The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), has sanctioned Alain Goetz, the African Gold Refinery in Uganda, and a network of companies involved in the illicit movement of gold valued at hundreds of millions of dollars per year from the Democratic Republic of the Congo (DRC).
According to the Press Releases issued by the treasury, the illicit movement of gold provides revenue to armed groups that threaten the peace, security, and stability of the DRC.
‘’Today’s action was taken pursuant to Executive Order (E.O.) 13413, as amended by E.O. 13671, which targets, among other things, individuals and entities involved in activities that threaten the peace, security, or stability of the DRC or that undermine democratic processes or institutions in the DRC. Our action demonstrates the U.S. commitment to disrupt the illicit mineral trade and encourage mining sector transparency’’, reads in part the release.
The Release further reads;
More than 90 percent of DRC gold is smuggled to regional states, including Uganda and Rwanda, where it is then often refined and exported to international markets, particularly the UAE. In eastern DRC, where there are approximately 130 active armed groups, the gold trade is a major driver of conflict. A network of armed groups, smugglers, and companies generates illicit revenue from the gold industry through forced labor, smuggling, or by extorting payments from miners. These actors use revenue from gold to finance armed conflict and enrich themselves while depriving the DRC of tax revenue and disregarding the environment and local communities.
“Conflict gold provides the largest source of revenue to armed groups in eastern DRC where they control mines and exploit miners,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Alain Goetz and his network have contributed to armed conflict by receiving DRC gold without questioning its origin. Treasury has been very clear: global gold markets, at every step of the supply chain, must engage in responsible sourcing and conduct supply-chain due diligence.”
CONFLICT MINERALS COMPLIANCE
The United States supports private sector adoption of supply chain due diligence procedures in mineral supply chains, including ones for precious metals and gemstones. Today’s action shows that given the multiple threat finance concerns throughout these supply chains, due diligence is a key tool for the private sector to mitigate risks from U.S. and international sanctions regimes.
Additionally, U.S. companies that are required to file a Conflict Minerals Report to the Securities and Exchange Commission must exercise due diligence on the source and chain of custody of their conflict minerals, including gold. The due diligence measures must conform to a nationally or internationally recognized due diligence framework, such as the Organization for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
Today’s action is also in line with the United States’ continued support for international recognition of the importance of supply chain due diligence as captured by UNSC Resolution 1952 (2010) and the commitments by regional states and the International Conference on the Great Lakes Region (ICGLR) set out in the 2010 Lusaka Declaration to Fight the Illegal Exploitation of Natural Resources in the Great Lakes Region.
ALAIN GOETZ (GOETZ)
Goetz is a businessperson from Belgium who operates the African Gold Refinery (AGR) in Uganda, as well as companies in the UAE that receive illicit gold from mines in regions of DRC that are controlled by armed groups, including the Mai-Mai Yakutumba and Raia Mutomboki that are involved in destabilizing activities in South Kivu, DRC.
Goetz’s gold network has extensive refining and transport capabilities and sources gold from DRC, Kenya, South Sudan, and Tanzania. In 2014, Goetz incorporated AGR and has maintained ownership or control of AGR since then through his majority ownership of an offshore holding company in the Seychelles, AGR International Ltd., which holds virtually all of the shares of AGR, making Goetz the overall beneficial owner and/or shareholder of AGR. Since establishing AGR, Goetz has held multiple leadership positions in the company, including chief executive officer and director, and has been involved in AGR’s gold trading activities. In 2018, Goetz acknowledged that AGR refines about 150 kilograms of gold from the DRC per week, or approximately 8.5 tons per year, valued at $496 million. This amounts to almost all of Uganda’s total gold exports in 2018, which were approximately 10 tons and valued at $515 million.
Goetz was designated pursuant to E.O. 13413 for being a leader of AGR, for having acted or purported to act for or on behalf of, directly or indirectly, AGR, and for being responsible for or complicit in, or having engaged in, directly or indirectly, support to persons, including armed groups, involved in activities that threaten the peace, security, or stability of the DRC or that undermine democratic processes or institutions in the DRC, through the illicit trade in natural resources of the DRC.
AFRICAN GOLD REFINERY (AGR)
Since 2016, AGR has sourced illicit gold from mines in regions of DRC that are controlled by armed groups, including the Mai-Mai Yakutumba and Raia Mutomboki that are involved in destabilizing activities in South Kivu, DRC. AGR has a refining capacity of 219 tons per year and is considered one of the largest gold refineries in Africa, after refineries in South Africa and Ghana. AGR and Goetz acknowledged that a share of the gold AGR refines comes directly from mines in the DRC and has taken over a significant portion of the market for gold trafficked from the DRC.
AGR was designated pursuant to E.O. 13413 for being responsible for or complicit in, or having engaged in, directly or indirectly, support to persons, including armed groups, involved in activities that threaten the peace, security, or stability of the DRC or that undermine democratic processes or institutions in the DRC, through the illicit trade in natural resources of the DRC.
The following entities were also designated pursuant to E.O. 13413 for being owned or controlled by, or for having acted or purported to have acted for or on behalf of, directly or indirectly, Alain Goetz:
Agor DMCC is a UAE-based gold refinery that imports gold from AGR and is owned or controlled by Goetz.
AGR International Ltd. is a Seychelles-based holding company owned or controlled by Goetz.
Alaxy is a Belgium-based management company that is owned or controlled by Goetz.
CG – Vastgoed Invest is a Belgium-based holding company owned or controlled by Goetz.
Goetz Gold LLC is a UAE-based gold trading company that is owned or controlled by Goetz. In 2020, Goetz rebranded Goetz Gold LLC to PGR Gold Trading LLC.
Premier Gold Refinery LLC is a UAE-based gold refinery that imports gold from AGR and is owned or controlled by Goetz.
Orofino is a Belgium-based holding company that is owned or controlled by Goetz.
WWG Diamonds is a Belgium-based holding company that is involved in mining activities and is owned or controlled by Goetz.
As a result of today’s action, all property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC or otherwise exempt, OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. U.S. persons may face civil or criminal penalties for violations of E.O. 13413.
The power and integrity of OFAC sanctions derive not only from its ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897.