Johannesburg – Misinvoicing of gold exports amounts to a loss of $19.5bn and not $78.2bn as determined by the United Nations Conference on Trade and Development (Unctad) .
According to research commissioned by the South African Chamber of Mines and an independent inquiry by economic consultants Eunomix, the research findings by Unctad are “invalid”.
Unctad’s study, released in July 2016, asserts the misinvoicing of primary commodities by mining companies in five countries to evade taxes and legal obligations. South Africa was among the five countries implicated.
The report found that in South Africa, during 2000 and 2014, under-invoicing of exports amounted to $102.8bn. Specifically for gold this amounted to $78.2bn, or 67% of gold exports.
This was higher than the misinvoicing for silver and platinum which came to $24bn or less than 10% of exports, and $600m for iron ore.
The South African Revenue Services (Sars) had publicly disputed Unctad’s study, as did Statistics South Africa (StatsSA).
Fin24 previously reported that statistician general Dr Pali Lehohla pointed out the “gross discrepancies” in South Africa’s records of gold exports and that of its trading partners.
READ: StatsSA boss slams UN invoice-fraud report
Unctad indicated that because South Africa does not report its old exports by country of origin to the platform Comtrade, the value of exports is not accurately reported.
Eunomix found this to be invalid indicating that gold exports are “appropriately” and “comprehensively” reported on other, publicly available, platforms.
The value of these exports is also known by producers to both tax customs and excise authorities and relevant statistical authorities, stated the Eunomix report. Platforms for gold exports data include StatsSA, the South African Reserve Bank (Sarb) and the Chamber of Mines.
Furthermore, any of the slight differences reported in export volumes is due to the volatility in the exchange rate and gold price.
“Monthly changes in the rand gold price over the period 2000-2014 were highly volatile,” stated Eunomix’s report.
In one instance the monthly price increase was 19%, on another, the monthly fall was 13%.
“In a market where the gold price and exchange rate can be very volatile, differences in reported values are therefore unsurprising.”
Eunomix concluded that Unctad’s finding that the loss in gold export revenues amounted to $78.2bn. The correct amount, based on publicly available data, was $19.5bn. The resulting loss of $102.8bn, implied by Unctad is also incorrect, by at least $58.7bn.
Eunomix added that the loss of $19.5bn is not necessarily due to trade misinvoicing. This implies that trade discrepancies are not necessarily as a result of trade misinvoicing.
Eunomix also called into question the lack of alternative perspectives in the Unctad report, which was telling of the “scientific quality” of the report.
It also pointed out that Unctad’s conclusion that misinvoicing is a result of “deliberate illicit action” was incorrect.
“Trade misinvoicing probably occurs. It may occur deliberately. It may occur with illicit intent. But it may also occur accidentally.”
Read Fin24's top stories trending on Twitter: Fin24’s top stories