Enough project calls for targeted US sanctions on Sudan gold exports

March 4, 2015 (WASHINGTON) – The United States should move swiftly to impose sanctions on gold produced in Sudan’s conflict zones, a think-tank group said.

“After studying this regime for 25 years, it is my conclusion that the Khartoum government is most vulnerable to targeted, focused, relentless economic and financial pressure. Therein lies the greatest opportunity for American leverage to be deployed in support of peace and human rights in Sudan,” John Prendergast, the co-founder of the Enough Project, said in prepared remarks before US congress on Wednesday.

Prendergast recalled the $8.9 billion fine imposed by the US on BNP Paribas for its dealings with sanctioned nations including Iran, Cuba and Sudan saying that it demonstrates “that pressure on the international financial system can have an effect on pariah states, even regimes that have been under sanctions for decades”.

“In the wake of the BNP Paribas fine, some major Saudi and European banks stopped conducting transactions with Sudan,” he added.

However, he underscored that more needs to be done in terms of enforcement to prevent the East African nation from exploiting loopholes in the international banking system.

Prendergast urged the US congress to introduce a resolution that would “call on banks and gold refiners to red-flag Sudanese gold as high risk, and for gold industry associations to include Sudan as a high-risk country in their conflict-free audits, in order to ascertain what gold exports from Sudan are conflict-affected”.

“Given the gravity of the threat that the gold trade presents, Congress should expand the scope of Sudan’s sanctions outlined in the 2007 Darfur Peace and Accountability Act to specifically include provisions that would allow the imposition of sanctions on traders, officials, and armed leaders benefitting from the conflict-affected gold trade from Darfur,” he said.

Prendergast gave the example of Janjaweed militia leader Musa Hilal whom he claimed is benefiting from gold production in Darfur.

He further said that the US department of treasury should build dossiers for eventual sanctions designation on traders, companies, and/or officials who are involved in trading conflict-affected gold from Darfur.

“The US state department should urge the UAE to tighten its import controls on gold from Sudan. Specifically, the government and the Dubai Multi-Commodities Center should require that any imports from Sudan are documented with invoices stating consignees, certificates of origin, and proof of original export taxes paid,” he said, adding that US diplomats should urge the UAE to eliminate the hand-carry rule that allows smugglers to carry in large amounts of gold with limited scrutiny.

“The state department’s bureau of economic and business affairs should urge the OECD multi-stakeholder group on responsible mineral supply chains, the conflict-free sourcing initiative, the London Bullion Market Association and the Responsible Jewellery Council to make sure that their various auditors designate Sudanese gold as high-risk when conducting conflict-free audits,” he said.

“Given the consolidation of all gold mined in Sudan by the Central Bank, all exports coming from the country should be considered high risk for connections to conflict at present,” he added.

The International Monetary Fund (IMF) said in a report last year that it expects Sudan’s non-oil growth to hit 2.9% in 2014 as a result of strong gold extraction among other reasons.

Last year, the government announced that gold production in 2014 would reach 70 tonnes compared to 34 tonnes in 2013 following development of the traditional mechanisms of exploration.

Sudan started focusing on gold production to make up for the budget deficit it incurred as a result of losing three quarters of its oil production due to the secession of South Sudan in July 2011.

(ST)