Thread: Perth Mint sold diluted gold to China, got caught, and tried to cover it up

Perth Mint sold diluted gold to China, got caught, and tried to cover it up

Four Corners
/ By Angus Grigg, Ali Russell, Stephanie Zillman and Meghna Bali
Posted Mon 6 Mar 2023 at 4:00amMonday 6 Mar 2023 at 4:00am, updated Tue 7 Mar 2023 at 1:31amTuesday 7 Mar 2023 at 1:31am



Perth Mint is facing the potential $9b recall of diluted gold bars.
Help keep family & friends informed by sharing this article

The historic Perth Mint is facing a potential $9 billion recall of gold bars after selling diluted or "doped" bullion to China and then covering it up, according to a leaked internal report.
Key points:

• The mint started "doping" its gold as a cost-saving measure
• When it got caught for some of its gold dipping below Shanghai Gold Exchange standards, it kept it quiet
• While the gold remained above the 99.99 per cent requirement, it exceeded the amount of allowable silver in Shanghai

Four Corners has uncovered documents charting the WA government-owned mint's decision to begin "doping" its gold in 2018, and then how it withheld evidence from its largest client in an effort to protect its reputation.
While the gold remained above broader industry standards, the report estimated up to 100 tonnes of gold sent to Shanghai Gold Exchange (SGE) potentially did not comply with Shanghai's strict purity standards for silver content.
One Perth Mint insider, who asked not to be named as they could face five years' jail if their identity is revealed, says it is a "scandal of the highest level".
"I don't know if I've ever seen one this big," they say.
The mint is the largest processor of newly mined gold in the world, one of Perth's top tourist attractions and well known for producing commemorative coins to mark everything from royal weddings to a new James Bond film.
Last year alone it sold $20.3 billion in gold. It is the only mint in the world that has a government guarantee.
But in recent years the 124-year-old institution, officially known as Gold Corporation, has been plagued by a series of scandals.
WA Premier Mark McGowan had ministerial responsibility for the mint for four years until March 2021.



The mint started doping in 2018 in a bid to save money.(Getty Images/Bloomberg)Doping the gold

Gold doping is a somewhat accepted practice in the industry and is not illegal, but is high risk for refiners, as it lowers the quality of bullion by adding impurities like silver or copper.
Trace amounts of these metals are permitted, but Perth Mint's plan – to keep just within industry standard of 99.99 per cent purity – only left a miniscule margin of error.
The mint began doping its gold as a cost-saving measure in 2018, expecting to save up to $620,000 a year — a tiny fraction of its annual sales.



Perth Mint has been a pillar of Western Australia's gold industry for more than 120 years.(Four Corners: Mat Marsic)Within two years this desire to save money would put the mint at the centre of what may be one of the biggest gold scandals in Australian history.
From the outset there were signs of trouble. Just months after the doping began, the report says refinery staff identified concerns that silver and copper levels may have exceeded those allowed by the SGE.
Despite this, refinery staff continued doping the gold.

YOUTUBEThe gold industry's dirty secrets exposed
Damage control

The doping program began to unravel in September 2021. Shanghai Gold Exchange alleged two bars contained too much silver and were non-compliant with its specifications.
Fearing a major blow to its reputation, an internal investigation was ordered on the same day the complaint was received.
The investigation made clear just how much was on the line if the SGE went public.
"If SGE – Gold Corporation's pre-eminent exchange client – had made public that they had issues with Gold Corporation bars … the impact of negative public statements on the business could be very significant," the internal report said.
It then laid out just how large the problem was.
"Based on average understandings of volumes … it was possible for up to 100 tonnes of stock to be recalled from the Shanghai Gold Exchange for replacement," the report said.



