Vietnamese Gold Smuggling
Back in March 2017 51-year-old Cambodian, Rim Ri Linh, has been sentenced to six years in jail by the People’s Court of An Giang province in Vietnam. He was found guilty of illegally transporting 18 kilograms of gold from Cambodia to Vietnam. Rim Ri Linh, a former major and deputy chief of the border security office in Phnom Den, Cambodia, was caught by customs officers at the Tinh Bien border gate in An Giang when he failed to stop for immigration procedures.
The gold, valued at approximately 15.6 billion VND (658,152 USD) at the time, was discovered in his car. Rim Ri Linh admitted that he had agreed to transport the gold for a Cambodian man named Ti to a Vietnamese woman in Nha Bang town.
Rim Ri Linh should now be out of jail for the crimes he committed but how many stories have we heard of Vietnam gold smuggling from Laos or Cambodia in the media since? Does that mean it stopped? No of course not, its just being done by those that are approved for smuggling.
Well this week another big case of Vietnam Gold smuggling hit the news which suggests someone either has not paid their dues and is being thrown under the bus or they have fallen out of favour with certain people with power!
Investigating a Gold Smuggling Gang: Uncovering the Intricacies and Implications
In the realm of illicit activities, gold smuggling has emerged as a lucrative and pervasive practice, plaguing nations worldwide. Recent reports have shed light on a major gold smuggling operation that has captured the attention of authorities and the public alike. This comprehensive article delves into the intricacies of the investigation, uncovering the modus operandi of the Vietnam gold smuggling gang, its key players, and the far-reaching consequences of their actions.
The Gold Smuggling Operation
The Ministry of Public Security is currently spearheading an investigation into a notorious gold smuggling gang comprised of 20 individuals. Led by Le Xuan Tung, chairman and CEO of Phu Quy Gold Investment Company, this group is suspected of Vietnam gold smuggling a staggering three tons of gold worth VND5 trillion (approximately $212 million) into Vietnam. The gold was illegally transported from Laos and subsequently sold through local stores, with Phu Quy acting as one of the primary distribution channels. This illicit operation has not only evaded legal scrutiny but has also resulted in significant tax losses to the state coffers, estimated at VND6.1 billion.
The Key Players
Le Xuan Tung, the chairman and CEO of Phu Quy Gold Investment Company, occupies a central role in this smuggling network. As investigations unfold, Tung faces not only charges related to gold smuggling but also scrutiny for alleged tax evasion. The involvement of Tung and other suspects, including Le Thuy Quynh, highlights the complicity and scale of this operation. Their actions have necessitated a thorough examination of Phu Quy Gold Investment Company’s operations, tax declarations, and financial practices.
The Implications
The implications of this Vietnam gold smuggling operation extend beyond the immediate financial losses incurred by the state. Uncovering the intricate network of gold smuggling sheds light on the broader issues surrounding illicit financial activities and money laundering. Reports indicate that the gold trade is an ideal avenue for criminals seeking to launder large sums of money. The nature of the gold trade, involving melting, refining, and the subsequent obfuscation of its origin, makes it exceedingly challenging for law enforcement agencies to trace the illicit flow of funds.
What Gold is smuggled into Vietnam?
It’s mostly Kilo bars from neighbouring countries like Cambodia and Laos. The gold industry associations like the WGC, SBMA and the LBMA are all very much aware of the situation and look the other way particularly when it has ties to the Swiss LBMA Good Delivery Refineries!
How do I know about it? Well I went to Vietnam, opened an account to sell gold to the Laos arm of a Vietnamese gold trading company! Did I know what he was going to do with it when we shipped it via Brinks to his Laos office? I could only hazard a guess and did not ask further.
Once the account was actually open the client only wanted a specific brand of Swiss Kilo gold bars, since we did not deal with that refinery brand of gold bar we were unable to do any business with them directly.
Laos Gold Imports and Exports
According to this quote (Link in quote):
The country’s total trade surplus amounted to approximately USD 15 billion, with exports worth USD 8.198 billion and imports worth USD 6.808 billion. Laos’ main exports in 2022 included electricity, gold, gold ore and gold bars, paper, paper waste, and wood pulp.
This OEC website Laos Exports & Imports for 2021 were as follows:
Laos Gold Exports 2021
In 2021, Laos exported $1.79B in Gold, making it the 41st largest exporter of Gold in the world. At the same year, Gold was the 2nd most exported product in Laos. The main destination of Gold exports from Laos are: Australia ($662M), China ($372M), Thailand ($309M), Switzerland ($233M), and Hong Kong ($140M).
The fastest growing export markets for Gold of Laos between 2020 and 2021 were Australia ($507M), China ($353M), and Switzerland ($161M).
Laos Gold Imports 2021
In 2021, Laos imported $646M in Gold, becoming the 29th largest importer of Gold in the world. At the same year, Gold was the 2nd most imported product in Laos. Laos imports Gold primarily from: Thailand ($385M), Switzerland ($260M), United States ($869k), and Australia ($1.58k).
The fastest growing import markets in Gold for Laos between 2020 and 2021 were Thailand ($376M), Switzerland ($260M), and United States ($407k).
Do you really think Laos has that big an appetite for Gold? Asking for a friend!
Why is Cambodia actually importing a lot of gold?
