MADRE DE DIOS REGION, PERU - NOVEMBER 17: A National Police officer searches an illegal mining ... [+]
Dirty Gold: The Rise And Fall Of An International Smuggling Ring is an engrossing, well-written book about the problematic dealings of a U.S.-based company called Elemental LLC and its subsidiary NTR Metals. The authors use the unpretentious prose of a police novel to tell the story of Elemental’s law-breaking foray into the world of illegal gold mining in South America. The book includes a number of relatable characters including a college-educated Chilean gold exporter, a flamboyant Peruvian gold dealer, three relatively low-level corporate criminals, a Peru-based DEA agent, and a Miami-based prosecutor. Dirty Gold was written by a team of journalists that includes Jay Weaver, Nicholas Nehamas, Jim Wyss and Kyra Gurney.
Early in the book the authors explain, “For years Peru’s central government refused to shut down the illegal mining, even as it became an international embarrassment. It was simply generating too much money for almost everyone; the collectors, the mine owners, the equipment sellers, the pimps, the drug deals, even the dirty politicians and police officers who took bribes.” The authors describe the situation in Peru as, “a perfect storm of geology, corruption, globalization, greed, and decades of neglect.”
Peru is a deeply divided country that struggles to fight corruption. Peru has a population of 32 million and an average per capita income of only $6,430. Meanwhile, around one fifth of Peru’s residents live below the poverty line. There are six Peruvian billionaires, including Carlos Rodriguez Pastor, whose net worth is over $5.3 billion. Income inequality in Peru is not as bad as in Brazil or Mexico but is worse than in Haiti and El Salvador. Peru sits at 94th place in Transparency International’s Corruption Perception Index.
Political corruption is a serious issue in Peru. In investigations unrelated to the Dirty Gold scandal, former Peruvian presidents Pedro Kuczynski and Alejandro Toledo are now detained on house arrest. Another, Alan Garcia, killed himself while facing the threat of arrest on corruption charges. Yet another, Ollanta Humala, is facing corruption and money laundering charges and is restricted from leaving Peru ahead of his trial. On September 28, 2021 a U.S. judge ruled that another former Peruvian president, Alejandro Toledo, can be extradited to face corruption charges in Peru.
Dirty Gold is an ambitious book that tries to explain a very challenging political context. At its best, Dirty Gold excels at bringing court documents to life, in telling the story of the investigation and prosecution of the young men directly involved in buying, exporting and processing illegal gold. What’s noticeably absent from the book is the voices of Peruvian or Colombian environmental activists who work in the regions most affected by illegal mining. It is not clear if any of the authors actually visited the remote sections of Peru where the mining takes place. More vivid storytelling and on-the-ground reporting from Peru would have improved the book. The police noir style makes for entertaining reading but it fails to address the magnitude of the environmental disaster unfolding in Peru and Colombia. Casting the story as a cat-and-mouse game between law enforcement agents and a small group of likable criminals borrows the plot of Miami Vice and risks reinforcing superficial tropes about good-natured American police and dangerous Latin American criminals. Spoiler alert: no high-level U.S.-based executives were imprisoned for their role in the scandal.
All in all, none of the top corporate leaders involved, including John and Steve Loftus, the co-founders of Elemental, NTR’s parent company, Bill LeRoy, Elemental’s CEO, or Steve Crogan, Elemental’s compliance officer, faced criminal prosecution or prison time.
Elemental sold its dirty South American gold to a long list of blue chip American companies, including Apple, Google, HP, IBM, General Motors, Ford, Johnson & Johnson, Dow Jones, Merck, Lockheed Martin, Macy’s Staples, Ralph Lauren, JetBlue, and the Walt Disney Company. None of these companies or their executives faced criminal charges or fines. All of these companies could and should have done better due diligence reviews of their suppliers and included more rigorous human rights due diligence as part of their internal oversight of their supply chains.
Overall, Dirty Gold is an entertaining book. It highlights why foreign companies operating in Latin America need to build robust human rights due diligence programs to avoid serious reputation damage.
Additional reading: Are Mexico’s Cartels Winning The War On Drugs?
