The Trump administration's push to bring Venezuelan gold into the United States has tied American companies to a mining industry still riddled with gang extortion and corruption.
After U.S. forces removed Venezuelan President Nicolás Maduro in January, the administration moved quickly to take control of the country's natural resources, starting with oil and then turning to minerals, reported the New York Times.
Venezuela holds one of the world's largest untapped gold reserves, and gold prices have hovered near record highs.
The gold deal began with a proposal from Trafigura, one of the world's largest commodity trading houses. Within days of Maduro's arrest, company executives pitched the White House on Venezuelan gold as a national security opportunity, according to people familiar with the discussions.
In early March, Interior Secretary Doug Burgum traveled to Caracas and oversaw the signing of a contract allowing Trafigura to buy and export gold from Minerven, Venezuela's state-owned producer. Within hours, Trafigura flew the first shipment to the United States.
Ten Venezuelan gold bars were stacked in the White House's Roosevelt Room for a private celebration with Trump and Burgum, and aides reportedly joked about keeping the gold.
"Usually, you have to be in the Olympics to bring back the gold," Burgum later cracked at an energy conference.
"Aides took photos and joked about keeping the gold," the Times reported.
The newspaper found the arrangement hasn't kept crime out of the supply chain. Trafigura agreed to buy only from two fenced, military-guarded industrial mines, but gold began flowing before the company or independent auditors had visited them.
In El Callao, the center of Venezuela's mining industry, mine operators told the Times they hand a share of their output to a local gang, Tren de Guayana, as protection money.
One brigade leader operating on Minerven property said 20 percent of his team's gold goes to the gang each month. Another portion goes to Minerven, which melts it down with the gold sold to Trafigura.
Trafigura said an audit found no evidence of extortion or involvement by illegal actors at the sites and that its due diligence was "ongoing."
A second venture, led by private equity firm Heeney Capital and trader Mercuria, has signed a deal to take over El Chocó, a state-run open-pit mine where contractors reportedly pay the same gang.
"Around 90 percent of the gold produced in Venezuela is criminally produced," said Julia Yansura of the FACT Coalition, an anticorruption group.
The White House defended the effort. "We are cleaning up Venezuela's mining industry," spokeswoman Taylor Rogers said. "Western companies are improving and legitimizing it."
Still, hundreds of millions of dollars' worth of the gold sits unsold in storage because refiners must certify that it has no ties to crime, the Times reported, and Democratic lawmakers have questioned the deal's legality.
