Five financial institutions concentrate illegal gold trade

Five financial institutions concentrate illegal gold trade

Gold extracted from clandestine mines is legalized in the financial system by a small group of institutions, according to surveys and investigations into the illegal trade of the precious metal in Brazil.

Suspicions fall on five DTVMs (Distributors of Titles and Securities), a type of financial institution that can specialize in buying and selling financial gold and operates with authorization from BC (Central Bank). When contacted, 3 of the 5 distributors denied irregularities, and 2 did not respond (read more below).

DTVM is a vital link in the chain of legalization of gold taken from indigenous lands and reserve areas. It is in these companies that the illegal prospector can present a forged mining permit and leave with the invoice that makes the product legal to be transported and traded.

One of the places that concentrates DTVMs and other companies dedicated to the sector is Itaituba (PA).

The Gold Bulletin, for example, identified that practically seven tons of illegal gold produced between January 2021 and June 2022 were “heated” by five DTVMs and a laboratory. The researchers do not disclose the names, because the companies are under investigation by different authorities.

The survey, which consolidates data since 2019, is signed by researchers Bruno Manzolli and Raoni Rajãoe and published by CSR/UFMG (Remote Sensing Center of the Federal University of Minas Gerais.

The methodology, created in partnership with the Federal Public Ministry, makes it possible to trace the flow of gold, from who is responsible for the original mining title to who makes the first tax payment, that is, the first buyer.

In this most recent period of a year and a half, the conclusion of this survey is that at least 30% of the total 158 tons produced in Brazil is irregular, with 35.7 potentially illegal tons and another 10.5 illegal tons.

Three cities in Pará, Itaituba, Cumaru do Norte and Novo Progresso accumulate 98% of the 10.5 illegal tons. Itaituba appears in first place, with 75% of the total.

Another survey that identified the concentration of suspicious operations in a small number of institutions was the work “Raio X do Ouro: More than 200 tons can be illegal”, by Instituto Escolhas.

The document highlighted that in the Amazon the businesses of clandestine prospectors were concentrated in four DTVMs, and named F.D’Gold, OM (Ourominas), Parmetal and Carol4.

Between 2015 and 2020, says the text of the document, they would have moved a third of the entire volume of gold with evidence of illegality detailed in the study, or 79 tons. “This means that 87% of their operations are doubtful”, states the study.

At the end of the analyzed period, says the survey, a fifth DTVM would have started to move gold with signs of irregularities, the Fênix.

The owner of FD Gold, politician and businessman Dirceu Santos Frederico Sobrinho, was even arrested in a PF investigation into illegal gold.

Sobrinho was a member of the PSDB and, in 2018, ran as first alternate for Senator Flecha Ribeiro, for the state of Pará. In May of last year, he assumed that F.D’Gold was the owner of 78 kg of gold seized by the Federal Police, in Sorocaba, in the interior of São Paulo. The cargo was in suitcases and attracted attention because it was being escorted by military police from the state of São Paulo. Nephew assured the gold was legal

In September, however, he was arrested in a blitz by the São Paulo Military Police. He had a temporary arrest warrant issued by the Federal Police of Rondônia for being suspected of illegal mining in the Amazon.

Based on data from Instituto Escolhas, Ibram (Brazilian Mining Institute) requested an investigation from the CVM (Comissão de Valore Imobiliários). The request was leaked last January, after the humanitarian crisis of the Yanomamis gained worldwide prominence.

In the Federal Supreme Court, a lawsuit authored by the PV is being processed to question an excerpt from the DTVMs law regarding the acquisition of gold produced in mining areas.

According to the party, the norm reduces the liability of distributors for irregularities related to the origin of the ore, by allowing them to buy the metal based on the principle of good faith, based exclusively on information provided by the sellers.

On Monday (6), Minister Gilmar Mendes, rapporteur for the process, requested information from the National Mining Agency and the Central Bank on the matter before a decision is reached.

OTHER SIDE: DTVMs deny wrongdoing and question study that points to evidence of irregularities

In a note sent to Sheet, Fênix’s press office declared that there was a mistake in relation to its inclusion in the complaint presented to the CVM and says that it is not being investigated. The company points out that the study by Instituto Escolhas brings “inconsistent and inconclusive information against Fênix DTVM, which even led to a lawsuit against it”.

“The company reinforces its commitment to compliance and legality, acting within the strictest governance and compliance standards to ensure that all gold acquired comes from areas with environmental and mining ballasts and is available to the responsible authorities to collaborate with any possible investigation.”

The OM also stated in a note that it does not condone illegal mining and violations of the environment, whether in the Amazon or anywhere in Brazil. The company also says that it was not notified by the CVM, but that if called, it is fully interested in demonstrating the legality of its operations, and also questioned the Escolhas study.

“It is important to highlight that the study by Instituto Escolhas is sponsored by Ibram, an association that brings together the largest multinational mining companies in the country, including the one that caused the environmental and social disaster of Mariana and Brumadinho, it is totally generic, inconclusive and partial”, says the note.

“It should also be noted that the generic and inconclusive content of the study is already being legally challenged, as well as Ibram and Instituto Escolhas will be criminally questioned for slandering and defaming the honor of the company OM DTVM on a national network, imputing a criminal act to it without any proof.”

In the opinion of the OM, the multinationals that export Brazilian gold should also be subject to BC and CVM rules, and that Brazil needs to debate whether it would not be better to transform gold from any exploration regime in the first acquisition 100% into a financial asset .

Parmetal also highlighted that it was not notified by the CVM, and reinforced that its procedures are in accordance with BC determinations.

“It is worth noting that we do not agree with the situation of neglect with the Yanomami indigenous people or with any other ethnic group. Just as we adopt conduct contrary to illegal mining present in quilombola areas, conservation units, indigenous lands or any other location where mining is not legally possible. permitted by the National Mining Agency and licensed by the competent environmental agency”, states the DTVM text.

A Sheet made contact with the main office of FD’Gold and was informed that there was no one able to respond to the report, nor would it be possible to intermediate a contact with the owner. Carol 4 did not return to the report until the publication of this text.

Wanted, Ibram and Instituto Escolhas declined to comment on the criticism. The CVM advisory stated that the entity does not comment on ongoing procedures.

Marcelo Rocha collaborated

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