Perth Mint feared a major blow to its reputation.(Four Corners: Mat Marsic)At today's gold prices, buying back that amount of bullion would cost $8.7 billion. This would then need to be transported back to Perth and recast before it could be sold again.
Financing a recall of this scale would also be difficult for the mint and would likely require support from WA taxpayers.
Shanghai exchange 'misled'

When Perth Mint went back and checked the two gold bars at the centre of the customer complaint it found one had been "red flagged" by its refinery.
The bar's purity test, known as an "assay", had failed to meet SGE's strict standards for silver, but was still above the crucial 99.99 per cent purity.
But it wasn't just one bad batch, it meant most of the gold bars during the three-year doping program were potentially non-compliant with Shanghai standards.
Crucially, the mint did not share this information with its largest client.



The mint didn't send SGE the failed purity test.(Getty Images/Bloomberg)The report claims that during a meeting on September 30, 2021, advice was sought from then-CEO, Richard Hayes, as to whether both the failed and compliant assays should be sent to Shanghai.
"CEO confirmed only the compliant assay would be provided to the customer, with the broader burden of proof to be left with the SGE to prove non-compliance," the report alleges.
On the day the failed assay was discovered, the mint immediately ceased its gold doping program.
Governance and transparency advocate, Serena Lillywhite says all the test results should have been sent to the SGE.
"I think it can be described as a cover-up, because [the mint] had a choice to disclose all the information, and in fact chose not to," she says.
"They chose a selected amount of information that was perhaps less damning to their reputation and their business practices."



Serena Lillywhite says all the test results should have been sent.(Four Corners: Mat Marsic)The mint insider agrees.
"If they've … traded bars through the SGE that are non-compliant, they'd lose their accreditation."
In the same week as this crisis was unfolding behind closed doors at the Perth Mint, it was announced that Mr Hayes would be retiring early due to illness. He did not respond to Four Corners' questions or a request for an interview.
Perth Mint confirmed it did receive a customer complaint about a small number of 1kg gold bars but that, "due to Chinese government restrictions on exporting gold from China, the customer did not return the bars … and therefore the customer's concerns could not be verified".
It said its refining methods had been enhanced since late 2021 and it was now committed to higher purity standards than the industry average.
Reputation and trust

In the end the SGE chose not to make its complaint public and accepted assurances around quality from the mint. The mint agreed certificates of assay would accompany all bars sent to the SGE in the future.
The longer-term damage to the mint's reputation stands to be far greater.
"Potentially you'll get gold buyers in the market going, 'Can we trust anything coming out of the Perth Mint? Including coins, bullion, anything?'," the insider says.
"It happened in the first place because of poor systems management and incompetence on the refining side. But once they found it, they knew what they were doing. They took deliberate actions to ensure this didn't get out."
This is the latest scandal to hit the mint, after it was investigated by the London Bullion Market Association (LBMA) in 2020 over gold purchased from a convicted killer in Papua New Guinea.
The mint was forced to adopt a "corrective action plan" after the PNG gold was revealed to have been cut with mercury and mined with the help of child labour.
The mint kept its accreditation, but the LBMA says it "reserves the right to re-visit" the issue "if new information … becomes available".
The other headache for the mint is an ongoing investigation by financial crime regulator, AUSTRAC, into its compliance with Australia's anti-money-laundering laws.
It could be facing a hefty fine, potentially running into the hundreds of millions of dollars, like those levied on Australian banks and casinos in recent years.
Watch the full Four Corners investigation on ABC iview.

Perth Mint sold diluted gold to China, got caught, and tried to cover it up - ABC News

Kazarian's gonna Kazarian

If they did it to Chine, little Investers didn't get the real gold either.

Astonishing claims emerge the Perth Mint sold up to $9B of dodgy gold to a Chinese exchange - as it's revealed the state-owned facility faces fraud and money laundering investigations and could be forced to pay the money back

• Perth Mint was 'doping' or diluting its gold product
• Shanghai Gold Exchange found some bars did not meet standards
• The mint allegedly already suspected this but kept it quiet

By BRETT LACKEY FOR DAILY MAIL AUSTRALIA
PUBLISHED: 09:15 EDT, 6 March 2023 | UPDATED: 10:19 EDT, 6 March 2023
66View comments

Up to $9billion worth of gold that the Perth Mint sold to China could be recalled after it was discovered some bars were diluted with other metals.
The WA government-owned mint, which is the largest refiner of newly mined gold in the world, started 'doping' its gold in 2018 - a process which involves mixing in silver or copper while still keeping the purity above 99.99 per cent.
While the product met widely accepted standards on the global gold market, up to 100 tonnes of bullion shipped to China potentially falls short of the more stringent standards of the Shanghai Gold Exchange (SGE).

