"Unlike with sourcing diamonds from conflict zones (blood diamonds), where there has been a global campaign and multilateral organisations monitoring it for some time, the emphasis on bullion has happened only recently," said
"Two auditors were named and it is for local wholesalers to make sure that due process is followed in all sourcing arrangements."
This means that the wholesale buyer will need to be sure not just about the supplier's credentials about the sanctity of the bullion, but even confirm that the supplier's own original sourcing of the same meet the norms.
The issue has come to light after reports in the international media cast doubts over some sourcing arrangements made by a
On its part, Kaloti issued a statement to its stakeholders and the local media categorically stating its position. "There has been no evidence in any of E&Y findings that Kaloti sourced gold from conflict zones," the statement quoted Tarek El Mdaka, managing director at Kaloti. "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.
"In all of Ernst & Young's reports and findings during the process, Kaloti was never found to be sourcing from conflict zones.
"I would like to take this opportunity to reassure you that these allegations are false and without any substantiation."
Such strict requirements are already there in the diamond trade under the ÂKimberley Process', with all stakeholders working together to make sure the sourcing and supply meet ethical norms. It was in the 1990s that the world decided there would not be easy money to be made by militia gangs in conflict-prone zones particularly in
The same standards are being applied to the gold trade as well, especially related to supplies from strife prone Congo. While diamonds that are found to have been sourced from conflict zones will invite stiff penalties for the buyer, the stakes are not that high as yet for similar deals don on bullion.
The penalties could include losing the buyer being blacklisted if he wanted to sell to clients in the US or
But market sources confirm that stiffer penalties could be drawn up in future. As such, the tougher auditing requirements could just be the beginning.
Also, DMCC has got a blueprint available for the bullion trade to make sure compliance measures are in place. "There is a responsible sourcing initiative on the DMCC link http://www.dmcc.ae/gold-responsible-sourcing-precious-metals and that's pretty much the standard practice," said
At the end of the day, it comes down to reputation management "For any trader or participant in the gold trade dealing in hundreds of kilos, there is no way they would want to spoil their reputation by buying gold that cannot be accounted for or of doubtful antecedents," said a source in the local wholesale trade.
"Reputations account for a lot in an extremely closed trading environment as in gold. That would be the biggest incentive not to do anything unethical."
Most Popular Stories
- Major Phone Makers Sign Anti-Phone-Theft Pledge
- 'Beige Book' Federal Reserve Survey, April 2014: Full Text
- College Board Offers a Sneak Peak at New SAT
- Yellen Remarks, Market Data Give Stocks a Boost
- Yahoo Struggles Despite Alibaba Boost
- Chevrolet's Small SUV Coming to the U.S.
- Is This Job Too Good to Be True?
- Brands Get Caught in Bitter-Tweet Traps
- Rapper Cuts Off Own Penis, Jumps Off Building in Failed Suicide
- Neil Young Closes Kickstarter Campaign for PonoMusic