEE ALSO: Peru News and Profile

Elemetal had been on LBMA’s “Good Delivery List,” under which accredited refineries must undergo a publicly reported annual audit. Metalor is also certified by the association. Ojo-Público reported in 2015 that four other multinational companies accredited by LBMA had links to South American exporting firms that were buying suspect gold.

Elemetal was removed from the list in March 2017. Metalor remains in good standing so far, but the association “will continue to monitor the situation and will review any new information,” LBMA spokesman Aelred Connelly told InSight Crime in an email.

“Any incidents or issues that endanger the Good Delivery List and the wholesale bullion market are treated very seriously,” Connelly said.

The guilty plea by Elemetal came after three employees of a Miami-based refinery, NTR Metals, were convicted of running an international laundering scheme in which they bought billions in illegally mined and smuggled gold. NTR Metals, which was a subsidiary of Elemetal, was also certified by LBMA but later expelled from the organization.

The company declared $980 million worth of gold imports from Peru in 2013, a staggering jump from $73 million the previous year, according to a 2017 federal indictment in the Southern District of Florida. When Peru began to crack down on illegal gold, the company followed a known pattern of buying Peruvian gold smuggled into neighboring Bolivia, Ecuador and then Colombia.  An informant involved in the sale of hundreds of millions of dollars in illegal gold from Peru to NTR Metals said that only one of the shipments –- worth only about $50,000 — might have been legally sourced.

Illegal gold mining in Latin America has decimated the environment, generated enormous illicit wealth and convened other criminal actors. Drug traffickers are known to use illegal gold to launder cash. Criminal groups, including guerrilla forces and drug gangs, largely run the mines, taxing miners in gold. The mining sites are also hotbeds for sex trafficking and violence.

By going after the multinational refineries and exporters, prosecutors are taking a different approach: making it harder for dirty gold to appear clean.

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