Man cheats death after walking out laundrette beforedryer explodes
Some of the gold the SGE tested from Perth Mint exceeded the allowable silver content.
Even more remarkably, when Perth Mint was caught out not meeting the SGE standards they allegedly tried to cover it up, concerned it could affect the mint's reputation, reports the ABC's Four Corners.

+5
View gallery

Up to 100 tonnes of gold the Perth Mint sold to China's Shanghai Gold Exchange potentially does not meet it's standards

+5
View gallery

The 124-year-old Perth Mint is the biggest refiner of newly mined gold in the world

+5
View gallery

It began 'doping' or diluting it's gold in 2018, which involves mixing in copper or silver but keeping the purity above 99.99 per cent
One Perth Mint insider told the program it is a 'scandal of the highest level'.
The 124-year-old Perth Mint is Australia's biggest gold refinery with a turnover of almost $22billion last financial year.
It sold almost 20 million coins, medallions and bars to customers in more than 130 countries.
WA Premier Mark McGowan was the minister responsible for the Perth Mint for four years until March 2021.
The 'doping' program was introduced in 2018 with an expected saving of about $620,000 a year - a tiny fraction of the mint's turnover.
Documents show some internal staff raised concerns the gold bars might not meet SGE standards but the program continued.
The SGE itself first alleged in September 2021 that two gold bars from Perth Mint it had tested using metallurgical assay allegedly contained too much silver.
The doping program was immediately stopped and an internal investigation launched - which found one of those two bars had been checked before it left Perth Mint and had allegedly failed to meet SGE's standards then.
Rather than inform the Chinese exchange, Perth Mint opted to not send through the failed assay test.
The internal investigation provides an insight into why.
'If SGE – Gold Corporation's pre-eminent exchange client – had made public that they had issues with Gold Corporation bars … the impact of negative public statements on the business could be very significant,' the internal report said.
The report also noted the scale of product that could be affected.
'Based on average understandings of volumes … it was possible for up to 100 tonnes of stock to be recalled from the Shanghai Gold Exchange for replacement,' the report said.
The Perth Mint appeared desperate to avoid losing their accreditation with SGE and the damage this would bring to their reputation on global gold markets.
The mint claims that since 2021 it's refining method has been improved and it's gold is now higher purity than the industry standard.
But that isn't its only troubles.
+5
View gallery

WA Premier Mark McGowan had responsibility for the mint for four years until 2021

+5
View gallery

Perth Mint is also under investigation for potentially breaching money laundering laws
It is also separately under investigation by financial crime regulator AUSTRAC, which last year ordered the appointment of an external auditor to the West Australian government-owned corporation after identifying compliance concerns.
The auditor is examining whether Gold Corporation, trading as Perth Mint, has complied with anti-money laundering and counter-terrorism financing obligations after allegedly selling gold to persons known to have links to criminal syndicates.
It is also investigating the mint's compliance with requirements relating to the reporting of suspicious matters.
Any confirmed breach of money laundering laws could leave the mint facing heavy criminal fines which would ultimately be paid by WA taxpayers.
A Perth Mint spokeswoman said the corporation 'is required to and fulfils its obligation' to report to AUSTRAC if staff suspect a person or transaction is linked to a crime.
She said the mint had launched anti-money laundering and counter-terrorism financing remediation programs and processes to improve its engagement with customers.
'The Perth Mint acknowledges there have been instances of historical non-compliance that we are working through, including with regulators such as AUSTRAC, to rectify any shortcomings,' she said.

Perth Mint sold 'doped' gold to China and then allegedly tried to cover it up | Daily Mail Online

Kazarian's gonna Kazarian

If they did it to Chine, little Investers didn't get the real gold either.