In March, Uganda’s merchandise exports rose sharply to $604.4mn (revised) up from $296.3mn (revised) the previous month. The surge resulted from a spike in gold exports to their highest level ever.
Data from the Bank of Uganda shows that gold exports rose to $363.4mn, up from $69.7mn in the previous month. This figure — which exceeds what Uganda normally earns from its monthly exports — was much higher than the previous all-time high for monthly shipments of the precious metal, which was $120mn in June 2017. Thanks to the Wall Street Journal, we now have an explanation for the surge.
The unusual amounts of gold were sneaked into Uganda from Venezuela, part of that country’s central bank’s reserves sold off by its embattled, cash-strapped government, according to the Journal. Citing Ugandan police and other officials, the WSJ article said that the gold arrived at Entebbe and was processed by African Gold Refinery Ltd, a local refiner, before being exported to the Middle East.
The operation was designed to circumvent US sanctions against the Venezuelan government of President Nicolás Maduro. Later, a police investigation into the “unusually large consignments” seized 3.6 tonnes of the Venezuelan gold in a raid on AGR. But the investigation was halted by President Museveni, who ordered the police to return the gold to the company and withdraw their officers from AGR’s premises. The report adds that AGR was also “instructed” by the attorney general to stop importing gold from Venezuela.
The gold arrived in Uganda in two consignments aboard planes owned by a Russian charter company, the Journal said:
On two early-March flights, at least 7.4 tons of gold with a market value over $300 million moved from Venezuela to a refinery in Uganda, say officials in Venezuela and Uganda, a foreign diplomat and Venezuelan opposition lawmakers, who have concluded Mr. Maduro’s government exported the ingots.
The gold arrived on a Russian charter jetliner in two shipments at the international airport in Entebbe, says Ugandan national-police spokesman Fred Enanga. The accompanying paperwork identified the ingots, some with stamped labels partially scratched off, as Venezuelan central-bank property, says a senior Ugandan police officer who saw the bars and documents. Flight records show the trips originated in Caracas, Venezuela.
Uganda produces very little gold, yet the precious metal has become its top export: gold shipments have exceeded coffee exports, Uganda’s traditional top export, in seven of the last 13 quarters, according to data from the Bank of Uganda. In 2018, gold was Uganda’s most valuable export, at $514.9mn, compared to coffee receipts of $436.4mn.
AGR was responsible for this, according to the Wall Street Journal. Since it began operations in 2015, it has processed and exported more than 38 tonnes of gold. Most of this gold is of questionable origin: it was “allegedly smuggled from conflict-torn eastern Congo and other African nations, according to officials with Ugandan police, the country’s Financial Intelligence Authority and regional smugglers.”
The Journal adds:
Even before the Venezuelan shipments, AGR had drawn the scrutiny of Ugandan authorities for processing gold allegedly smuggled from conflict zones in Congo, as well as from South Sudan and Zimbabwe, much of which later leaves the country as Ugandan gold, according to Ugandan police, the country’s Financial Intelligence Authority, regional smugglers and Congolese mining officials.
Sydney Asubo, executive director of the Financial Intelligence Authority, Uganda’s government body in charge of combating money laundering, says the agency reported the smuggling activities to authorities and requested prosecution. No charges have been filed, he says, pending the conclusion of an investigation of AGR by Uganda’s Inspectorate of Government over suspicions of tax evasion, smuggling, and money laundering. Ali Munira, a spokeswoman for the Inspectorate, which is charged with investigating corruption and other abuses, confirms there is an investigation but declined to comment on details.
Mr [Alain] Goetz [the company’s founder] and AGR’s [general manager] Ms [ Cherry Anne] Dacdac say they have complied with Ugandan and other laws. Mr Goetz denies there are probes. Ms Dacdac says she isn’t aware of any investigations by the Financial Intelligence Authority or Inspectorate.
When the police raided AGR’s premises on 7 March, the first consignment of gold was gone; it had been exported to the Middle East, with Turkey as its final destination. However, the second shipment of 3.6 tonnes was seized, which a senior officer said were “ingots stamped with labels identifying them as Venezuelan central-bank property”.
Later that month, President Museveni ordered the police to return the gold to AGR, according to a letter written by attorney general William Byaruhanga to the minerals protection unit. Under pressure from American diplomats who had learned about the gold, the attorney general also warned AGR not to import any more gold from Venezuela.
The president’s spokesperson told the Journal that Mr Museveni’s order came after investigators had cleared the imports. Although we now wonder if this ‘clearance’ was also the result of an order from above.
