Broken Chain
Apple’s Dirty Gold Problem
Apple has touted its efforts to halt the trade of conflict minerals like gold. But the company has long relied on gold suppliers linked to money laundering and other illegal activity.

Apple has repeatedly used gold suppliers implicated in money laundering, human rights abuses, and sanctions evasion, according to a Tech Transparency Project (TTP) investigation, raising questions about the company’s reputation as an industry leader in responsible supply chain management.

The tech giant has won praise from some activists for doing more than its corporate peers to halt the trade in so-called conflict minerals such as gold, which has funded violent conflicts and criminal groups in Africa and Latin America.

But TTP found that despite its reputation, Apple has for years relied on a range of suppliers linked to the global trade in “dirty gold.”

Across Africa, the gold trade is often run by paramilitary groups that profit from child labor and use the proceeds to fund civil wars. In Latin America, drug cartels use gold refineries to launder illicit proceeds. This dirty gold is sold to prominent refineries and brokers who re-process and re-brand it, allowing it to slip into the global supply chain.

Many of Apple’s suppliers have obtained gold from the Kaloti Group, a Dubai-based refinery that has repeatedly been linked to the trade in dirty gold.

The Kaloti Group garnered international attention when an auditor at Ernst & Young discovered that the refinery was allegedly smuggling gold and laundering money. The global accounting firm refused to take action and allegedly forced the auditor, Amjad Rihan, out of his job.

Rihan alleged his audit team had also uncovered Kaloti transactions involving gold imported from Sudan and Iran, both subject to U.S. and EU sanctions at the time, and the Democratic Republic of the Congo, where the gold trade has long been associated with human rights abuses and child labor.

A UK court awarded Rihan over $10 million in damages in April 2020 after the judge found Ernst & Young had unfairly pushed him out of his job to help Kaloti cover up the purchase of smuggled Moroccan gold and suspected money laundering. Ernst & Young is appealing the award.

In July 2020, human rights NGO Global Witness released a report claiming that Kaloti was actively supplying Valcambi S.A., an Apple supplier, from 2018 to 2019. Sometime between 2017 and 2019, Kaloti was also reportedly purchasing gold from the Central Bank of Sudan, an entity that has allegedly sourced conflict gold from mines run by Sudanese militia groups since 2012.

This is just one instance where Kaloti’s gold could have made its way into Apple’s supply chain. The TTP review found at least seven more current and former Apple gold suppliers with ties to Kaloti:

  • Three of Apple’s longtime Swiss gold suppliers—Valcambi, Argor-Heraeus, PAMP—have bought gold from the Kaloti Group, according to money laundering experts and NGO reports.
  • These Swiss suppliers have also been implicated in other illicit dealings, researchers have found. Valcambi has allegedly purchased gold sourced using child labor in Burkina Faso. PAMP has sourced gold from Ghana, where child labor is also used. And Argor-Heraeus allegedly purchased dirty gold from the Democratic Republic of the Congo.
  • A Kaloti affiliate and five Apple gold suppliers were implicated in a 2013 Peruvian government seizure of over 500 kilograms of gold tied to Peter Ferrari, an alleged money launderer for drug cartels. In 2018, three executives of a subsidiary of Dallas-based gold refinery Elemetal pleaded guilty in a U.S. court to laundering gold with Ferrari. Apple stopped using Elemetal as a supplier that same year. Kaloti and the Apple suppliers have not been charged, and Ferrari is awaiting extradition to the U.S. on related charges.
  • Several Apple suppliers implicated in the Ferrari case have been involved in other instances of alleged gold laundering. Italy-based Italpreziosi has been connected to three different money laundering schemes over the last 11 years, including in 2015 for allegedly aiding a Peruvian crime family. The company became an Apple supplier in 2017.
  • Swiss refinery Metalor and Miami-based Republic Metals purchased almost a billion dollars worth of gold from Goldex, a Colombian gold company charged in 2015 with money laundering. Metalor has been an Apple supplier since at least 2013, while Republic Metals was an Apple supplier from 2015-2018 before being acquired by Japan-based Apple supplier Ashai Pretec in 2019.
  • Separately, Asahi Pretec was allegedly involved in purchasing hundreds of millions of dollars worth of gold from an intermediary connected to illegal Colombian mines and Venezuela's state-owned gold refinery, according to investigations by the Miami Herald and The New York Times.

Taken together, the evidence shows that Apple continues to source gold from companies that have been credibly associated with money laundering and the illicit gold trade. Apple only severed ties with one of those named above, Elemetal Refining, and that was after three executives of a subsidiary were convicted of money laundering.

The review also identified flaws in Apple’s supply chain due diligence. Since 2015, Apple has required all of its suppliers to undergo annual audits at the risk of removal for those that refuse. As it happens, one of Apple’s first audits focused on the Kaloti Group.

Apple acknowledged in its 2015 conflict minerals report that it had commissioned a consultant to investigate the potential links between its gold suppliers and Kaloti, stating, “The objective of the investigation was to identify whether reported gold refiners may be associated with armed groups.”

Apple has never publicly revealed the results of that investigation and continues to work with suppliers tied to Kaloti today.

September 2, 2020
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