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Blackwater USA – Daily Brief 7/24/19

Brexit

  • Boris Johnson was officially proclaimed the winner of the Conservative Party’s leadership ballot, so he will succeed Theresa May as PM, starting tomorrow. Johnson has pledged to lead the UK out of the EU by the current October 31st deadline—with or without a deal.

Venezuela

  • The Miami Herald reports that the U.S. is willing to offer Pres. Maduro guarantees that he won’t be indicted if he leaves Venezuela. And “that’s the only thing there’s room for negotiation with Maduro,” according to an unnamed senior official.
  • The Herald also had a good article calling out the global refineries that help to prop up Maduro’s government by processing its gold…pasted below.
  • The U.S. is deciding whether to renew a Treasury Dept. license that allows Chevron to keep operating four JVs in Venezuela after the initial six-month license expires on Saturday. If it does not renew the license, Pres. Maduro could—and probably would—take control of the underlying assets, though Pres. Guaido has pledged to try to protect them from falling into Maduro’s hands.
  • A bipartisan effort to give illegal Venezuelan migrants Temporary Protected Status in the U.S. failed to get enough votes in the House yesterday. Republicans worried about creating another immigration problem that needs to be solved in the future.
  • Meanwhile in Venezuela, the opposition-led National Assembly approved a law that would let Venezuela rejoin the Inter-American Treaty of Reciprocal Assistance (TIAR, en espagnol), which opposition hardliners say can be a precursor to requesting foreign military intervention to oust Pres. Maduro—hough it’s unlikely TIAR countries would actually step up to their responsibility to defend fellow members, in this case.

Iran

  • The U.S. now says the USS Boxer may have shot down not one, but two Iranian drones last week: sailors saw one go down, and the other quickly disappeared from radar after being targeted.

Afghanistan

  • Afghan officials are perturbed about Pres. Trump’s claim that their whole country “would be wiped off the face of the earth” if he really wanted to win the war there. U.S. Special Envoy Zalmay Khalilzad met Pres. Ghani for a tense meeting, in which Ghani apparently demanded a little more respect (not that he’s shown leadership deserving of it).

China

  • Huawei said it was willing to sign a “no backdoor” agreement—essentially a pledge not to use hidden means to access customer data—with any country, in order to assuage fears that its hardware is spyware.
  • Hong Kong police arrested six people, in conjunction with the violence against demonstrators at a train station on Sunday.

U.S.

  • The Senate confirmed Mark Esper as the new SecDef by a vote of 90-8, and he was quickly sworn in. The job has been open for seven months—the longest the U.S. has gone without a SecDef since the position was created.
  • Special Counsel Robert Mueller made a late request for his deputy, Aaron Zebley, to be sworn in to testify before the House Intelligence committee today. CNN expects a “blockbuster” hearing.

Libya

  • Several EU countries agreed to end the detention of migrants in Libya, after the July 5th bombing of a detention center. Detention centers like that are where migrants apprehended on the Mediterranean Sea were being sent—I’m not sure where they’ll go instead now.

DRC

  • Twin ADF attacks in North Kivu’s Ebola zone killed at least 12 civilians, though they don’t seem to have targeted health workers.

These are the refineries processing Venezuela’s ‘blood gold’ — and helping Maduro stay in power (Miami Herald)

In a high-security refinery in Antwerp, Belgium, two men pour molten gold — heated to more than 2,120 degrees Fahrenheit — into molds roughly the size of a smartphone.

Looking at the glowing gold bars — coveted by banks, jewelers and technology companies — there’s no way to tell where it came from or how much blood was spilled to extract it.

But according to documents leaked by Aruban customs, Venezuelan gold — much of it mined illegally and supporting an increasingly autocratic regime in Caracas — is working its way into the global gold supply, ending up in the United States, Europe and the Middle East.

Thanks to arcane rules, the gold is hopscotching across the Caribbean and into world-class refineries thousands of miles away that are sometimes inadvertently laundering that “blood gold,” obscuring the devastating impact and the crimes surrounding its origins.

