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Jail for traders in illegal gold

While illegal miners continue to face arrest and the possibility of losing their lives in violent turf wars or accidents‚ the traders who keep them in business are rarely apprehended.

But three such men were brought to book this week.

Louis Makoka‚ Celiwe Mlambo and Cameron Leokaoke were all sentenced to time in prison in the Johannesburg Magistrate’s Court on Tuesday.

In December 2014‚ the court found that the three men had traded in illegal mine gold.

Makoka and Mlambo owned a company called Tsakane Supply Jewellery and police confiscated seven gold bars from them in 2005‚ but the men said the gold was gold obtained legally. Leokaoke was the company’s procurement officer.

Investigations revealed that the gold was mine gold‚ usually bought from zama-zamas‚ which was smelted with copper‚ zinc and tin to pass it off as jewellery gold to be sold commercially.

Makoka‚ Mlambo and Leokaoke made R17-million in less than five months in 2005 by selling gold to refineries.

The men were convicted of two counts of fraud each and Makoka and Mlambo of failing to keep a proper gold register.

Makoka and Mlambo were sentenced to an effective six years behind bars for fraud and Leokaoke to four years‚ with two more years suspended.

The men are still free‚ after they were granted bail of R10,000 pending their appeal.

The confiscated gold bars‚ worth R3-million‚ were declared forfeit to the state.

According to the precious metals value chain the South African Police Services (SAPS) developed to classify the illegal trade‚ the three men operated in the fourth tier‚ which includes individuals who are legitimate dealers in possession of licenses which they use to conceal their illegal activities.

Testifying in court‚ South African Police Service organised crime co-ordinator Lieutenant-Colonel Hendrik Flynn said: “Unscrupulous license-holders would create a fictitious invoice system [pretending] that jewellery was purchased from individuals. Upon investigation it is often discovered that the individuals reflected in the registers deny any transactions relating to jewellery.”

These people are seen as essential players in the market as they provide the lower tiers‚ made up of zama-zamas and those who buy directly from them‚ with large cash injections to keep business afloat‚ Flynn said.

Prosecutor Talita Louw argued that in this way‚ Makoka‚ Mlambo and Leokaoke helped keep the illegal trade of gold alive. Apart from the loss of revenue this creates for the taxman‚ it is increasingly putting the communities in which they operate in danger‚ Louw said.

Flynn said the use of mercury in the smelting process poses a serious health risk to those carrying out the work.

Gauteng‚ North West and the Free State are the regions in the country worst affected by illegal mining activities‚ Flynn said.

The Chamber of Mines estimates that up to 10% of South Africa’s total gold production — which in 2013 amounted to R72-billion — is from illegal mining.

Illegal mining turf wars
South African Police Service organised crime co-ordinator Lieutenant-Colonel Hendrik Flynn‚ testifying in the case‚ said turf wars among illegal miners are becoming increasingly violent and more frequent.

In the last year‚ near Johannesburg:

– 15 illegal miners were killed within 72 hours in a turf battle in Springs in September;

– 10 bodies of illegal miners were found with gunshot wounds in Benoni in June‚ five in April and five in February; and

– Four men from Lesotho who mined for gold illegally were killed in February and their bodies dumped in a disused mine shaft on the West Rand. Seven men are on trial for their murder in the high court in Johannesburg.

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