Though the recent gold price fixing scandal out of Switzerland may have come as a shock to many, the reality is that this is just the latest installment in a long saga of shady Swiss gold dealings. More troubling than the event itself is that this, and other nefarious gold-related transactions, are taking place in a country which accounts for nearly 70 per cent of the world’s production and refining of gold bullion.
In light of that last figure, it is easy to surmise that the Swiss are very dependent on their gold industry, which brings in nearly $18 billion in profit annually. As a result, authorities actively try to encourage growth in this sector, often turning a blind eye to suspicious activity. This applies in particular ore imports from countries affected by oppression, armed conflict or violation of environmental protection violation.
For many years now, NGOs monitoring the trade have been pointing the finger at two particularly large Swiss assayers — namely Metalor and Argor-Heraeus for committing particularly flagrant violations. This though, is just the latest generation of Swiss manufacturers to assume the position that ‘if it doesn’t happen in Switzerland, it doesn’t matter.’
To fully understand this mentality, it is necessary to go back to the 1920s. Situated in the heart of then economically stricken Europe, Switzerland managed to avoid the ravages of numerous recessions by attracting substantial, yet oftentimes dirty deposits to its secretive banks. The discretion of the banks, the fact that Switzerland was traditionally a neutral country (and thus not as susceptible to the geopolitical instability of its other European counterparts), and its being situated near the center of the continent all made it an attractive place to store wealth.
The large deposits led to a booming gold trade as depositors went between investment and liquidity, and this led to enormous multiplier effects in the Swiss economy. When everyone else seemed to be down and out, Switzerland was booming — and all because they had turned a blind eye to anything that might cause a moral dilemma.
Commonly known (to the point where it has become a point of ridicule) is Swiss cooperation with Nazi Germany – the country even came to be known as the “Bank of the Third Reich.” Gold bought from Germans came usually from looted property and the victims of the concentration camps.
It has recently reported that even “gold teeth [were] sent to the headquarters of the Reichsbank in Berlin, where they melted down to ingots.” What is perhaps more shocking is that “the Swiss knew full well that part of the gold sent to them must have come from prisoners.”
In the ’80s, the Swiss once again faced international scrutiny when it came to light that rather than being imported from South Africa as Swiss refiners had claimed, they had actually been importing gold ore in violation of an international embargo on the DR Congo.
Other than this, it has been reported that Metalor had for years been buying gold from Peru, where the company had been making mining contracts with organized crime syndicates. Employees of the resulting makeshift mines faced exploitative wages and hours, and the methods of extraction (particularly the use of mercury) were extremely detrimental to both the workers and the environment. Rather than local benefits, the areas around the mines saw rampant prostitution and drug addiction, which also benefited the syndicates who had brought in the industry.
For their part, Argor-Heraeus has apparently for years been violating import restrictions from the Congo. The firm is reported to have financed one of the warring parties, and exploited cheap labor ($1 per day in dangerous conditions). The extracted gold was then transported to Uganda, thus in effect ‘laundering it,’ and thus allowing it to legally get to Switzerland. In November last year, the Swiss giant was accused of financing acts of war, smuggling and money laundering, and faces a multitude of international court cases.
So as one may see, Swiss price fixing is just the tip of the dirty iceberg – more a symptom of a gold industry that has been corrupted by its historical impetus. When one takes into account all of the human suffering that the Swiss gold industry supports, it seems only logical that they would try to maximize benefit on their end – making this latest scandal sadly unsurprising.
skarbnicazlota 