Kaloti says Grant Thornton audit clears refiner of involvement in conflict gold

An employee arranges basins full of gold flakes during the refining process at the Kaloti facility in Sharjah. Duncan Chard / Bloomberg News

Kaloti Precious Metals says that an independent audit of its compliance practices has found that its policies are fully in line with the regulatory guidelines of the Dubai Multi Commodities Centre, as it seeks to further distance itself from allegations of accepting conflict gold.

The Dubai-based refiner and precious metals trader yesterday published the results of an audit of Kaloti’s compliance report in relation to the responsible sourcing of gold for the six months to March 2014, conducted by the accountants Grant Thornton.

“It is our opinion that for the review period, 1 October 2013 to 31 March 2014, Kaloti’s compliance report fairly describes the compliance activities they have undertaken to demonstrate compliance with DMCC’s guidance, and that Kaloti is in full compliance with the DMCC guidance,” said Grant Thornton at the conclusion of the seven-page report.

The refiner claims the audit results confirm its full compliance with DMCC guidelines, “which are based on the OECD’s, and are in line with international standards for responsible sourcing of precious metals.”

“Kaloti is pleased to once again provide evidence of the full compliance of Kaloti Jewellery International DMCC and Kaloti Gold Factory with responsible sourcing of precious metals from all its local and international sources,” said Tarek El Mdaka, the co-chief executive of Kaloti Precious Metals in a statement yesterday.

“As an organisation, we are dedicated to providing the highest standards of due diligence for the good of the industry and the sustainability of our own business. We remain committed to continually improving our risk management and reporting processes, and we are regularly educating our staff as well as suppliers to ensure the highest possible responsible supply chain standards are maintained.”

The Grant Thornton audit follows the publication of a report in February by Global Witness, a UK- based NGO, that claimed an inquiry into Kaloti’s supply chain compliance for 2012 found a number of serious failures.

These were alleged to have included the failure to report a series of suspicious cash transactions totalling US$5.2 billion over the year and knowingly accepting four tonnes of gold disguised as silver imported from Morocco by suppliers with falsified paperwork.

Global Witness, which campaigns to prevent natural resource-related conflict and corruption, yesterday welcomed the Grant Thornton audit, but urged the refiner to go further.

‘We welcome any steps Kaloti is taking to ensure compliance with international due diligence standards,” said the NGO in an emailed statement. “We urge the company to publish in full all management reports prepared by auditors.”

Global Witness’s February report claimed that Kaloti lacked adequate supply chain information on several tonnes of gold from Sudan, the report claimed.

Kaloti strongly denied the allegations, claiming that non-compliance findings related to specific documentation anomalies, which were strictly rectified, and that there was no evidence of any of its gold being sourced from conflict zones.

The refiner last month sent a legal notice to Global Witness contesting the claims made in the February report, threatening the NGO with legal action.

“The legal notice has been issued by Kaloti after a long process of denying the allegations raised in the said report and after having sent numerous assurances of full compliance with international regulations to various stakeholders,” according to a company statement.

“It further warns Global Witness that in case of non-compliance with Kaloti’s demands, Kaloti will commence legal proceedings in the UAE and other jurisdictions as appropriate and will take all legal measures.”

Global Witness declined to comment on the notice.

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