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Illegal gold flowing through FL is ‘direct threat’ to US national security, Rubio says

Miami's gold trade fuels guns, gangs and profit in Latin America, where illegal mining is widespread and controlled by narco-traffickers and other criminals. The outlaw mines are poisoning workers and fragile rainforests. (Miami Herald/TNS)

At a U.S. Senate subcommittee hearing Thursday, Sen. Marco Rubio called illegal gold mining in Latin America a “direct threat” to U.S. national security that has become “far more lucrative than drug trafficking” — and noted that billions of dollars worth of the illicit precious metal is entering American consumer markets through Miami.

“There is a major human toll if we do not get control of this problem,” said Rubio, citing a cornucopia of evils unleashed by illegal mining including human trafficking, corruption, disease, mercury poisoning, drug smuggling, widespread deforestation in the Amazon basin and the enrichment of powerful criminal groups and rogue governments like Nicolas Maduro’s regime in Venezuela.

But American consumers are scooping up gold with little awareness of where it comes from or who gets hurt. The metal is used not only by the jewelry industry but also in electronics such as smartphones and tablets. Rubio said 58% of imported U.S. gold comes from Latin America. Miami International Airport, the closest U.S. port to Latin America, has long been the nation’s leading gateway of gold.

“Unfortunately, my home community … has become a major entry point for this activity,” Rubio said. “It’s refined, it’s made into jewelry or placed into our electronics and then it’s sold to U.S. consumers — much of it, if not all of it, untraceable.”

To feed the growing demand for gold, impoverished miners across the Amazon are tearing down jungle in protected areas and using toxic mercury to separate metal from rock. The outlaw miners live in dangerous camps rife with malaria, sexually transmitted infections and other diseases. Women and children are forced into the sex trade to serve them.

A 2018 Miami Herald series called “Dirty Gold, Clean Cash” spotlighted the growing crisis. The series, a finalist for the Pulitzer Prize, showed how gold has become the secret ingredient for Latin American narcotraffickers, armed groups and other criminals who bankroll illicit mining in order to launder money. The Herald’s work focused on a successful $3.6 billion money-laundering case brought by federal prosecutors against Miami-based precious metals traders working for a Dallas company that sold gold to nearly 70 Fortune 500 companies, among them Apple, General Motors and IBM. Prosecutors also indicted Peruvian gold traders they alleged had ties to the drug trade, including a prominent Lima businessman known by the nickname Peter Ferrari.

After the series’ publication, Rubio called on the Trump administration to investigate money laundering in the gold trade.

At the hearing, Rubio said he wished to “acknowledge the investigative reporting of the Miami Herald, which shined light on this issue last year and in particular how it related to how illegally mined gold was being transacted out of South Florida.”

Florida’s senior Republican senator chairs the Senate Foreign Relations Subcommittee on Western Hemisphere, Transnational Crime, Civilian Security, Democracy, Human Rights, and Global Women’s Issues.

Rubio said he hopes a bill he sponsored with Democratic Sens. Ron Wyden of Oregon and Sheldon Whitehouse of Rhode Island can make life more difficult for traders in illegal gold. Called the Corporate Transparency Act, the legislation would require anonymous shell companies and limited liability companies, often used by fraudsters and criminals to hide their assets, to disclose their true owners to the U.S. Treasury Department.

A version of the legislation — which would better enable law enforcement to “follow the money” — passed the House in October.

The hearing saw testimony from five officials at the State Department; the Agency for International Development; Immigration and Customs Enforcement; and the FBI. Each spoke to the destructive and wide-ranging effects of illegal gold mining, focusing especially on the gold-rich nations of Peru, Colombia and Venezuela. Their testimony also delved into the extensive involvement of U.S. companies in the industry.

“Transnational criminal organizations use often-witting U.S. businesses to exploit U.S. regulations and export illegally extracted gold to the United States to launder billions of dollars of illicit proceeds from criminal operations in Latin America,” said Regina Thompson, a deputy assistant director with the FBI.

