Quinn Kepes, a Program Director at Verité, was recently interviewed by Fusion (ABC/Univision) regarding the intersection between illegal gold mining, organized crime, conflict, corruption, and human trafficking. In the video, Mr. Kepes asserts that “the whole international focus has been on Africa, specifically the Democratic Republic of Congo […] The focus is the traditional conflicts between guerrillas and government. On the other hand, in Latin America, most of the time, gold funds criminal organizations [and] organized crime. It’s generating the same type of conflict. [… ]This gold makes its way into a lot of our products. Whether that’s jewelry or electronics, cellphones, laptops […] there’s really a need to expand the definition of ‘conflict minerals’ to include these types of issues in Latin America, where gold is really fueling slavery, violence, corruption, [and] organized crime.”

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Across Latin America, organized crime has wreaked havoc on local populations. As a result, Latin America’s regional homicide rate is the highest in the world. On a list developed by Insight Crime of the world’s 50 most dangerous cities, 43 were located in Latin America. Much of this violence can be attributed to organized crime groups often referred to as “drug cartels.” While most of these groups do engage in drug trafficking as a way to generate revenue, they are increasingly moving into other activities such as extortion, kidnapping, human trafficking, and illegal mining. In fact, in Peru and Colombia—the number one and two cocaine producers in the world, respectively—the value of illegal gold exports has surpassed the value of cocaine exports, becoming the largest illicit export from these two countries. The revenue generated from illegal mining across Latin America funds organized crime groups, thus fueling conflict, violence, corruption, and human trafficking.

In Peru, Verité’s in-depth research on forced labor in illegal gold mining discovered that organized crime is intrinsically linked to illegal mining, greatly increasing the risk of human trafficking. Verité research also found that Peruvian and international organized crime and rebel groups are heavily involved in illegal gold mining in Peru, as they profit from gold extraction and trafficking, and use gold to launder illicit proceeds. These groups include the Peruvian Shining Path, the Colombian FARC (Fuerzas Armadas Revolucionarias de Colombia), the Italian ‘Ndrangheta, and Chinese and Russian organized crime groups. Research has found that almost two percent of all gold produced worldwide comes from illegal Peruvian gold mines, many of which are tied to human trafficking and organized crime.

Illegal mining is rampant in a number of other countries throughout Latin America, but the link with human trafficking, conflict, organized crime, money laundering, and corruption has only been sporadically documented and the dots have not been connected. Organized crime has been linked to iron, coal, silver, copper, and gold mining in Mexico; emerald, tungsten, coltan, and gold mining in Colombia; and gold mining in Honduras, Panama, Venezuela, and Ecuador, among others. In Mexico, the ultra-violent Zetas and Knights Templar “cartels” have been profiting from coal and iron mining. The Knights Templar reportedly earned approximately $1 billion from roughly 700,000 tons of iron ore exports to China, which “financed its irregular army of extortionists and hired guns.” In Colombia, the left-wing FARC and ELN (Ejercito Nacional de Liberación) guerilla groups and the right-wing paramilitary groups—the Urabeños and Rastrojos—have been working together to extract and export gold. In Mexico and Colombia, mining company representatives, human rights activists, and unionists working in opposition to these organizations’ mining interests have been intimidated and assassinated.    

Illegally mined minerals are “laundered” and exported, with the help of corrupt government officials, to prominent gold refineries and companies in the United States, Switzerland, Italy, the United Arab Emirates, and India that supply some of the biggest banks, jewelry companies, and electronics producers in the world. By buying these conflict minerals, companies fuel conflict and finance criminal groups that subject workers to forced labor, take over vast stretches of land, and foment corruption and impunity. Verité has previously written about the link between foreign corrupt practices and trafficking in persons and the ways in which companies may face sanctions under the Foreign Corrupt Practices Act (FCPA) for failing to address corrupt practices facilitating the movement of migrant workers. Likewise, companies can face sanctions for corrupt practices if any of their representatives bribe foreign officials to facilitate the export of illegally produced minerals.

Additionally, companies and their executives can face steep sanctions under the Foreign Narcotics Kingpin Designation Act and the Specially Designated Nationals (SDN) List for funding criminal and terrorist groups, or individuals tied to these groups. Groups on the lists include the Shining Path, the Zetas, the Knights Templar, the ELN, the FARC, the Rastrojos, and the Urabeños. According to a representative of the Treasury Department’s Office on Foreign Assets Control (OFAC), much like the FCPA, the SDN and Kingpin Act establish “strict liability” in that they do not take into account whether executives had knowledge of payments being made to individuals or entities on these lists or whether these payments were made by sub-agents of US-based companies. Once a violation occurs, OFAC will look at whether a business has mitigated risk and whether they have a compliance program. Could a company be held accountable if a local agent of the company unknowingly purchased iron ore or gold that was produced by an illegal mine? The answer is yes.

In its recently released report for the U.S. Department of State’s Office to Monitor and Combat Trafficking in Persons (JTIP), Verité identified the presence of organized crime as a key “red flag” indicating a high risk of human trafficking, as it shows a high level of general lawlessness and corruption, both of which contribute to trafficking risk in their own right, and because workers may be fearful of leaving their jobs before paying off their debt or completing their contracts due to a fear of violent reprisal. Therefore, companies that fail to address the presence of organized crime in their supply chains may also be failing to address the risk of human trafficking in their supply chains, thus opening themselves up to liability under the Executive Order Strengthening Protections Against Trafficking in Persons in Federal Contracts.

All too often, the concept of conflict minerals is applied only to the African context, especially the Democratic Republic of the Congo (DRC) and bordering countries. Meanwhile, illegal mining in Latin America—which links to the supply chains and products of numerous multinationals—is intrinsically linked to human trafficking, organized crime, violence, and corruption, and there are few initiatives in place to address this intersection. Companies should lead the way by taking steps to ensure that they do not perpetuate organized crime, violent conflict, corruption, and slavery by purchasing illegally mined “conflict minerals” from Latin America.  Verité has developed guidance for companies to identify and address human trafficking risk in their supply chains in order to come into compliance with the above-mentioned Executive Order by carrying out focused risk assessments, developing detailed compliance programs, communication and training, monitoring and remediation, and conducting periodic reviews. These same steps can help companies to identify and address links to organized crime, corruption, and conflict minerals in their supply chains.

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