Jeweller - April 2023

News
$9 billion deal turns sour as Perth Mint
rocked by alleged gold doping scandal
Perth Mint accused of potential
commodities breaches
The Perth Mint has been thrust into the national
spotlight after the revelation of coinciding
scandals involving a notorious biker and a $9
billion bullion deal with China gone wrong.
The ABC’s Four Corners program aired a report
detailing a potential $9 billion recall of gold bars
featuring diluted bullion which was sold to the
Shanghai Gold Exchange (SGE).
‘Gold doping’ is the addition of trace amounts of
elements such as silver or copper to bullion. It’s
an accepted practice as long as a standard of
99.99% purity is maintained.
“The mint began doping its gold as a costsaving
measure in 2018, expecting to save up to
$620,000 a year — a tiny fraction of its annual
sales,” the ABC report reveals.
“Within two years this desire to save money
would put the mint at the centre of what may be
one of the biggest gold scandals in Australian
history. From the outset, there were signs of
trouble.
“Just months after the doping began, the report
says refinery staff identified concerns that silver
and copper levels may have exceeded those
allowed by the SGE. Despite this, refinery staff
continued doping the gold.”
In September of 2021, officials at the SGE
alleged that two gold bars contained too much
silver and were non-compliant.
The Perth Mint allegedly launched an internal
investigation which concluded that up to 100
tonnes of stock would need to be recalled from
Shanghai and replaced.
A purity test of the two bars identified as
problematic by the SGE revealed that they were
above 99.99 per cent pure, but had exceeded the
SGE’s strict standards for silver.
“But it wasn’t just one bad batch, it meant most
of the gold bars during the three-year doping
program were potentially non-compliant with
Shanghai standards.
“Crucially, the mint did not share this information
with its largest client,” the report continues.
The SGE opted not to make its complaint public
and accepted assurances of quality from the
mint, agreeing that certificates of ‘assay’ would
accompany all future bars.
Visit from the Hells Angels
The Perth Mint has also been accused of
permitting a renowned member of the
Hells Angels to purchase $27,000 in gold
in June of 2022.
Dayne Brajkovich made the purchase at the
Perth Mint’s gift store, despite the law requiring
rigorous background checks to identify high-risk
customers and prevent money laundering.
Brajkovich is no longer a member of the
Hells Angels; however, he has previously been
imprisoned for possessing a commercial
quantity of MDMA.
In September, the Australian Transaction
Reports and Analysis Centre (AUSTRAC) ordered
the appointment of an external auditor to assess
the operations of the mint.
The audit was reportedly launched as officials
suspect the mint has failed to appropriately
report up to 5,000 transactions.
The Perth mint is the largest processor of newly
mined gold in the world and in the past year has
completed sales in excess of $20 billion.
Gold Corporation is the parent company of
the Perth Mint. The mint was established
in 1899 and is owned by the Government of
Western Australia.
The controversy has continued this week with the
revelation the Perth Mint was warned in 2022 that it
was potentially breaching commodities laws in the
US by holding gold for customers in its depositary.
WA Premier Mark McGowan made the comment
in the chamber as the fallout over the Perth Mint
continues.
“In September 2022, the mint publicly
acknowledged it was addressing ‘historic noncompliance
issues; with the US laws and had selfreported
the issue to regulators,” the ABC reports.
“But what it failed to mention was that those
potential breaches dated back nearly 25 years and
covered around 1,500 accounts holding $US254
million ($AU380 million) worth of precious metals
on behalf of clients.”
In May of 2022, the Perth Mint reportedly received
external legal advice about these potential
breaches and was told that even if the issues were
rectified, the mint may still be liable for penalties.
Current WA Premier Mark McGowan was the
minister responsible for the mint between 2017
and 2021 and said the government awarded $34
million to upgrade computer systems and employ
additional staff to fix these issues.
Specifics
In order to prevent fraud, the Model State
Commodity Code (MSCC) was implemented
in the US in 1985.
The MSCC is used in 23 US states and requires
anyone purchasing gold receives a physical
delivery of that gold within 28 days unless the
seller is an ‘exempt person’. The Perth Mint
allows internationals to purchase gold and store
it via a Depository Service. Approximately six per
cent of the mint’s customers are based in MSCCcompliant
US states.
The Perth Mint is not considered an ‘exempt
person’ under the MSCC and thus, could be in
breach of commodities laws.
April 2023 | 21