Tarnished reputation?

Gold maintains its lustre without tarnishing in air or water and is one of the least reactive of chemical elements. It is insoluble in nitric acid which otherwise dissolves metallic elements, a particular property that has been used to confirm the presence of gold and gave rise to the term ‘acid test’. However, while gold does not tarnish, the same may not necessarily be said of the reputations of those that handle it. Dubai’s reputation is under attack and, in particular, that of Dubai-based gold refiner Kaloti Precious Metals, the largest gold refinery in the Middle East.

UK newspaper The Guardian claims that in 2012 Kaloti ‘paid more than $5bn in cash for the metal and accepted gold from more than 1,000 customers who walked in off the street with no paperwork’.
The regulations of the Dubai Multi-Commodities Centre require gold refiners to make detailed checks of cash deals worth more than AED 40,000. However, it appears that Kaloti did not have a system in place to do this in 2012. The paper’s story is based on leaked documents from Ernst & Young (E&Y), which had been brought in to review Kaloti’s business practices.
Among specific allegations by The Guardian, Kaloti was said to have ‘taken millions of dollars of gold knowing it was plated in another metal and seemed to have been smuggled out of Morocco’.
The refiner has responded, “There is absolutely no evidence that Kaloti falsified any documentation. In its audit report, E&Y clearly stated that ‘findings were inadequate documentation in the supply chain’.
“Kaloti had full KYC documentation on all its Moroccan clients and had proper import documentation and invoices stating that this particular consignment was gold from Morocco. 
“Kaloti accepted it had a shortcoming in the initial audit, quickly remediated it, and is now fully compliant.”
The Guardian also claimed that Kaloti had ‘accepted 2.4 tonnes of gold in more than 1,000 transactions with customers who provided no paperwork’; and ‘paid cash to Sudanese suppliers who had hand-carried gold to Dubai – sourced from small-scale, artisan mining operations – but did not check whether they had approved mining licences’.
The refiner has responded, “All cash transactions mentioned in the report were conducted for clients that were on boarded by Kaloti and have full compliance KYC documentation. Each transaction was monitored by E&Y and each of the suppliers were checked by E&Y. There is no evidence that Kaloti was involved in money laundering; or any of our clients for that matter…”
The paper admitted that, “The Guardian has seen no evidence that published reporting of Kaloti failings was out of line with regulatory rules or industry practice.” It also said, “While there is no evidence that the refinery accepted conflict gold, major breaches in new guidelines were uncovered, raising concern about the history of huge volumes of shipments.”
In its public statement responding to the international media reports, the refiner said, “Kaloti would like to take this opportunity to reassure that these allegations are false and without any substantiation. Kaloti has strongly denied these claims and any implication relating to regulatory non-compliance in the gold trade.”
It added, “In all of Ernst & Young’s reports and findings during the process, Kaloti was never found to be sourcing from conflict zones. Any non-compliance during the initial audit stage was related to specific documentation anomalies, which were swiftly rectified, and not to any findings of conflict gold within the supply chain. There has been no evidence in any of E&Y findings that Kaloti sourced gold from conflict zones…
However, the refiner admitted, “As stated in the audit’s Consolidated Report, published on our website in accordance with the requirements of the regulator, Kaloti had shortcomings in the initial stages of the multi-staged process. However, as per DMCC Guidelines, Kaloti submitted a corrective action plan and immediately started the remediation process. The company received a fully compliant final audit result, which was confirmed by Ernst & Young.”
Unfortunately, it is perhaps not enough to be in a position to refute the allegations that have been made. Better by far to have systems in place that preclude them from ever being made in the first place. Gold is a key factor in Dubai’s trade, the gold business in the emirate is estimated to be worth around $70 billion a year.
The row centring on Kaloti is not over claims that it imported gold from conflict zones but that the systems it had in place meant that it was impossible to determine the origin of some of the gold it imported.
There are now strict international rules regarding so-called ‘conflict diamonds’. The global community is attempting to put in place similar rules regarding ‘conflict gold’. Kaloti could perhaps restore the lustre to its reputation and indeed boost its business by ensuring that not only are its systems and business practices correct but also that they are clearly seen to be correct, obviating the need to defend itself against any future claims otherwise – that would perhaps be the refiner’s own ‘acid test’.