Washington has been ratcheting up the pressure on Venezuela as it tries to force leader Nicolás Maduro out of office. As part of that effort, in March, the U.S. Treasury Department rolled out sanctions against buying gold from Venezuela’s state mining company, Minerven.

But experts think sanctions could have a perverse effect, likely increasing mineral trafficking by criminal gangs and armed groups. This means the United States might have done a favor to organizations such as the National Liberation Army (ELN) and dissidents of the Revolutionary Armed Forces of Colombia (FARC), both on the U.S. terrorism list. Meanwhile, Venezuelan gold continues to reach international markets, including the United States.

Transit countries, often nations that export serious amount of the metal but don’t have any deposits of their own, are a key stepping stone on the path toward obscuring the origins of gold.

The Caribbean Dutch islands of Curaçao and Aruba belong to this category.

According to government sources and leaked documents, at least 130 metric tons of gold left Curaçao and about 30 metric tons left Aruba between 2014 and 2018. Ninety percent of it came from Venezuela. While the imported gold seemed to have its paperwork in order, island officials said the gold’s legal status was dubious at best.

Those documents also confirm that the gold is entering the island nations from Venezuela on private flights, sometimes hopscotching between the islands, further obscuring its route.

But ultimately the gold is shipped out on commercial flights — en route to refineries in the United States, the United Arab Emirates, Switzerland and Belgium — without any indication that it was mined in Venezuela.

And once it’s mixed with gold from other countries, it’s virtually impossible to know its origin.

It’s difficult to know who’s buying this Venezuelan stealth gold from the Dutch Caribbean. But leaked documents from Aruban customs identified a company in Dubai and two gold traders in Antwerp’s “Diamond District” — one of the most important diamond-trading locations in the world.

One of those companies is Tony Goetz NV, among Belgium’s most prominent gold traders and the only one that has a smelting facility in the country. According to the customs documents, the firm bought 46 pounds (21 kilos) of gold in December 2016.

Dressed casually and wearing leather loafers, the owner of the Antwerp refinery, Sylvain Goetz, shows a visitor around the factory that processes about 220 pounds of gold per day. Pointing to a neat row of gold ingots that will be stamped with the company’s logo, he said: “It’s not going to get any better than this. This is really pure gold.”

Asked about its gold imports from the Dutch Caribbean, the company says it doesn’t know whether the 2016 shipment ever took place. Goetz acknowledges that his company did buy gold from the islands up until three years ago, but says he no longer buys gold from Venezuela or the Dutch Caribbean, precisely because the origin of that gold is so difficult to determine.

“We decided a few years ago to stop cooperating with offshore areas or so-called transit countries,” he said.

In 2017, the Venezuelan government asked Goetz to refine about three tons of gold. But in a letter to the Venezuelan Central Bank, the company denied the request, citing the lack of paperwork and overall transparency.

“We have grounded reasons to believe the [gold] supply would not meet the requirements of our due diligence policy,” the company wrote to Venezuela’s Central Bank. “This decision had to be made now in order to avoid reputational damage to our company.”

The company’s lawyer, Bert Luyten, also confirmed that in 2017 the board decided not to import any more Venezuelan gold.

Argentor Essayeurs, another Belgian gold trader a few blocks away in the Diamond District, also appeared in the leaked Aruban customs documents. Between January 2016 and December 2017 the company imported $6 million worth of Dutch Caribbean gold. Director Gianni Proost does not deny that the company traded through Aruba and Curaçao, but says it ceased to do so about a year ago.

“The company we bought from said that the gold came from Guyana and Colombia, but when we saw reports about Venezuelan gold and started to ask questions, I did not find their evasive answer very convincing and stopped our collaboration,” Proost said. “This remains a very opaque world.”

A more clear-cut case is that of GoetzGold in Dubai. The company is owned by Alain Goetz, the younger brother of Sylvain Goetz. According to lawyers for both companies, the businesses in Dubai and Belgium are completely separate.

