Taxpayers on hook for Perth Mint scandal, but state’s premier nowhere to be seen

With West Australian taxpayers facing potentially hundreds of millions in anti-money laundering fines, the state’s opposition has called on the government to set up a Royal Commission into the Perth Mint and Gold Corporation.

The mint and Gold Corp were plunged into turmoil after a Four Corners report on Tuesday claimed the state-owned trading enterprises failed horribly in meeting anti-money laundering and counter-terrorism obligations over several years.

The Perth Mint has been plunged into turmoil.

The report also claimed that in 2021, the mint tried to cover up a scandal brewing over its practice of diluting or “doping” its gold using silver or copper to improve margins.

WA Premier Mark McGowan had responsibility over Gold Corporation until the portfolio was transferred to Mines Minister Bill Johnston in April 2021.

Johnston is currently on a trade mission to Asia to spruik WA’s resources industry while McGowan is yet to comment publicly about Four Corners’ claims.

The mine and Gold Corp are currently the subjects of an Austrac audit that began last year after concerns were raised about the mint’s compliance with stringent regulations set by the Anti-Money Laundering and Counter-Terrorism Financing Act.

Opposition leader Shane Love has been asking questions in parliament about the mint and Gold Corp since 2021, which intensified in August last year after an Austrac audit was launched.

He said the allegations were raised were “unfathomable”.

“We need a full royal commission to get to the bottom of what’s been going on – not only around those Austrac allegations, because that is an inquiry which is ongoing, but as we saw last night, the allegations around the gold doping is of particular concern, and the reputational risk that that exposes for Western Australia’s Perth Mint,” he said.

Four Corners claimed the mint failed to register more than 5000 international movements of money over a nine-month period. Each failure to register these could result in a fine of up to $21 million.

Love said the report had uncovered serious issues in the mint that could see WA taxpayers on the hook for hundreds of millions, if not billions, in fines.

In the past Austrac has not been afraid to lump enormous fines on organisations that breach anti-money laundering laws.

In 2018, Commonwealth Banks was hit with a then-record fine of $700 million for repeated breaches while in 2020 Westpac copped a $1.3 billion penalty for its own breaches.

The difference here is that the mint’s gold is backed by the WA government (it is the only mint in the world to offer such a guarantee), which means taxpayers will have to foot the bill for any fines.

On top of potential fines, the gold doping may also come back to haunt taxpayers.

The mint began doping its gold in 2018 to improve margins on the product while keeping its bullion at a globally accepted 99.99 per cent purity.

However, in 2021 the purity of the mint’s bullion was noticed by one of its biggest customers and the exchange with even tougher purity standards than accepted across the rest of the world, the Shanghai Gold Exchange.

Four Corners claims when the mint received a complaint about two bullion sent to SGE it conducted an internal investigation which found about 100 tonnes of gold sent to the exchange could be below their purity standards – about $8.7 billion worth at today’s prices.

During its investigation, the mint went back and found one of the gold bars had been “red flagged” by its own refinery but did not share that information with the Shanghai Gold Exchange. The mint recognised the reputational damage this could cause if it was made public.

This doping practice could leave taxpayers exposed in that the mint may have to purchase the gold back and recast it to acceptable purity, which would mean transport and refinery cost on top of the purchase back.

Perth Mint refines more than 90 per cent of newly mined gold in the country. Credit:

This may prove tricky, however, given the Chinese government’s ban on exporting gold from the country. Shanghai Gold Exchange was contacted for comment.

Financial regulation expert Nathan Lynch said in addition to that gold the mint might also be currently holding customer gold that did not meet global purity specifications.

“The Shanghai gold was only picked up because the bullion was shipped. How much doped gold is inside? How much of that has been altered with silver?” he said.

With the premier nowhere to be seen in Perth on Tuesday, Transport Minister Rita Saffioti faced a barrage of questions about the issues facing the mint and Gold Corp but could not answer any.

She said the gold doping questions were about operational matters and said Gold Corp chief executive Jason Waters would answer those questions later on Tuesday.

She said she expected the premier would speak on the issue later this week.

Saffioti also rubbished the opposition’s call for a royal commission.

“I think they’ve asked for a royal commission every week,” she said.

The most shocking case study in the Four Corners expose was the revelation that former Hells Angels sergeant-at-arms Dayne Brajkovich was able to purchase $27,000 worth of gold from the mint in the middle of last year by simply producing his driver’s licence.

Lynch backed a call for a royal commission and said similar issues had led to the commissions into the banks and casinos.

“Morally and ethically and legally, it’s no different to what the banks and casinos were doing, which is underspending on risk and compliance controls and delivering that as a quasi-profit to shareholders,” he said.

The 120-year-old Perth Mint is the only government-owned and guaranteed precious metals enterprise and refines more than 90 per cent of newly mined gold in the country.

It held $5.85 billion worth of precious metals on behalf of clients in 2021.

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