At least Canada admits it when the gold is missing

Mint Can't Account for Missing Gold

By Ian Macleod
Ottawa (Ontario, Canada) Citizen
Tuesday, June , 2009

http://www.ottawacitizen.com/Business/Mint+account+missing+gold/1656084/...

OTTAWA -- A significant quantity of gold, silver, and other precious metals is unaccounted for at the Royal Canadian Mint.

External auditors are investigating a discrepancy between the mint's 2008 financial accounting of its precious metals holdings and the physical stockpile at the plant on Sussex Drive in Ottawa.

The mystery raises possibilities from sloppy bookkeeping to a gold heist.

Officials with the commercial Crown corporation are saying little and refuse to confirm the amount and value of the unaccounted for gold, silver, and palladium.

"An unprecedented demand in gold in 2008 has led to an unreconciled difference between the mint's financial statements and the physical count of precious metals. There's a difference there that we're looking into," Christine Aquino, mint spokeswoman, said in a prepared statement Tuesday in response to questions from the Ottawa Citizen.

"We're taking this very seriously. We're conducting a thorough review and we're expected to have that completed within the month. (It) includes the analysis of precious metal by-products and financial data. We've allocated all necessary resources to this review."

She stressed police have not been called into what mint officials consider an internal matter. She would not say whether the gold and other metals in question were part of the refinery and bullion operation or one of the mint's three other business lines: producing Canadian circulating coins, designing and producing coinage for foreign countries, and numismatics.

"We're looking at many different angles right now," she said.

The mint's Ottawa headquarters houses one of the world's leading gold and silver refineries, turning out almost 2.8 million troy ounces of refined gold in 2007.

Another 369,000 ounces of refined silver were produced as a byproduct of refining the gold from a number of sources, including gold ore, scrap recyclers, financial institutions and industry. (A troy ounce is the traditional unit of weight for precious metals and equals 1.097 ounces.)

The volume of precious metals refined in 2007 climbed by eight per cent over 2006, to 5.4 million ounces. Bullion and refinery revenues increased to $286 million. Total mint revenue in 2007 was a record $632 million. Annual figures for 2008 have yet to be released.

Further, production of the mint's Gold Maple Leaf coins last year surged by 325 per cent over 2007, fuelling the "unprecedented demand" for gold, said Aquino.

Stealing gold or other metals from the refinery would be a considerable feat.

"The rigour of our production standards is equalled by the stringency of our security protocols, which are implemented at every level of refinery operations," according to the mint's website. "The refinery is a restricted environment controlled by security personnel supported by state-of-the art surveillance technology."

It's not known when or what triggered the audit review or what external auditor is conducting the review.

The corporation's year fiscal 2008 runs Jan. 1 to Dec. 31 and its normal external auditor is the auditor general of Canada, who is required to audit the mint's year-end consolidated financial statements.

Security is paramount to the mint's success, including its reputation with foreign governments.

In 2001, during a court hearing for a mint employee convicted of smuggling counterfeit coins from the mint's Winnipeg plant, a statement from management said the theft could have "significant economic impact" for the Crown corporation because security breaches threatened future contracts.

The largest reported theft at the mint was in 1996, when a machinist at the Sussex Drive plant pocketed 85 ounces or eight bars of almost-pure gold called "anodes," the final step in the refining process before 24-karat ingots are made in an acid bath. He sold it for $8,000 to another man, who sold it to a company for $22,000. It was resold once more for $40,000.

A charge of theft against the man was later dropped for unexplained reasons and the mint was spared the humiliation of a trial that would have explained how the man snuck the precious metal past metal detectors, surveillance cameras and electronic sensors.

Prior to that, there were only two reported incidents of gold theft in the mint's 101-year history.

In 1988, a 23-year veteran janitor at the plant stole at least $30,000 in gold. The man worked in an area of the mint where objects that come into contact with liquid gold, such as tools, are crushed and recycled so the gold can be recovered. Police found he had more than $150,000 in unexplained income between 1985 and 1988.

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