The customs documents show that between October 2017 and October 2018 GoetzGold purchased 24 tons of gold from the Venezuelan Central Bank, according to an investigation published earlier this year by RunRunes, a Venezuelan investigative journalism website.

A lawyer from GoetzGold said in an email that every shipment of gold from Aruba and Curaçao comes “from legal, certified dealers and is also checked by customs authorities.” But the company didn’t say if it had bought Venezuelan gold.

The amount of gold sent to Belgium and Dubai is pocket change compared to the quantities sent to Switzerland, where about 75 percent of the world’s gold is refined. According to Swiss customs, the country imported 88,383 pounds (40,090 kilos) from Curaçao between January 2015 and April 2019, with a customs value of 1,292,336,974 Swiss Francs, about $1.3 billion.

The four biggest Swiss refineries belong to the most powerful actors in the gold industry. One of them, Valcambi, did not answer questions, saying any response would contain “sensitive company information.”

Argor-Heraeus said it acts in accordance with Swiss legislation and international standards, adding that it is “very committed to transparency, sustainability and respect for human rights.” It did not, however, answer specific questions concerning gold from Venezuela, Aruba or Curaçao.

The other two firms, PAMP and Metalor, said they are not buying gold from these countries.

ROLE OF THE NETHERLANDS

The Netherlands is a signatory to a number of treaties and United Nations’ guidelines that govern gold supplies and aim to prevent human rights abuses in the mines and keep “conflict” gold out of the global supply chain. In 2017, a so-called “gold covenant,” monitored by the Dutch Social Economic Council, brought together the state, corporations and non-governmental organizations to agree to a voluntary behavioral code guaranteeing that companies acquire as much gold as possible from ethical sources.

And the Organization for Economic Cooperation and Development (OECD) — an intergovernmental bloc of 36 countries, including the Netherlands — provides guidelines to members on dealing with conflict minerals.

When it comes to Venezuelan gold, “political violence, reports on the sale of gold reserves in breach of sanctions, armed group involvement in the mining region and cross-border gold trafficking: these are all reasons for extra due diligence,” the organization said in an email, adding that companies should think twice before buying Venezuelan gold.

Despite these initiatives, the Netherlands has been accused of insufficiently addressing its role in the Venezuelan gold trade that contributes to human rights violations.

Ronald van Raak, a member of the Dutch Parliament, was astonished that Venezuelan gold was getting whitewashed by its passage through Aruba and Curaçao.

“Even though they have autonomous governments, the Netherlands is responsible for good governance on the islands,” he said. “We cannot, as a kingdom, condemn the human rights violations of the Maduro government but also be allowing [Venezuelan] corrupt elites to enrich themselves through the same kingdom.”

AIR GOLD

One of the key players in this global game of gold obfuscation is the commercial airline industry that carries the metal.

About 5,000 miles from the conflict-ridden mining pits in Venezuela, a significant share of that gold flies into Amsterdam Airport Schiphol, after having bounced through the transit zones in the Caribbean.

Officials with the Royal Dutch Airlines (KLM) refused to give an interview but said via email that they “don’t agree with the characterization that large amounts of gold on KLM flights are transported via Curaçao to the Netherlands.”

KLM’s spokesperson later did acknowledge that “three shipments took place in 2018 and two in 2019, which were taken through official channels and were completed with the approval of all authorities.” Due to the “sensitive nature of the shipments,” the airline, which is majority owned by the state, declined to say more.

However, Dutch customs officials say commercial airlines shipped far more gold than that. In an email, the customs agency said that from 2015 through 2018, there was a total of 310 gold shipments from the Free Trade Zone in Curaçao to Schiphol, totaling 36,086.5 kilos (79,000 pounds) worth nearly $1.5 billion dollars. The majority went to Switzerland and Turkey, it said. No statistics from Aruba were available.

In 2021, a new piece of European Union legislation with more teeth will come into force. It will require corporations active in the gold sector to report on the origins of their gold. Even that will be difficult to enforce, since gold gouged from the Venezuelan rainforest is often carried into neighboring countries and shipped through the Caribbean, disguising where it was mined.