Crackdown on fraud in mineral business

Police investigations show that unscrupulous persons register legit business agencies dealing in minerals and use it to defraud unsuspecting parties interested in minerals.
Wolfram miners in Northern Province. File.
Wolfram miners in Northern Province. File.

Police investigations show that unscrupulous persons register legit business agencies dealing in minerals and use it to defraud unsuspecting parties interested in minerals.

The dealers approach interested persons with minerals and after all negotiations and payments are made, they offer fake minerals instead.

Police are now working with Rwanda Mines, Petroleum and Gas Board, Rwanda Development Board, and Rwanda Mining Association to crackdown on the fraud that threatens reputation of the mining sector.

Recently, a foreign national was approached by a group of people said to be dealing in mineral business, and made him believe that they can supply him the 50 kilogrammes of gold, which he wanted.

The two parties agreed on the terms; the buyer was to incur all expenses, including ground transport, taxes and laboratory qualitative analysis costs, among others.

The agreement settled at excess of $1 million. Fast forward, the suppliers delivered – at least at the buyer thought at the time.

The buyer was given the sample, which he took to Rwanda Mines, Petroleum and Gas Board (RMPGB) laboratory services. The lab results proved that the samples were genuine, according to the issued certificate.

The suppliers secured the declaration certificate from Rwanda Revenue Authority (RRA), which also specified that over Rwf14 million would be paid in taxes.

With declaration and lab qualitative analysis certificates, the buyer couldn’t doubt any further; at this time, he had already paid $105,000 to the suppliers, with the balance to be paid at an agreed later date.

When the buyer arrived back in his home country, he took the gold in the laboratory to run the tests afresh. The lab tests showed that the gold was fake; the businessman had been defrauded.

At this point, the fraudsters seem to have an upper hand before the law for having “supplied genuine minerals” and the victim is obliged to pay the whole amount of money.

And indeed, the said fraudsters in this case, were quick to file a complaint with the Police seeking to be paid the remaining $900,000.

The victim also returned to Rwanda and lodged a complaint.

“When we conducted thorough investigations, we unearthed tricks fraudsters use to gain control of their target,” says Modeste Mbabazi, the director of the Economic and Financial directoratee, which operates under the f Criminal Investigations Department of Rwanda National Police

Tricks fraudsters use

Normally, the fraudsters register a company dealing in minerals with Rwanda Development Board (RDB), then find a way of locating and luring mineral buyers, especially foreigners.

With genuine registration papers, it’s easier for their targets to fall prey.

“This year, we have registered three cases on this nature, and all of them, the tricks are the same. Good enough, majority people involved in these fraud cases have been arrested after thorough investigations,” Mbabazi adds.

In the other two cases, victims were conned of $36,500 and $21,000, respectively.

To Alex Kagaba, a geochemist officer at Rwanda Mines, Petroleum and Gas laboratory services, “these frauds are preventable.”

“Our laboratory services have the capacity to run qualitative analysis on big quantities. We appeal to buyers to bring their minerals so that we run as much tests as possible to prove beyond doubt, but also to facilitate the judicial system with scientific evidence in case we find out that the minerals are fake, to prosecute the suspected criminals,” said Kagaba.

The president of the Rwanda Mining Association (RMA), Jean-Malic Kalima, said the mineral business sector is also facing challenges, where people, including those said to be registered as mineral dealers, connive with workers at concessions to buy minerals illegally.

“Whenever we encounter such unlawful acts, we inform the board (RMPGB) to take action. For members of our association in particular caught is such, we warn them but also suspend them where necessary,” Kalima said.

According to Winifred Ngangure, the head of Investment and Promotion at Rwanda Development Board (RDB), “anyone found acting contrary to investment certificate awarded, the license is terminated.”

“At RDB, we have aftercare services to help investors, and in case an investor becomes a victim of fraud or faces any challenges, let them come to us as well… that’s why we made every Friday between 9am and 12-noon as a day to receive investors, know the challenges they are facing, and work with the Police where necessary, to ensure that criminals are brought to justice and recover whatever is taken from them,” Ngangure said.