Venezuelan gold behind Uganda’s best ever monthly exports

Ugandan gold refinery helped Venezuela sell off its gold reserves in a scheme designed to evade U.S. sanctions

In March, Uganda’s merchandise exports rose sharply to $604.4m (revised) up from $296.3m (revised) the previous month. The surge resulted from a spike in gold exports to their highest level ever.

Data from the Bank of Uganda showed that gold exports increased by 421.5% from the previous month to $363.4m. That figure — which exceeds what Uganda typically earns from its monthly exports — was much bigger than the previous all-time high of the precious metal’s shipments, which was $120m in June 2017. Thanks to the Wall Street Journal, we now have an explanation for the spike.

The unusual gold amounts 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. Quoting Ugandan police and other officials, the WSJ article says 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 evade U.S. sanctions on the Venezuelan government led by President Nicolás Maduro. Later, a police investigation into the “unusually large consignments” seized 3.6 tons of the Venezuelan gold in a raid on AGR. But the investigation was stopped by President Museveni who asked the police to release the gold back to the company and withdraw its 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 chartered company, notes the Journal:

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 commodity: gold shipments exceeded coffee exports, Uganda’s traditional top export commodity, in seven of the past 13 quarters, according to Bank of Uganda data. In 2018, gold was Uganda’s most valuable export at $514.9m compared to receipts from coffee of $436.4m.

AGR was responsible for this, said the Wall Street Journal. Since it started operations in 2015 it has processed and exported more than 38 tons of gold. Most of this gold has questionable origins: 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 March 7, the first consignment of the gold was gone; it had been exported to the Middle East with Turkey listed as its final destination. Still, it seized the second consignment of 3.6 tons which a senior officer says was “ingots stamped with labels identifying them as Venezuelan central-bank property”.

At the end of that month, President Museveni instructed the police to release the gold back to AGR according to a letter the attorney general, William Byaruhanga, wrote to the minerals-protection unit. Due to pressure from American diplomats who had found out about the gold, the attorney general also warned AGR against importing more gold from Venezuela.

Frontpage of Uganda's New Vision newspaper on March 10
The New Vision’s frontpage on March 10 2019, leading with a story on the Venezuelan gold seized by police at African Gold Refinery Ltd. in Entebbe.

The president’s spokesperson told the Wall Street Journal that Mr Museveni’s order came after investigators cleared the imports. Clearly, those were not police investigators nor had they shared their findings with its investigations unit.