Thompson said illegal mining has “boomed” over the past decade as criminal groups recognized the benefits of investing in the lucrative and shadowy gold industry. She cited the involvement of Mexico’s violent Sinaloa cartel, as well as two armed Colombian groups, the National Liberation Army and the Revolutionary Armed Forces of Colombia, both designated as terrorist groups by the United States.

Unlike cocaine, criminals can easily make illegally mined gold appear legitimate by bribing officials to produce false mining titles and customs paperwork. The metal is then “virtually impossible” to trace, said Patrick J. Lechleitner, ICE’s assistant director for International Operations and Homeland Security Investigations.

Experts now say illegal gold earns more profit for criminal groups than cocaine. The narcos use their drug money to buy and sell gold, giving them cover as legitimate businessmen. In Colombia, the figure generated by illegal mining is estimated at $2.4 billion, according to figures presented at the hearing. Other precious minerals such as coltan, used in electronics, are also exploited by criminal groups.

The ill effects of illegal mining go beyond transnational crime. At ground level, subsistence miners are invading protected national parks in the Amazon, tearing down the jungle at an unprecedented rate and poisoning waterways with mercury.

In Peru’s largest gold mining region, an area “seven times the city of Miami,” has already been deforested, said Richard Glenn, a deputy assistant secretary at the State Department’s Bureau of International Narcotics and Law Enforcement Affairs.

Gold is also valuable for countries cut off from international markets by sanctions.

Earlier this year, el Nuevo Herald reported that a consortium led by Venezuelan President Maduro is pillaging the country’s mining industry. Sources say the operation produces more than $1.5 billion per year for Maduro and his inner circle. The funds are crucial to Maduro’s regime, which needs to keep the military loyal at a time of political upheaval but can no longer depend on Venezuela’s self-destructing oil industry. In partnership with an international group of journalists, the Herald documented how some of that illegal Venezuelan gold is smuggled into Miami through Colombia, Aruba and Curacao. Two Venezuelan nationals recently pleaded guilty after being arrested at Fort Lauderdale Executive Airport with $5 million worth of illegal gold hidden in a private plane.

Carrie Filipetti, a deputy assistant secretary at the State Department’s Bureau of Western Hemisphere Affairs, said 90% of people working in one of Venezuela’s mining regions had unsafe levels of mercury. She said the health of women and children living in the area was also suffering, and that rates of AIDS and HIV are spiking.

As Maduro muscles in on the mining trade, Filipetti said, violence between miners and the military has erupted, leading to “countless mass graves for an unknown number of victims.”

Nonprofit groups have made efforts to introduce sustainable mining practices in Latin America, reforest damaged areas and raise awareness in the United States about so-called “blood” gold. And Peru recently shuttered its largest illegal mine, a 40-square-mile wasteland gouged from what was once old-growth Amazon forest. Known as “Plan Mercury,” the government operation has led to a severe economic slowdown in the mining-dependent province of Madre de Dios, as well as a surge in crime, illustrating the difficulties political leaders face in restricting the gold trade.

Rubio said Thursday’s hearing was important to get the major U.S agencies involved in combating illicit mining on the record about what they’re doing to combat the problem, and what challenges remain.

“We need to do what we can on our end to make it harder to bring (gold) in here, and having South Florida being an entry point for so much of it is a concern to me,” Rubio said in an interview after the hearing.

While Rubio focused on how law enforcement and foreign diplomacy could combat illegal mining, Sen. Ben Cardin, a Maryland Democrat and the subcommittee’s ranking member, drew attention to the complicity of U.S. companies that use gold.

Cardin said those companies should be subject to more scrutiny and transparency in their supply chains — and even suggested Congress might pass a ban on gold imports, something he acknowledged could violate trade agreements and hurt the economy.

“If we can’t get this right, we will look for other ways to deal with this,” Cardin said. “Quite frankly, I don’t believe we have the cooperation of the commercial entities in this country. I don’t think they share enough concern about where their revenues are going. They look more as to their own profitability rather than what they are contributing to.

“We’ve identified a problem,” he added. “I don’t know if we’ve identified an answer.”


© 2019 Miami Herald

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