Dilma signed a law that ‘heats’ illegal gold – 02/09/2023 – Market

The presumption of “good faith” in the gold trade, identified as decisive for the advance of illegal mining, is authored by a federal deputy from the PT and was sanctioned by former president Dilma Rousseff.

Today, the exploitation of the precious metal in indigenous lands is one of the greatest challenges faced by President Luiz Inácio Lula da Silva at the beginning of his third term, in the face of the Yanomami crisis.

Deputy Odair Cunha (PT-MG) is the author of the amendment that established the presumption of “good faith”, via law nº 12.844, of 2013. The original text, in which this amendment was included, was a provisional measure (MP) which dealt with agricultural insurance, a topic unrelated to mineral extraction.

This makes Cunha’s amendment a tortoise, in parliamentary jargon. The president approved without vetoing.

The deputy’s amendment determined that the ore seller’s word is enough to attest that the origin of the gold is legal. The buyer assumes that he is telling the truth, and will not be punished if the contrary is proven one day.

In practice, however, Law No. 12,844 limits the supervision, by the Central Bank, of accredited financial institutions operating with gold, the DTVMs (Distributor of Bonds and Securities). gold came from an environmental reserve, for example.

In both cases, DTVM can always argue that it is not obliged to check whether the seller is lying.

Different organizations concerned with combating illegal mining consider this presumption of good faith to be the main instrument for “heating up” illicit gold in Brazil. To overthrow it, there are initiatives in Congress and in the STF (Federal Supreme Court).

A survey carried out by Instituto Escolhas points to evidence of illegality in the sale of more than 200 tons of gold mined in the country, from 2015 to 2020, supported by the instrument of good faith, as reported by economist Marcos Lisboa, in the article “A history of gold and blood”, published in Sheet.

Author of the amendment, Cunha says that flawed inspection, which expanded in the Jair Bolsonaro government (2019-2022), distorted the purpose of the proposal. Cunha claims to defend a new framework for mining, capable of ensuring the monitoring of gold extraction and curbing illegal activities, damage to the environment and to indigenous people (read excerpts from the note below).

The petista was Secretary of State in the government of Fernando Pimentel, in Minas Gerais, and has just been re-elected for the sixth term as federal deputy for the state. He became best known when he was rapporteur for the CPMI (Mixed Parliamentary Commission of Inquiry) that investigated suspected illicit transactions between public and private agents and businessman Carlos Augusto Ramos, Carlinhos Cachoeira.

It is not even a name associated with mining, like other parliamentarians. However, he was assigned to the Mines and Energy transition group and worked to change the mining law. He made more than one attempt to ease the legislation on this activity before he managed to get the bona fide amendment through.

He was the author of Bill No. 6700/09, which proposed to decriminalize the exploitation of gold without legal authorization when the metal was destined for the financial market or exchange rate policy, in the operations of financial institutions authorized by the BC.

The congressman argued that the activity had encountered bureaucratic limitations since the enactment of Law No. 11,685/08, known as the Garimpeiro Statute. The new framework began to require the presentation of the PLG (Permission to Mining Garimpeira) both to extract and to sell the gold, but the release of the document was slow and was holding back the sector.

Cunha declared, at the time, that it was unreasonable for the entire gold chain to remain, overnight, outside the law. With the exception, he claimed, it would be possible to speed up exploration and ensure that this gold was sold in Brazil, and not smuggled.

The project, however, did not go ahead.

The block of articles that established the presumption of good faith required persistence from the parliamentarian. According to the amendment protocol document, its content had already been presented within another proposal, passed in the Chamber, but was eliminated in the Senate.

In the end, the amendment dedicated to mining found shelter in MP 619, presented during the Dilma government. It started to compose the block of articles 37 to 41 of Law nº 12,844.

Article 39 says, in paragraph 3: “The seller is responsible for the veracity of the information provided by him in the act of buying and selling gold”.

And it follows in paragraph 4: “The legality of the gold purchased and the good faith of the acquiring legal entity are presumed when the information mentioned in this article, provided by the seller, are duly filed at the headquarters of the institution legally authorized to carry out the purchase of gold “.

Mobilization on different fronts tries to revoke the measure

In Congress, the then deputy Joênia Wapichana (Rede-RR) presented in August last year the bill nº 2159/2022, receiving support from other parliamentarians. In addition to putting an end to good faith, the proposal establishes the principles for creating gold traceability. Joênia was not re-elected, but became, in Lula 3, the first indigenous woman to command Funai (National Foundation of Indigenous Peoples).

Its proposal is still in parliament, attached to PL 5.131/2019,

Parties appealed to the STF. In November last year, the PSB (Brazilian Socialist Party) and the Sustainability Network filed a Direct Action of Unconstitutionality against the sale of gold from mining based on the presumption of good faith. At the beginning of February this year, the PV (Green Party) did the same, also requiring that the DTVMs be obliged to create mechanisms that guarantee the origin of the gold.

This Tuesday (7), in order to obtain more information, STF Minister Gilmar Mendes summoned the BC and the ANM (National Mining Agency) to provide testimonials on the situation of illegal mining in the Amazon.

Different entities also organized to overturn the measure.

In July of last year, BC president Roberto Campos Neto was alerted to the growing damage to good faith by a group that included representatives from Ibram (Brazilian Mining Institute), Ethos Institute, Isa (Socio-environmental Institute) and Instituto Escolhas, which has already published several surveys on the socio-environmental and economic consequences of illegal mining.

The suspicions are that a small group of just five DTVMs would be involved in the legalization of clandestine gold, and the end of the presumption of good faith would open the way to break this cycle.

OTHER SIDE: Bolsonaro dismantled inspection and changed context of ‘good faith’, says Cunha

Sought by the report to explain the consequences of his amendment, deputy Odair Cunha said in a note that his proposal was thought of in a context totally different from the current one. In 2013, he believed that the presumption of good faith procedure would be one more element to guide the origin of gold, contributing to the inspection of public bodies.

“Unfortunately, over the period, inspection failures occurred and crime in the sector was disseminated at the instigation of former President Jair Bolsonaro, especially in indigenous areas, with the deliberate dismantling of inspection bodies”, he said in the note.

Cunha also says that, as he is from Minas Gerais, he has a natural connection with gold mining, and that is why he committed himself to contributing to the sector’s legislation.

“Mining activity is enshrined in the name of my state of origin. Support for a legal, socially and environmentally sustainable activity cannot be confused with support for criminal practices,” said Cunha in the text. “I repeat: what happened in the Bolsonaro government was the dismantling of the inspection bodies, which led to the current calamitous situation”.

The deputy also says that, based on this new reality, he understands that it is now necessary to have a new framework for mining, capable of maintaining strict inspection, guaranteeing the monitoring of gold extraction, together with measures that curb illegality, damage to the environment environment and attacks on indigenous peoples, among other initiatives.

“Ten years later, taking into account the scrapping of inspection bodies and the advancement of technological means, it is essential to improve control instruments in order to guarantee traceability of the metal”, says the parliamentarian’s note.

“Thus, we are going to study, within the scope of our mandate and with the technical assistance of the leadership of the party in the Chamber, initiatives that update the legal framework, including in the mineral code reform commission.”

Sought, the press office of former president Dilma Rousseff did not respond until the publication of this text.