Case Shows Role of Legal Exporters in Colombia’s Illegal Gold Trade

Posted on Jun 23 2014 - 9:30pm by Rico

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One of Colombia’s largest gold export companies is under investigation for money laundering and ties to narco-paramilitaries, shining a light on the key role of legal companies in the illegal mining trade.

According to a recent report by El Tiempo, 63 former associates, clients or employees of John Uber Hernandez Santa — the owner of Goldex, Colombia’s second largest gold export company — are currently under investigation for reporting false exports and laundering money.

Hernandez has admitted buying gold from ex-convict Jairo de Jesus Rendon Herrera, alias “German Monsalve,” brother of the founder of Colombia’s prinicpal criminal group the Urabeños, the now incarcerated Daniel Rendon, alias “Don Mario,” and former paramilitary leader Freddy Rendon Herrera, alias “El Aleman.” Hernandez told El Tiempo he purchased nearly $7 million in gold from Jairo Rendon and businesses linked to his family between 2007 and 2009, although he said Rendon had not been accused of any illegal activity at the time.

Hernandez claims he ended his business relationship with Rendon in 2009 when he found out about his ties to criminal activity. According to El Tiempo, the last month Goldex registered purchases from Rendon — July 2009 — was the same month in which Rendon handed himself in to authorities in the United States. Rendon later spent over two years in prison in the United States after being convicted of money laundering.

In September last year, WRadio reported Hernandez had been brought in for questioning over his company’s activities, but he told El Tiempo this was not the case and he had just been helping investigators with their enquires.

The gold industry plays an important role in Colombia’s criminal underworld, serving as both a source of funding for criminal groups and a means of laundering money. Illegal armed groups, including the Urabeños, are heavily involved in gold mining operations, exerting control in mining areas through extortion or by directly running operations in nearly half of Colombia’s municipalities.

Extracted gold is sold to exporters by “compras de oro” — gold buyers — many of which have been linked to money laundering. The export companies play a crucial role in the illegal mining chain by introducing the gold to the legal market, at which point its illegal roots become increasingly difficult to trace.

Money laundering through the gold industry often involves false accounts of exports, which have led to huge spikes in reported gold sales that do not appear to coincide with real extraction figures. Authorities believe the gold industry in Colombia has been used to launder a total of $4 billion.

Goldex has exported 40 tons of gold — worth approximately $1.3 billion — to the United States over the past five years, and if investigations into the company’s business dealings demonstrate criminal activity it could mark a major step towards tackling the role of legal exporters in laundering illegal gold.