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‘Merchanting’: The code phrase for the gold mafia’s plunder | Investigation Information

“We do merchanting, that’s it.”

That is how Mohamed Khan, considered one of South Africa’s greatest cash launderers, described his strategy to hiding huge quantities of illicit money from authorities.

That code phrase for laundering sits nicely with the person identified higher by his road title, Mo {Dollars}. During the last decade, Khan has constructed a legend as a go-to determine for individuals wanting to scrub their soiled cash in Southern Africa.

He helps a few of the area’s wealthiest individuals legitimise hundreds of thousands of {dollars} of unaccounted money via a complicated net of entrance corporations, bribes and faux invoices, hundreds of paperwork and interviews with Khan’s former colleagues, brother and ex-wife have revealed.

Mo {Dollars} is a central determine in Al Jazeera’s four-part investigation, Gold Mafia, into gold-smuggling and money-laundering operations in Southern Africa. The investigation reveals how competing gangs have infiltrated state establishments, airways and banks in Zimbabwe and South Africa to launder piles of cash utilizing gold.

“He’s kind of held up as a kind of shadowy determine that controls cash laundering in South Africa,” cash laundering investigator Paul Holden informed Al Jazeera.

Amongst Mo {Dollars}’s greatest purchasers is Simon Rudland, a Zimbabwean millionaire who owns one of many area’s greatest tobacco corporations, Gold Leaf Tobacco. South African income officers have accused Rudland of evading taxes by promoting his cigarettes on the black market.

So, what precisely is “merchanting”? How do launderers like Mo {Dollars}, Rudland and their accomplices transfer soiled cash throughout borders with out being tracked?

Ghost comapnies were made out of people's stolen ID's
So-called ‘ghost corporations’ have been used to separate up Gold Leaf Tobacco’s illicit cash [Al Jazeera]

Stolen identities

A former worker of Mo {Dollars}, who we’re calling Jimmy to guard his identification, informed Al Jazeera that the staff goes out at evening, seems to be for poor and homeless individuals, and presents them as much as 10,000 rand ($550) in the event that they accompany Mo {Dollars}’s staff to a financial institution and open accounts. Telephones given to them are registered with the financial institution.

Then “the cellphone was taken away from them, the pin quantity was modified on the banking app”, Jimmy recalled from his time with the group, explaining how Mo {Dollars}’s staff takes management of these financial institution accounts.

Soiled money from Gold Leaf Tobacco and different purchasers is break up into small, comparatively unsuspicious quantities and deposited into these a number of accounts, that are in impact dealt with by monetary service suppliers PKSA and SALT Asset Administration, each owned by Mo {Dollars}.

Image showing Salt Asset Management is authorised to handle Gold Leaf Tobacco's assets.
One of many paperwork exhibiting how Gold Leaf Tobacco authorised Salt Asset Administration to be its agent [Al Jazeera]

Entrance corporations

In 2016, Mo {Dollars} signed Rudland’s Gold Leaf Tobacco on as a shopper. That deal was “particularly for the intention of cash laundering and nothing else”, Dawood Khan, Mo {Dollars}’s brother and former colleague, informed Al Jazeera. Dawood has severed ties together with his brother’s enterprise and is hiding in an undisclosed location.

Rudland authorised Mo {Dollars} to hold out international change transactions on Gold Leaf’s behalf. The stage for “merchanting” was set.

Since then, Rudland and Mo {Dollars} have laundered a whole lot of hundreds of thousands of {dollars} to financial institution accounts of a set of entrance corporations unfold internationally – Aulion in Dubai, Vantage Leaf in Mauritius, Velmont Valley in Switzerland and Liberty Gold in the US. These corporations are managed by Rudland and his enterprise companions like Howard “Howie” Baker and Andrew Greyvenstein, firm paperwork present.

In simply 2017, Gold Leaf wired $14m to Aulion, $12m to Vantage Leaf, $16m to Velmont and $9m to Liberty Gold, transaction paperwork accessed by Al Jazeera reveal.

Merchanting, the code word for money laundering

Duping the central financial institution

The cash is described to South Africa’s central financial institution – which screens all foreign exchange transactions – as advance funds for items to be imported.

“Each transaction overseas must be reported to the reserve financial institution and it’s a must to give them a purpose for why you’re shifting cash overseas,” Holden defined. “The import advance cost, it’s a really helpful method for cash launderers as a result of you’ll be able to justify the motion of funds in a foreign country with out something coming in simply but.”

“It means that you can transfer the cash overseas instantly after which, you realize, create a paper path at your comfort at a later stage.”

That paper path is certainly created later: Dawood described how he would create pretend invoices for corporations that might by no means really ship any items to South Africa.

“In a whole guide of SALT Asset Administration…I can say, 90 p.c of the accounts that have been on the guide have been hijacked,” Dawood stated.

Within the case of Gold Leaf Tobacco, these pretend invoices have been initially primarily for tobacco imports that by no means got here. Then, the operation ran right into a problem: They’d extra soiled cash than they might launder utilizing tobacco or different innocuous “imports” like clothes.

So Rudland and Mo {Dollars} turned to a different product: gold.

