Kaloti Group, Dubai’s biggest gold refiner, has proven that it is abides by international guidelines to prevent the underground trade in the metal following an independent audit held in response to damaging allegations made by the UK’s Guardian newspaper in February.
The commissioned audit, conducted by the accountancy firm Grant Thornton, found that the Kaloti Group took the necessary precautions to avoid abuses during the six months ending March this year – both in monitoring its sources and checking its financial transactions.
No evidence of wrongdoing or failure to fully comply with international guidelines on conflict gold was found, despite specific by the British newspaper that 2.4 tonnes of gold from over 1,000 deals had been accepted from customers who provided no paperwork.
At the time, the group vehemently denied the report, which referred to the period before the Grant Thornton audit, but the negative publicity generated by the subsequent news coverage was an unwelcome distraction for Dubai’s gold trade.
“Initially there were negative reactions from some stakeholders,” Munir Al Kaloti, president and founder of Kaloti, told Reuters. “Some became more reluctant to work with us, or to increase the value of contracts.”
He noted that business had now returned to normal, but the practice of Dubai refiners paying cash for large purchases of gold has largely ended in the wake of the controversy.
Dubai’s share of gold imports and exports leapt to $75bn in 2013 from $6bn in 2003, with the emirate handling nearly 40% of the world’s physical trade passed last year, according to the Dubai Multi Commodities Centre (DMCC), which facilitates gold trade in the emirate.
Much of the gold that is sourced from Africa passes through Dubai on its way to the world’s two biggest centres in China and India, so Dubai is an increasingly important location for ensuring the enforcement of the global standards for transparency in the trade.
Though wholly denying the details of the report in February, the DMCC has taken the opportunity to further reassure the markets by tightening its supervision of the trade, and will be commissioning an expert advisory firm to review the monitoring process in Dubai.
As for Kaloti, the group is building a $60m gold refinery in the emirate due to open next year, in confidence that Dubai’s role in the trade will be continuing its upward trend in the trade for many years to come.