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Perth Mint Gold “Doping” Scandal Calls Senior Leadership Into Question

Perth Mint

By Hubert Walker for CoinWeek ….
A recent report on Australian TV has put the reputation of one of the world’s major mints–as well as the reputation of the entire international system of precious metals accreditation–in jeopardy.

On Monday, March 6, an internal report from the Perth Mint was leaked to the Australian Broadcasting Corporation (ABC) regarding the Mint’s alleged adulteration of gold bullion sold to Chinese customers. According to the report on the television program Four Corners, the Mint faces a potential buyback of up to $6 billion USD (almost $9 billion AUD) worth of one-kilogram gold bars–approximately 100 tonnes–and both Mint management and the Government of the State of Western Australia allegedly worked to cover up the situation.

The events that the leaked report describes occurred in 2018, and the report itself was compiled in 2021 after the Shanghai Gold Exchange complained to the Mint about two gold bars not meeting its specifications regarding acceptable levels of non-gold material in gold bullion.

Shanghai Gold Exchange
Shanghai Gold Exchange

The decision to “dope” the bars was made in 2018 to save approximately $415,000 USD (about $620,000 AUD) worth of gold that is usually “given away” by bullion producers due to modern refining practices. For comparison’s sake, in 2022, the Perth Mint gave as its gross revenue (“annual turnover”) a total of $14.58 billion USD ($21.77 billion AUD) in its Annual Report.

The Perth Mint did not notify the Shanghai Gold Exchange of this change in alloy.

Nevertheless, the two gold bars flagged by Shanghai still met and exceeded the industry standard purity of .9999 fine gold. What the bars did not do was meet the Shanghai Gold Exchange’s own specifications regarding how much silver could be in a 99.99% pure gold bar.

A 100% pure gold bar or coin is usually undesirable as a finished product, since it will be too soft and malleable. Therefore, the bullion industry has long alloyed other metals with their gold products – often silver or copper. It is industry standard for gold bullion to be at least 99.99% pure, but as refining technology and techniques have improved over the centuries, refineries often achieve exceedingly precise levels of purity, with extra fractions of a percent of gold being included in their products in order to make sure they cover the 99.99% “minimum” – much like a “baker’s dozen” of old. The resulting surplus gold is therefore a “giveaway”, and since this is an obvious loss to Mints and refineries, industry-wide standards have been accepted as to how to mitigate this.

One such technique involves the addition of silver or copper–referred to in this article as “non-gold material”. Prior to the “doping” decision, the Perth Mint was producing gold bars at a purity of 99.996%, which means there was a 0.006% “gold giveaway” with each bar. In 2018, Mint management decided to reduce this giveaway by two thirds – resulting in gold bars of 99.992% purity. Most buyers did not take issue with either the adjusted purity or the increased silver content, but the Shanghai Gold Exchange requires that the amount of silver in a gold bar not exceed 0.005% of the metal content. Clearly, the 0.008% silver content of the new purity regime did not meet specifications.

Perth Mint 10 ounce gold bars. Image: Perth Mint.
Perth Mint 10 ounce gold bars. Image: Perth Mint.

This did not escape the notice of the refinery staff who were tasked with producing the new bullion, but management told them to proceed.

Yet despite the fact that the Shanghai Gold Exchange received the two gold bars that were the initial basis for the complaint in 2018, they didn’t notice the altered silver content until September 2021. In the meantime, the Perth Mint had delivered an estimated 100 tonnes of the 99.992% pure 1 kg gold bars.

The report that was leaked on March 6 was the result of an internal investigation initiated by the Perth Mint on the same day in September 2021 that Shanghai notified Perth of its own findings.

The following are perhaps the key lines from this report (“Gold Corporation” being the Mint’s parent company):

“If SGE – Gold Corporation’s pre-eminent exchange client – had made public that they had issues with Gold Corporation bars … the impact of negative public statements on the business could be very significant…”


“Based on average understandings of volumes … it was possible for up to 100 tonnes of stock to be recalled from the Shanghai Gold Exchange for replacement…”

The report even stated that the Mint had flagged one of the two bars as not meeting Shanghai specifications before it was shipped.

After the report was made, Perth decided not to tell the results to Shanghai. At a September 30 meeting, then-CEO Richard Hayes said that only the compliant assay would be sent back to the Gold Exchange, and that it would be up to Shanghai to prove that any other 1 kg gold bars failed to meet specifications.

