DUBAI: Dubai’s biggest gold refiner is following international guidelines to prevent underground trade in the metal, an independent audit has found after allegations of illicit dealing damaged the emirate’s image as a major gold market.
The audit by global accountants Grant Thornton, published this week, found the Kaloti Group took the necessary precautions to avoid abuses during the six months to March 31 this year, by monitoring its sources of gold and checking its financial transactions.
The guidelines, followed by refiners around the world, are designed to stop human rights abuses and underground trade in gold by African warlords. Kaloti commissioned Grant Thornton to conduct the audit after reports by Britain’s Guardian newspaper and the BBC in February alleged the group had failed to examine suspicious deals, for example by accepting 2.4 tonnes of gold in over 1,000 deals with customers who provided no paperwork.
The group denied the reports, which referred to the period before the Grant Thornton audit. But the negative publicity was unwelcome for Dubai’s gold trade, with some foreign customers and banks becoming more cautious about dealing with the emirate, according to industry sources.
“Initially there were negative reactions from some stakeholders. Some became more reluctant to work with us, or to increase the value of contracts,” Munir Al Kaloti, president and founder of Kaloti, said.
Kaloti said business had now returned to normal. But the practice of Dubai refiners paying cash for large over-the-counter purchases of gold has largely ended in the wake of the controversy.
Dubai’s position between Africa and the world’s two biggest centres of gold demand, China and India, is fuelling its growth as a trading centre.
REUTERS
