Kaloti Precious Metals

ENOUGH PROJECT MAKE CORRECTIONS DUE TO FACTUAL INACCURACIES

  • The Impact of Dodd-Frank and Conflict Minerals Reforms on Eastern Congo’s War

    EnoughProject makes Correction-- June 20, 2014: References to a gold dealer and refiner on pages 2 and 16 have been deleted due to factual inaccuracies. A comment from the company can be found here "Response to Enough Project"

    Kaloti Precious Metals (Kaloti) declares that all allegations and implications relating to its non-compliance in the gold trade business are false and without any merit or substantiation.

    Kaloti is proud to have led the transparency drive in Dubai's physical gold market by completing all stages of any independent third party audit and by implementing DMCC Guidelines on Responsible sourcing of Precious Metals and Review Protocol. Kaloti willingly underwent the first-ever audit of its gold refinery business and went a step further for transparency by voluntarily opening the third party audit to include all trading activities of Kaloti Jewellery International DMCC.

    Our fully compliant final result was confirmed by Ernst & Young, the auditors, in their Review and Assurance Reports.

    In all enhanced and rigid Ernst & Young audit reports and findings, Kaloti was never found to be sourcing from conflict zones or DRC area in particular. It was also never found to be funding conflict or human rights abuses or any of the other mentioned allegations All non-compliance during the initial audit stage was related to a lack of specific KYC documentations and not to say any findings of conflict gold within the supply chain.

    The final findings of the Consolidated Report were published in accordance with the requirements of the regulator and they were consistent with global best practices and industry norms of compliance reporting.

    Kaloti has followed and adhered at all stages to the requirements of the audit and the DMCC Review Protocol and remains fully compliant.

    Just four years after enactment of historic Dodd-Frank “conflict minerals” legislation, a new investigative report by the Enough Project identifies early signs of success, with many lucrative mines in eastern Congo no longer controlled by violent armed groups responsible for mass atrocities, rape, and grave violations of human rights.

    By Fidel Bafilemba, Timo Mueller, and Sasha Lezhnev | Jun 10, 2014

    [This report contains a correction.]

    Market changes spurred by the 2010 Dodd-Frank law on conflict minerals have helped significantly reduce the involvement of armed groups in eastern Democratic Republic of Congo (“Congo”) in the mines of three out of the four conflict minerals. The law, in addition to conflict minerals audit programs from the electronics industry and related reforms begun by African governments in the region but not yet fully implemented, has made it much less economically viable for armed groups and Congo’s army to mine tin, tantalum, and tungsten, known as the 3Ts. Minerals were previously major sources of revenue for armed groups, generating an estimated $185 million per year for armed groups and the army. However, artisanally mined gold continues to fund armed commanders. Further reforms are needed to address conflict gold and close loopholes on the other minerals.

    Furthermore, initial military restructuring within Congo’s army has removed armed actors from many mines, and military operations undertaken by the Congolese army and the United Nations Force Intervention Brigade have significantly reduced the threats of powerful armed groups such as the M23 and the Allied Democratic Forces. Neutralizing these groups – two of the biggest contributors to Congo’s deadly conflict in recent years – is helping improve the situation in the areas where they operated with impunity.

    Nevertheless, insecurity remains a serious challenge in several areas of eastern Congo. After 15 years of the deadly conflict minerals trade in the Kivus, the Dodd-Frank law initiated meaningful reforms in the way that international commercial actors engage with the minerals trade in eastern Congo, Rwanda, and the region, and is beginning to remove the gasoline that has helped fuel Congo’s deadly conflicts. While this has started a shift toward legal and peaceful forms of natural resource extraction for several minerals, the Congolese army and several other militias continue predatory abuses against civilian populations in the absence of the rule of law. The Kinshasa government’s significant corruption and dysfunction remain major obstacles to human security in Congo. Without reforming the security sector, militarily engaging the Forces Démocratiques de Liberation du Rwanda (FDLR) rebel group, introducing real anti-corruption reforms, and committing to free and fair elections, the security situation will remain unstable.

    The Enough Project conducted five months of field research in eastern Congo, interviewing 220 people in 14 mines and towns, in addition to 32 interviews in the U.S. and Europe. The research revealed the following findings...

    The text above is an excerpt from the full report, The Impact of Dodd-Frank and Conflict Minerals Reforms on Eastern Congo’s War. (PDF)

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