Revelations: the shameful secrets of Switzerland’s largest gold refinery

Confidential documents obtained by RTS lift the veil on the business relations of precious metals giant Valcambi. Contrary to its public commitments, the Ticino company continued after 2019 to import gold from the Kaloti company, based in Dubai. This company is at the heart of money laundering and gold trade from conflict zones.

On December 3, 2020, the Central Precious Metals Control Office is carrying out an inspection at the Valcambi plant in Ticino. Officials find gold of suspicious provenance. This gold comes directly from a Dubai refinery named MTM (MTM-O Gold Refinery) belonging to the Kaloti group.

This name is unknown to the general public, but in the world of precious metals, Kaloti and its MTM factory is synonymous with dirty gold. This company is at the heart of drug money laundering and the marketing of gold from conflict zones in Sudan.

Confidential document

In a confidential letter from the Swiss authorities, obtained by the RTS as well as by the newspaper NZZ am Sonntag, the officials warn the management of Valcambi about its high-risk practices: “Our investigations focused (…) on the ingots of gold purchased from Trust One Financial Services. These gold bars were delivered directly from the MTM refinery based in Dubai. In the media, this company is linked to money laundering and terrorist financing.”

Officials are surprised by the behavior of the Swiss company: “Valcambi has decided to continue its business relations with MTM, despite the very significant risks regarding the origin of the gold.”

Uncontrolled factory

The confidential document also indicates that the Valcambi company did not carry out any inspections or controls at the Dubai factory. The Swiss company limited itself to information provided by a financial intermediary called Trust One.

Despite this observation, officials from the central office for the control of precious metals did not sanction Valcambi. In fact, Swiss legislation does not provide for it, even in the event of findings of a breach of the duty of care.

Contacted, the Federal Department of Finance, which oversees the central office for the control of precious metals, explains that “the fact that a potentially delicate business relationship exists or has existed does not constitute proof of a criminal offense.”

Crossing the “red line”

For Olivier R. Müller, expert in watchmaking and former executive in a gold refinery, this document leaves no room for doubt. “Valcambi has crossed a red line that other Swiss refineries would not dare to cross. It is the whole supply chain that is opaque with Kaloti. It is a huge risk in terms of reputation and it also risks harming reputation of other players in the Swiss market,” he says.

>> An excerpt from the interview with Olivier R. Müller, watchmaking expert and former executive in a gold refinery:

The stakes are high. Switzerland is a hub for the global gold trade. Some estimates estimate that almost 60 to 70% of the world’s gold passes through our country. A success which can be explained by the know-how of Swiss refineries, an absence of VAT for gold and a summary legal framework.

Money laundering charges

These confidential documents confirm the fears of non-governmental organizations. Marc Ummel from Swissaid is the key figure in the field. His expertise made him a man both feared and criticized by the precious metals industry.

“The document in question confirms what we have already denounced for several years. By sourcing from companies very close to Kaloti, Valcambi takes big risks and does not comply with the OECD requirements in terms of due diligence. Kaloti imported gold from Sudan’s central bank, some of which comes from conflict zones, according to UN experts. Kaloti has also been caught in money laundering cases,” he said. he.

In a 2020 report, Swissaid already explained that Dubai gold was purchased by Valcambi. Facing the camera, Marc Ummel specifies: “one may wonder what are the reasons for importing gold already refined to 99.5% purity from Dubai to melt it again in a Swiss refinery. One of the main reasons, is that Dubai gold is not LBMA certified. An international industry standard which is essential to be able to sell gold to large banks or watch manufacturers. By passing through a Swiss refinery, the gold of Dubai suddenly obtains LBMA certification and increases in value.”

Certified origin of gold

The LBMA certificate guarantees both the purity of the bullion and the responsible provenance of the gold. This one is supposed not to come from war zones or criminal networks. The LBMA association label allows you to sell your gold everywhere and gain access to the most careful buyers, notably central banks.

Contacted by RTS, the LBMA certifier responded by letter that the business relationship between Valcambi and Kaloti was not problematic: “We carefully monitor companies benefiting from our certification which have business relationships in the areas identified in risk. Currently, there is no problem buying gold from the UAE, as long as it is responsibly sourced.”

For LBMA, officially everything is in order. Unofficially, the certifier asks the RTS, off the microphone, to keep him informed of the revelations and the results of his investigation.

Valcambi’s complaint against Swissaid

Valcambi did not wish to answer questions sent jointly by RTS and the newspaper NZZ am Sonntag. In 2020, Valcambi officially contested the Swissaid report.

The Ticino company even filed a complaint against Swissaid and demanded a withdrawal of the report. In a letter, Valcambi invoked this action against Swissaid to justify its refusal to respond to interview requests. “Valcambi does not wish to speak due to ongoing legal proceedings.”

In the newspaper Le Temps, the boss of Valcambi responded in October 2020 to criticisms made by Swissaid: “We respect all the rules imposed on us, and we even go beyond by asking sellers to sign a declaration of conformity. We “We carry out all necessary controls to prevent questionable gold from entering Valcambi’s value chain, and we seek to continually improve.”

The issue of Dubai’s gold imports

In the Berner Zeitung newspaper of October 2020, the boss of Valcambi, Michael Mesaric further clarified: “We have no longer had business relations with Kaloti for a year (2019).”

A surprising assertion, because confidential documents obtained by RTS show that Kaloti was still delivering gold to Valcambi at that time and even until December 2020. RTS does not have information which proves that these business relationships still last today.

Federal statistics indicate that the overall gold import from Dubai to Switzerland has not decreased in recent years. According to federal figures, between 120 and 150 tonnes of gold, or several billion francs, arrive in Switzerland annually. It remains to be seen what impact these revelations will have on Valcambi’s clients, including Apple, Nokia, as well as major Swiss watchmaking and jewelry groups.

Francois Ruchti

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