Perth also made the decision to stop “doping” its gold bars and return to the 99.996% purity level on the day the bad assay was reported to them. Later that same week, CEO Richard Hayes announced his retirement from the Mint due to “illness”.

Luckily for Perth, the Shanghai Gold Exchange accepted the Mint’s pledge to do better and agreed not to go public with the bad assay. Henceforth, the Perth Mint would include Certificates of Assay with each bar that it sells to Shanghai.

But this is not the first time that gold from the Perth Mint has met with controversy in recent years.

London Bullion Market Association Logo.
London Bullion Market Association Logo.

The London Bullion Market Association (LBMA), of which the Perth Mint is a member in good standing, investigated the Mint in 2020 regarding the sourcing of gold from Papua New Guinea that was mined using child labor and other unsavory practices. In order to keep its accreditation with the LBMA, the Perth Mint had to replace its auditor and harden its ethical sourcing rules.

Additionally, the Mint is the subject of an ongoing investigation by AUSTRAC (Australian Transaction Reports and Analysis Centre), the federal agency responsible for handling financial crime, concerning Perth’s compliance with Australian anti-money laundering and counter-terrorism laws. The Government of Western Australia has stated that originally it did not think that the specific anti-money laundering laws in question applied to the Perth Mint’s activities but realized that they did in 2021 and have been registered with AUSTRAC since March of that year. This means, however, that more than 5,000 transactions involving the international movement of money went unreported over nine months in 2020 and 2021, and at a $14 million USD ($21 million AUD) fine per violation, the Mint could be facing billions of dollars worth of exposure.

All payable by the taxpayers of Western Australia.

On Wednesday, March 8, the LBMA announced that the ABC news report had triggered the association’s “Incident Review Process” (IRP) and that the Association is now investigating the matter themselves. According to the LBMA, any event or situation that could damage the reputation of the Association’s “Good Delivery List” of certified bullion manufacturers is investigated. Removal or suspension from the list is a potential result of negative findings. The LBMA has given no timeframe for the completion of its inquiry; it, too, is waiting on the results of the AUSTRAC investigation.

At the time of writing, the Perth Mint remains on the Good Delivery List as the “Western Australian Mint“.

Also on March 8, the Perth Mint issued a press release in response to the ABC Four Corners report. The press release emphasized the Mint’s adherence to international and LBMA standards and explained both the reason for using non-gold material in its gold bullion products and the amount of silver used in the non-compliant bars reported by the Shanghai Gold Exchange. The release also gave a timeline of relevant events from the Mint’s perspective, as well as assurances that all gold bars are refined to 99.996% purity as of December 2021. And while it acknowledged past failures to report, The Perth Mint stated that it obeys the reporting requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. As part of its efforts to improve compliance, a new CEO, Jason Waters, was appointed less than a year ago, and other key officials have been replaced.

As for the Shanghai Gold Exchange, it issued a statement saying that the March 6 news report was not true. The Perth Mint is unable to discuss its current and potential customers due to Section 74 of the Gold Corporation Act 1987, the law that established the Gold Corporation.

Meanwhile, the issue has created political turmoil in the State of Western Australia, with state officials denying knowledge of the affair or avoiding responsibility for it. The current Premier, Mark McGowan, has been in office since March 17, 2017, and was directly in charge of the Perth Mint from 2017 through March 2021. McGowan claims that he didn’t know about the situation with the Shanghai Gold Exchange until the Honourable Bill Johnston, the Minister for Mines in McGowan’s Labor Government, told him on the day of the news report. Johnston claims that Mint officials did not notify him of the matter until January 2022.

According to Premier McGowan, the 2018 “doping” and the 2021 cover-up were a “historical matter” that has already been resolved. In response to McGowan’s pleas of ignorance, Western Australian government opposition leader Shane Love has called for a Royal Commission, or Parliamentary investigation, into the matter.

Yet despite this avoidance of responsibility on the part of the state–or even the Shanghai Gold Exchange’s comments in support of the Perth Mint–current CEO Jason Waters has issued a statement admitting fault in the matter.

At the time of writing, Mint Chair Sam Walsh has yet to comment.

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Hubert Walker
Hubert Walker
Hubert Walker has served as the Assistant Editor of CoinWeek.com since 2015. Along with co-author Charles Morgan, he has written for CoinWeek since 2012, as well as the monthly column "Market Whimsy" for The Numismatist and the book 100 Greatest Modern World Coins (2020) for Whitman Publishing.

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