Investigation Exposes Dubai As Global Capital of Smuggled Gold

Empire Diaries Desk

gold-biscuits
‘All that glitters is not gold’, William Shakespeare wrote in Merchant of Venice (Photo: Istara/ Pixabay)

July 9, 2020, New Delhi: The dazzling city of Dubai is often seen as a dream destination, a heavenly getaway or a businessman’s wonderland. Yet, the West Asian city’s dark financial underbelly is as notorious as its reputation for hosting most wanted criminals such as Dawood Ibrahim.

A new, scathing investigation has completely exposed Dubai as the undisputed global capital of illicit gold smuggling. More significantly, the probe has revealed that India is among the top importers of the smuggled, illicit gold that Dubai offers to the world.

The investigation, titled ‘Dubai’s Role in Facilitating Corruption and Global Illicit Financial Outflows’, was carried out by a team of investigators led by Matthew Page and Jodi Vittori from the US-based think tank Carnegie Endowment for International Peace.

 

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GANGSTERS’ PARADISE

Corrupt and criminal actors from around the world operate through or from Dubai,” the investigators conclude in their damning findings, in which they have looked at all aspects of financial fraud that takes place in the popular UAE super-city.

“Afghan warlords, Russian mobsters, Nigerian kleptocrats, European money launderers, Iranian sanctions-busters, and East African gold smugglers, all find Dubai a conducive place to operate. Secretive Dubai often rebuffs outside attempts to discern whether kleptocrats and criminals are buying property or laundering money through the emirate,” the probe report concludes.

 

A MAGNET FOR CONFLICT GOLD

On gold smuggling, the investigators found that Dubai is a magnet for artisanally mined gold – technically known as ASGM (artisanal gold mining). And that ASGM gold enters Dubai often from some restive African countries where artisanal gold is known to fuel domestic conflict.

“Now one of the world’s largest gold hubs, Dubai is a place to launder artisanally mined gold, especially from conflict-prone parts of East and Central Africa,” writes the investigation unit. “Opaque business practices and regulatory loopholes allow this laundered gold to enter world markets on a massive scale.”

The UAE’s tactically relaxed policies on the in-and-out movement of gold have made Dubai a favourite destination for African exporters looking to launder “conflict gold”. These exporters include armed groups from DR Congo, Sudan, Central African Republic and some Sahel nations. In fact, this trend fuels and prolongs a number of conflicts in Africa.

dubai-night
Is Dubai’s spectacular skyline only a facade? (Photo: Skeeze/ Pixabay)

THE ROUTE

How exactly the artisanal gold travels from the disturbed African countries into the heart of a glitzy Gulf city is intriguing, going by the probe’s findings.

“Gold travels to Dubai from all regions of Africa – basically from anywhere with an airport,” the investigators write. Gold headed for the UAE travels mostly by air. Most of that gold is “hand-carried by individual couriers”, who generally carry it in the range of 2kg to 20kg.

Till before the coronavirus pandemic, Dubai airport used to be the world’s busiest one by passenger volume. Top African capital cities are well connected with Dubai via direct flights. “These flights are often under five hours in duration and generally cost less than $500, meaning a gold courier can reach Dubai in a single day’s travel for the cost of approximately 10-12 grams of gold,” the probe says.

It is hardly ever debated why Dubai does what other gold hubs won’t do. It accepts dubiously collected ASGM gold from producer countries, something which other gold hubs avoid.

The investigation says, “An analysis of the UAE’s imports in 2016 showed that at least 46% of its gold supply came from countries that would be red-flagged by the OECD as being conflict-affected or high-risk countries had their country of origin been recorded rather than the country through which the gold transited.

“For example, gold from DR Congo and South Sudan are commonly trafficked ASGM gold hand-carried into Dubai that is almost always sold in the emirate’s gold souk rather than by major refineries.”

The sourcing story of Dubai’s gold brings us to the topic of rising gold prices in recent times. Although various analyses are given out, will it be too wrong to speculate that Africa-to-Gulf airlines routes drying up due to pandemic-related lockdowns could be a key reason behind the spike it prices?

 

INDIA IS A MAJOR IMPORTER OF CONFLICT GOLD

Data put together by the Carnegie team shows that Switzerland and India imported a total of more than 200 tons or just over $8 billion in UAE gold in 2016. Albeit, we have to presume without evidence yet that the countries buying Dubai’s dirty gold are doing so unwittingly.

Dubai’s penchant for amassing illicit or conflict gold from disturbed places and through dubious routes, and then repackaging it to pompously export it around the world, reminds one of the classic one-liner from William Shakespeare’s Merchant of Venice – “all that glitters is not gold”.

In the sparkling city of awe-inspiring skyscrapers, caught between red deserts and a tranquil sea, the gold of Dubai does glitter, but at what cost? Will its big-time importers such as India take note and shut out this dirty gold for good?

 

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