Collaboration over blame and the collective responsibility of trading vigilance

Outside of its fundamental components, trade can effectively be credited as the primary social catalyst that beckoned our species out of tribalism and into the highly sophisticated, global network of shared information, technology and culture we know today. Through the development and operation of routes such as the Silk Road, the far-reaching civilisations of China and the Roman Empire were able to connect, not only bridging the trade of new and exotic commodities but the exchange and understanding of drastically different cultures and ideas. With the advent of each epoch, new feats of engineering were created to enhance the world’s trade routes, a great example being The Grand Canal, the world’s longest artificial river, which reached its full form under the Sui dynasty (581 – 618 AD) and to this day stretches 1,776 kilometres connecting the cities of Beijing and Hangzhou with both the Yellow and Yangtze Rivers. In addition to infrastructure, new technologies were also being developed to provide a competitive advantage for merchant traders and explorers who sought to capitalise on the acquisition and sale of rare commodities, most notably Christopher Columbus, whose famous voyage of 1492 and subsequent connection to the New World was partially enabled by faster, stronger ships and superior navigational equipment.

Trade is so central to our evolution that even the etymology of common words and phrases that are still in use to this day, can be traced back to trade-based traditions and processes. Under the Roman Empire, salt was regarded as a precious commodity, so much so that soldiers were partially paid in the mineral. Derived from sal, the Latin word for salt, both the word salary and the expression, ‘not worth his salt’ are direct derivatives from this form of exchange.

Of course, as a by-product of trade came the development of wealth and power, eventually leading to the dawn of capitalism and the formation of international businesses that could be compared to many of today’s multinationals; most notably, the Dutch East India Company in 1602. Widely acknowledged as the world’s first mega-corporation or proto conglomerate, it was not only the first business to exhibit a vertically integrated global supply chain, but also, through the issuance of bonds and share certificates to the general public, the world’s first publicly listed company.

Over time, the ever-increasing volume of trade led to broad changes in consumer behaviour, where non-domestic goods became staples, leading to certain forms of trade becoming virtually essential to the newly established standards of everyday life. It was at this point that global politics became intertwined with trade, with one being able to wield the other as an incentive or deterrent, ranging from nation-on-nation disputes such as the Embargo of 1807 between the United States and Great Britain, or towards broader issues such as the United Nations’ sanctions on Iran in opposition to its nuclear programme. Further down the list of trade sanctions and embargoes comes the milder, politically motivated tactic of propaganda; and it is this that I am most keen to cover today.

Since arriving on the international stage as a global trading centre several decades ago, Dubai has shouldered its fair share of sensationalism. Reputed as a playboy’s paradise and a destination for decadence, it was always going to attract its fair share of detractors, however in recent years the rhetoric has steadily increased, not so coincidently in tangent with the emirate’s growing success. Fortunately, most of today’s criticism of Dubai is more of a petit bourgeois effort to discredit its reputation in the hope that traders will overlook the inadequate offerings and hypocrisy of the trading centres they conscientiously left behind. If anything, Dubai’s ongoing success, particularly in the precious metals and diamond markets, is a shining example of how the age of monopoly by fiat is over.

For any of my regular readers, you will know I’ve written extensively on the subject of biased treatment from NGOs, trade bodies and “journalists” alike, however it hasn’t stopped them from targeting Dubai without taking the time to mention either what we are doing to counteract the global challenges we face as a collective, nor how Dubai is taking the initiative to stem the flow of illicit goods for the benefit of the international community.

In a recent article titled, ‘All that glitters: A look into illicit gold networks’, as published by the Daily Maverick, the piece, to its author’s credit shares the focus of the problem with her native country stating, ‘South Africa has surfaced as a key transit point for bullion smugglers wanting to channel the precious metal to and from one of the world’s most prolific players in the gold industry – Dubai.’ After citing several arrests made by the unfortunately acronymed, South African Revenue Service (SARS), the article highlights the challenges faced by smugglers who source gold from across the African continent, particularly Zimbabwe and Madagascar, before using South Africa as the point of departure to transport their contraband either directly or indirectly to Dubai.  

Firstly, it is important for people to understand that smuggling gold into Dubai isn’t as easy or as risk-free as some of our critics might suggest. By Federal Law No. 11 of 2015, those involved in the dealing of precious metal or precious stone jewellery without proper hallmarking or certification from authorised institutions will be imprisoned for one year and/ or fined between AED250,000 ($68,073.52) – AED500,000 ($136,147.04). Over the past few years alone, Dubai Police have been extremely effective in arresting and prosecuting gold smugglers attempting to either import, export or use the city as a place of transit for illicit means. Only a few months ago, Dubai Police busted a smuggling operation that was using diplomatic baggage as a way of carrying out its activities from Dubai to India.  

As a jurisdiction with a more rigorous level of compliance than its LBMA counterpart, Dubai Good Delivery is an internationally recognised standard that requires its members to adhere to responsible sourcing practices in accordance with the ‘DMCC Rules for Risk-Based Due Diligence for Gold and Precious Metals.’ As a destination that has had to go above and beyond to illustrate its commitment to international best practice, industry stakeholders are frequently audited and required to provide clear reporting of their business in order to remain certified. On a collaborative level, the UAE recently joined eleven other gold trading hubs, as per LBMA’s request in support of upholding higher industry standards.

In terms of what the UAE is doing to further solidify its position as a transparent centre for the wider industry, Dubai Good Delivery is currently being assessed to become a Federal policy, meaning a nationwide, zero-tolerance approach to the illicit gold trade that will gain the support of the country’s Ministry of Economy, and therefore garner an enhanced level of resources to improve vigilance at every turn.

From my position, after reading this article and having put thought to page it occurred to me that we are not alone in attempting to deal with such issues. Given that many smugglers prefer to use air travel as their preferred means of transportation, I revisited an idea I had shared publicly at the second DMCC Africa Dubai Precious Metals Forum (ADPMF), held in Accra in 2016, where I openly called for all airlines to place a ban on the hand-carriage of gold. Through the support of industry vanguards such as the International Air Transport Association (IATA), the adoption of a ‘cargo-only’ policy would almost certainly be a giant leap towards solving this issue, not just between Africa and Dubai, but for the wider, global industry.

After a highly constructive conversation with IATA’s Kashif Khalid, regional director for Africa & Middle East, DMCC has opened talks to facilitate a series of workshops designed to address the challenges being faced, while reaching out to the international community and industry stakeholders to isolate weaknesses in our systems and provide a stronger, united front.

It would be cheap for me to point fingers at the various flaws within South Africa’s hard working border services or law enforcement agencies for not being more effective, so instead, I propose that all jurisdictions that are serious about solving this problem reach out to me and join this initiative as a proactive next step.

As a nation that at one stage accounted for more than 90% of the global gold coin market and that shares the UAE’s outlook for raising standards and fighting the illicit gold trade, I should thank the Daily Maverick reporter, Caryn Dolley for bringing South Africa to my attention. I am certain that through a more solution-oriented approach, we are fully capable of setting a bilateral example of how to deter and or catch would-be smugglers from using air travel to launder their goods and cheat Africa’s domestic economies of valuable tax revenues, while simultaneously finding a way to eradicate this practice for good.