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Thoroughfares, tweets and property prices

by Zoya Malik
 
There’s a lot to be said in favour of a smooth daily commute for a healthy and positive start to one’s work and school day.

 Traffic gridlock in The Gardens, in Dubai.

Residents at master developer Nakheel’s Discovery Gardens, The Gardens Community and Al Furjan Villas have been up in arms this past month due to the appalling traffic gridlock faced by Dubai commuters and school drop-off parents in its surrounding areas. A development that serves up to 30,000 residents and boasts 95 per cent occupancy has seen its roadways strained with bottlenecks due to a sudden RTA move to close a temporary dirt-path leading off from the Ibn Battuta Mall to the Sheikh Zayed Road. It seems this path has served as an informal fourth exit used by hundreds of cars every day for a swift getaway during morning and evening rush hour. The abrupt cut off that served as a lifeline for a number of years has frustrated commuters and children on buses servicing three local schools. Last week, the matter was made worse due to the rains and flooding, bringing greater pressure to bear on The Gardens’ historically poor drainage that caused accidents and left cars and vans abandoned in the flood water.
In the daily press, travellers’ have tweeted their travails as “being trapped” in vehicles from 45 minutes to two hours to reach school and work. Anxiety levelled at the RTA and Nakheel has been over children’s health and safety on buses, left without snacks and access to bathrooms.

 

On 13 February, Nakheel advised, “Today’s traffic congestion at Discovery Gardens is the result of a road closure by the RTA for safety reasons.  We continue to liaise with the RTA, impressing upon them the urgent need to address traffic congestion in the area.  Meanwhile, to help ease the situation, Nakheel has today opened up a temporary route between Discovery Gardens, Al Furjan and the E77 (Al Yalayis Road), which connects Sheikh Mohammed bin Zayed Road and Sheikh Zayed Road”. Since then The RTA announced, “As regards to the traffic congestion at Discovery Gardens the RTA  is about to undertake further road works in the area with a view to providing two additional entries and two exits for the Discovery Gardens and Ibn Battuta Mall at Interchange 5.5 on the Sheikh Zayed Road and the Sheikh Mohammed Bin Zayed Road. Works in these solutions are expected to be completed by the end of this year 2014. These works are undertaken as part of the next 5-Year Plan, which provides for completing parallel roads in that area”.
This lack of foresight in proper urban planning in a growing city creates headaches for the community at large and property owners. Many residents renting properties are thinking of moving out of the area. In speaking to Sohair Elmeniawi, Client Manager at Exclusive Links Real Estate Brokers responsible for The Furjan Villas, she commented, “We are finding that the absence of the originally promised exit to the Emirates Road, standing water and lack of a security gate in this prestigious development is scaring buyers away. While traffic issues are a main-stay of this area, property prices had risen in 2013 for three bedroom villas from AED 2.3 million – AED 2.9 million. Although Nakheel has done a good job with quality at Al Furjan, now prospective buyers are shying from such serious infrastructure issues. So access particularly is affecting property movement and so communities will get affected. It’s the RTA’s responsibility to sort out immediately, especially in view of the area’s proximity to the Jebal Ali Airport, Abu Dhabi and EXPO 2020 pavilions that will be located in this area.”
As a school mum to the area, the daily challenge puts undue pressure on the morning run to work. The school is accommodating and so are my bosses in their understanding, of matters far beyond one’s control. Patience is a virtue, yet the consequences of ad hoc planning should not be left to the good graces and acceptance of helpless residents.
Perhaps this raising of exigent petitions through social media and the show of reluctance by home- buyers to commit, may make the case and the endorsement for change and propel local agencies to cooperate in the planning and development of living spaces that are amenable for ease and safety of movement and peace of mind for all. 

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