VZCZCXRO8553
RR RUEHMA RUEHPA
DE RUEHBP #0199/01 0581217
ZNR UUUUU ZZH
R 271217Z FEB 08
FM AMEMBASSY BAMAKO
TO RUEHC/SECSTATE WASHDC 8791
INFO RUEHZK/ECOWAS COLLECTIVE
RHMFISS/HQ USAFRICOM STUTTGART GE
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 BAMAKO 000199 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD ML
SUBJECT: ALL THAT GLITTERS COULD BE ZINC: ARRESTS HIGHLIGHT 
RISKS TO GOLD EXPORTERS IN MALI 
 
 
¶1.  SUMMARY: Gold has become the centerpiece of the Malian 
government's budget, but the recent arrest of gold smugglers 
highlights the risky nature of exporting gold.  Three foreign 
nationals were caught red-handed trying to smuggle what may - 
or may not - have been three bags of gold through Customs 
with fraudulent gold export documents.  It is unclear if the 
accused smugglers were also fraud victims, as at least one of 
the bags they were attempting to spirit out of Mali was 
actually packed with painted bars of zinc.  Few arrests have 
been made in other cases, but reports of increasingly 
creative scams, thefts in transit, and fraud are common. 
Exporting gold legally from Mali is fairly straightforward, 
but government officials report that the sector is poorly 
organized and potential exporters can fall into many traps 
along the way from buying the gold until having it shipped. 
Mali's failure to crack down on con artists and establish 
better control over gold markets could have an impact upon 
other sectors as potential investors begin to look for less 
risky ventures in other nations. 
 
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IMPLICATIONS FOR MALI'S BUDGET 
------------------------------ 
 
¶2.  Gold production, ranging from industrial level operations 
to individuals panning in streams, accounts for the majority 
of Malian export earnings.  The largest industrial producer, 
AngloGold Ashanti, reported over 537,000 troy ounces mined in 
¶2006.  Exact figures have not yet been released for 2007, but 
rising market prices have offset a reported decrease in 
production.  Gold plays a critical role in financing the 
Malian government.  The GOM has a stake in gold companies 
operating in Mali ranging from 18-20%, and also receives 6% 
in taxes on refined gold plus 35% in corporate taxes. 
Finance Ministry Secretary General Sambou Wague said that 
although the GOM receives dividends as shareholders, only the 
gold companies know the true amount of their profits. 
 
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RECENT GOLD SCAM 
---------------- 
 
¶3.  At the beginning of February, a Russian, an Azerbaijani 
and a Congolese were arrested at the Bamako airport for 
attempting to smuggle gold out of Mali.  The three were 
planning to travel on Air Maroc to Dubai via Casablanca with 
three packages totaling 94 kg.  Customs agents said that 
somehow, Abdoulaye Toure, a private Malian linked to a 
nonexistent company called "Afrique Metal SARL," and likely 
the agent that sold the foreigners the gold, was able to have 
two of the bags removed from the outbound baggage conveyer 
after they were checked in.  He failed to get a third 
package, weighing 31 kg, which was subsequently seized by 
Customs and contained zinc made to look like gold bars.  When 
the three alleged smugglers were interrogated at Customs 
about the origin of their packages, the group jointly denied 
possession of them.  However, a subsequent search in their 
hand luggage revealed falsified documents stating that they 
had bought from Toure 90 kg of gold that was 93% pure for USD 
1,215,000 (at roughly 464 dollars a troy ounce, well below 
the world market price) .  Meanwhile, the two bags previously 
pulled from the conveyer had disappeared.  After a lengthy 
search, the bags were recovered empty.  Mr. Toure's 
whereabouts are unknown.  The three suspected smugglers are 
currently in prison awaiting trial while police continue to 
search for Toure. 
 
¶4.  Aside from this case, Customs officials said that they 
know of two other cases involving falsified documents in the 
last two years.  They added that exporters, especially 
foreigners, should be very careful when exporting gold out of 
Mali.  Mamadou Bah, Customs Chief at the Bamako airport, said 
suspicions are raised when anyone attempts to export more 
than 10 kg of gold.  He estimated that anyone selling and/or 
attempting to export gold over that amount is often engaged 
in some form of fraudulent transaction. 
 
-------------------------------- 
HOW TO EXPORT GOLD FROM MALI 101 
-------------------------------- 
 
¶5.  Gold buyers are required to acquire a license from the 
National Office for Trade (DNCC in French) or form a 
partnership with a Malian that is already licensed.  The DNCC 
maintains a list of approved gold sellers; while roughly 
twenty agents are authorized to export gold from Mali, the 
National Director for Trade, Mahamane Toure, estimates that 
as few as four of these agents are legitimate.  The DNCC 
showed an example of fake export documents that used a 
letterhead from the "Commerce Exterieur," a nonexistent 
 
BAMAKO 00000199  002 OF 002 
 
 
entity (note: Post has actually received a similar document). 
 
 
¶6.  Gold must be in the form of bars, rather than dust or 
powder, if it is to be exported from Mali.  Buyers must have 
their gold weighed and tested for its authenticity by the 
Division of Geology and Mines (DNGM in French) who in turn 
will provide a certificate of title for the gold.  The gold 
shipment is then sealed and passes out of the buyers hands at 
several steps on the way to the airport for transport.  The 
exporter must pay 6% in taxes (3% value-added tax and 3% CPS) 
to the Ministry of Finance.  Finally, the buyer takes the 
title for the gold to the Customs division in charge of gold 
exports at the Bamako airport to have it approved and 
stamped.  Since 1990, in an attempt to spur exports, there 
are no export taxes. 
 
¶7.  Lassana Guindo, Chief at the DNGM, said the gold selling 
process in Mali was poorly organized and suggested that gold 
exporting stakeholders should collaborate on improving the 
chain of sale process.  For example, customs officials 
suggested  several scenarios for fraud, such as submitting 
the required sample (40g) in real gold to the DNGM with the 
remainder fake or with a much lower purity.  Sealed packages 
are shipped in the hold of aircraft, and subject to theft 
and/or substitution by corrupt customs officials or airport 
employees. 
 
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COMMENT 
------- 
 
¶8.  As many Malian officials have noted, those looking to 
export gold should pay very close attention to who and how 
they do business, and the most recent case suggests that some 
Malian Customs agents may be involved in this type of 
corruption.  As the price of gold climbs, it has been no 
surprise that the Embassy has received numerous inquiries 
from Americans and others interested in entering the gold 
trade.  The rise in prices will also likely be matched with a 
rise in the number of scams, potentially sullying Mali's 
reputation in the eyes of international investors in other 
sectors far removed from the gold fields. 
MCCULLEY