I personally met with one Cambodian Gold importer who claimed the Cambodian farmers buried the gold on their farms (he had just imported 500kgs of a certain Swiss brand of gold bars the week before!). What do you think really happens here? Answers on a postcard to….
How does the Gold get to Laos and Cambodia?
Vietnam Gold mostly gets shipped from Bangkok, Thailand. The main security companies that operate those routes handle those air cargoes as valuable cargo. So why are the global security companies that airfreight gold not doing more due diligence on such shipments? Are they like the associations (and me) turning a blind eye? I’ll leave you to decide!
Monopoly on Gold Imports
State Bank of Vietnam (SBV) has the exclusivity on the legal importation of gold into Vietnam and despite visits by the associations mentioned above this has not changed since it was implements into state law “Prohibited acts in gold trading under Decree No. 24/2012/ND-CP of April 3, 2012“.
Even the SBMA talks about the illegal means of gold getting into Vietnam on their website “Despite the strict rules over gold business, there is no shortage of imported gold bars in the market as there are hidden pathway for gold with higher premium of USD 40/troy oz from Cambodia, Laos or China, and another fact is the gold retail sales’ distribution network has changed superficially on the surface, but not in its core business, and about 10,000 gold shops are still there, selling gold chi rings on the counter and gold tael bars under the counter.”
Gold Bullion below Purity case
We heard the case recently of The Perth Mint being accused of selling gold that had been doped to China, well Vietnam has had their own similar instance of this back in 2012 where the SJC accused a number of local producers of doping but they ended up being accused of not testing properly. SJC finds 6,200 gold bullion of below-par purity
Vietnamese Dong and the war on Gold
The State Bank of Vietnam’s decision to block Vietnam gold imports aimed to curb the weakening of the Vietnamese Dong and address the potential adverse effects on the economy. The import ban was implemented as a measure to control the trade deficit, cool inflationary pressures, and stabilize the economy.
Vietnam heavily relies on gold imports, with approximately 95% of its gold consumption being sourced from foreign markets. The State Bank of Vietnam regulates these imports by granting licenses and quotas to gold businesses seeking to import the metal. The import ban, initially implemented in May 2008, aimed to address the record-high trade deficit and combat soaring inflation, which had reached 21% in April of that year. By restricting gold imports, the central bank sought to curtail the outflow of foreign exchange used for imports while simultaneously combating inflationary pressures.
The correlation between gold and the Vietnamese Dong played a significant role in the decision to block gold imports. When a discrepancy arises between onshore gold prices and international market prices, speculators often purchase dollars to smuggle in gold. This influx of dollars exerts downward pressure on the Vietnamese Dong, potentially weakening the currency. Moreover, higher gold prices lead to a decreased attractiveness of holding Dong savings, driving individuals to convert their deposits into gold. This conversion can intensify inflationary pressures and have knock-on effects on property prices and the overall cost of goods. The State Bank of Vietnam aimed to mitigate these adverse effects by imposing the import ban and maintaining stricter control over gold inflows.
While the gold import ban helped restrict foreign exchange used for imports and initially stabilized the domestic gold market, it also created a scarcity of gold within the country, resulting in higher domestic prices compared to international market prices. This disparity provided arbitrage opportunities for gold smugglers and placed additional pressure on the Vietnamese Dong. Furthermore, gold-related businesses faced challenges due to limited access to raw materials, impacting the production of jewellery for export purposes.
The decision to block gold imports reflects the significance of gold as a valuable commodity in Vietnam. The country has a long-standing cultural affinity for gold and has been one of the world’s leading gold importers. The popularity of gold as an investment and a store of value has deep roots in the Vietnamese psyche, stemming from experiences with hyperinflation and economic instability over the years.
The Global Reach of Gold Smuggling
Gold smuggling is a global phenomenon
With ramifications that extend far beyond Vietnam. A recent investigation by Al Jazeera’s Investigative Unit has uncovered multiple gold smuggling gangs operating in Southern Africa. These criminal networks enable the laundering of substantial sums of money, simultaneously enriching themselves and destabilizing nations. The investigation revealed the involvement of high-ranking officials from Zimbabwe in both smuggling and money laundering activities, which circumvent Western sanctions imposed on the country. The global nature of these crimes further emphasizes the need for international cooperation and robust regulatory frameworks to combat gold smuggling effectively not so called organisations turning blind eyes to these situations knowingly.
The Ethical Concerns
Gold’s susceptibility to illegal activities raises significant ethical concerns. With its multiple stages of refining and melting, it becomes nearly impossible to ascertain the ethical and legal origins of gold purchased on the open market. This creates a disconcerting reality where consumers unknowingly contribute to the perpetuation of criminal enterprises or the exploitation of conflict regions. Heightened awareness and due diligence are essential to ensure that one’s investment in gold aligns with ethical and legal standards.
Conclusion
The ongoing investigation into the Vietnam gold smuggling gang has brought to light the complex and clandestine nature of this illicit trade. Uncovering the modus operandi of the smuggling network, identifying key players, and understanding the broader implications of such criminal activities are crucial steps in combating gold smuggling globally. Efforts must be directed towards strengthening international cooperation, enhancing regulatory measures, and raising public awareness regarding the ethical dimensions of the gold trade.
With comprehensive insights into the inner workings of gold smuggling and its far-reaching consequences, we equip ourselves with the knowledge necessary to address this pressing issue and safeguard the integrity of global financial systems.