One of Simon Rudland's gold smugglers caught on CCTV at Harare airport
Considered one of Simon Rudland’s smugglers caught on CCTV at Harare Airport [Al Jazeera]

Gold smuggling

Below the gold scheme engineered by the duo, PKSA supplies what are described as loans to Aulion, the Dubai-based entrance firm. In 2018 alone, the quantity transferred was $98m, in accordance with wire paperwork.

Aulion, in accordance with official paperwork drawn up by PKSA, buys Zimbabwean gold with that cash. But it surely doesn’t repay the mortgage. As a substitute, the gold is smuggled to Dubai by couriers working for Rudland.

In Dubai, the gold is dropped at a refinery the place it’s melted down and all traces of its dodgy origins eradicated.

Mo Dollars talking about merchanting
Al Jazeera obtained audio recordings from Mo {Dollars} speaking about merchanting [Al Jazeera]

Bribing bankers

To make sure the “merchanting” doesn’t elevate any pink flags in South Africa’s monetary system, Mo {Dollars} would bribe key officers at two of the nation’s greatest banks – Commonplace and ABSA – in addition to at Sasfin, a financial institution that focuses on small companies.

Ledgers accessed by Al Jazeera present hundreds of {dollars} of money have been paid each month to those officers. Different paperwork and interviews reveal that dodgy, illicit transactions have been solely processed when bribed staff have been within the workplace.

Individuals in financial institution compliance departments have been paid to make sure that PKSA and SALT Asset Administration paperwork appeared clear and acquired the required approvals. And within the case of Sasfin, a member of the IT division acquired bribes to wipe fraudulent transactions from the financial institution’s on-line system.

“Gold Leaf Tobacco had the aptitude inside Sasfin to maneuver large quantities of cash, not questioned, since you had the respective eyes within the financial institution, overlooking the whole course of,” Dawood informed Al Jazeera.

A pack of Simon Rudland's cigarette brand, Rudland & George
Considered one of Simon Rudland’s cigarette manufacturers, Rudland & George [Al Jazeera]

The victims of ‘merchanting’

Transferring hundreds of thousands of {dollars} of doubtful money throughout borders helps criminals cowl traces of ill-gotten wealth.

However it’s not only a victimless crime. “While you focus simply on the cash laundering, you are inclined to ignore what cash is being laundered,” Holden defined. “[Money launderers] are providing an extremely very important service to a few of the worst individuals on the planet: individuals trafficking, drug trafficking and complex organised crime like state seize in South Africa.”

State seize – which a authorities investigation confirmed underneath former South African President Jacob Zuma – refers to systematic political corruption designed to learn a couple of personal entities.

“State seize massively impacted the financial system in South Africa,” Holden stated. “It has impoverished large quantities of individuals, has threatened the true stability of the nation in the long run.”

“And that was all facilitated by stuff like this.”

Simon Rudland informed Al Jazeera that the allegations towards him shaped a part of a smear marketing campaign by an unidentified third get together. He denied any involvement within the sale of illicit cigarettes and in gold or different smuggling. He additionally denied any data of Aulion and informed Al Jazeera that cash had not been handed to the Dubai agency from Gold Leaf.

He accepted that he had had dealings with Mohamed Khan, who he agreed “appeared” to be a cash launderer. He acknowledged that Gold Leaf and one other of his corporations had authorised Khan’s SALT Asset Administration to behave as their agent however denied that any type of cash laundering had been undertaken for him or any of his companies.

Rudland stated that funds made to Vantage Leaf, Liberty Gold and Velmont Valley had nothing to do with him or his corporations.

Gold Leaf Tobacco denied any involvement, previous or current, in cash laundering, unlawful gold commerce and associated issues. No “untaxed” or “unlawful” cigarettes may very well be “attributed” to Gold Leaf, it stated. Gold Leaf’s restricted transactions with Mohamed Khan and SALT Asset Administration had all the time been lawful and correct, it stated. Gold Leaf stated it had by no means made any cost to Aulion.

Andries Greyvensteyn confirmed that he was underneath investigation by the South African Income Service, along with Rudland and Howie Baker. He stated his dealings with Rudland and with Mohamed Khan (who he accepted was a cash launderer) had been very restricted and he denied knowingly taking part in any crimes or unlawful actions. Baker didn’t reply to a request for feedback on the investigation.

Mohamed Khan informed Al Jazeera that each one allegations towards him have been false and based mostly on hypothesis, conjecture and manufactured and doctored proof. He confirmed that he was the proprietor of the PKSA Group and of SALT Asset Administration and that Gold Leaf have been purchasers of SALT however he denied involvement in cash laundering or different legal exercise. He denied bribing anybody who labored within the South African banking sector.

Liberty Gold denied all data of the issues and people featured in our investigation, whereas Vantage Leaf denied any identified involvement in cash laundering or false invoicing.

Sasfin Financial institution informed Al Jazeera it was taking vigorous motion towards suspended and former staff and purchasers of its international change unit and stated that it not had a relationship with any of the companies named on this article.

ABSA stated it had handed Al Jazeera’s findings to its Forensic Investigative Unit, whereas Commonplace Financial institution stated it has a zero-tolerance stance regarding fraud and criminality and would report and help in any authorized investigation.

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