The distinct possibility that precious metals may have been stolen from the Royal Canadian Mint is “inexcusable,” the federal minister responsible for the Crown corporation said Monday.
The findings of a long-awaited external audit, released earlier in the day, concluded that $15.3 million in missing gold is not the result of accounting or bookkeeping errors, raising even more questions about the whereabouts of the metals from what has been touted as one of the most secure facilities in Canada.
“The mint’s still unexplained loss of precious metals is inexcusable,” Transport Minister John Baird and Minister of State for Transport Rob Merrifield, whose department is responsible for the mint, said in a joint release. “The mint will be held accountable.”
The Royal Canadian Mint says the precious metals seem to have vanished from its inventory in the 2008 fiscal year, according to the third-party review conducted by Deloitte & Touche LLP.
External auditors have been working since early March to determine whether theft or an accounting error is behind an “unreconciled difference” between the mint’s 2008 financial records and its physical stockpile of gold and other precious metals at its downtown Ottawa headquarters.
The report released Monday concluded that “the unaccounted-for difference in gold does not appear to relate to an accounting error in the reconciliation process, an accounting error in the physical stock count schedules, or an accounting error in the record-keeping of transactions during the year.”
It is not clear at this stage whether any gold is physically missing from the inventory, the corporation said in a release. “All possible explanations for the inventory difference need to be investigated.”
The Deloitte report identified three “areas for consideration” to explain the unaccounted differences:
– Gold may have been lost through the refining process. The auditor suggested a review of the technical processes used in the various aspects of refining.
– Errors in reconciling the financial records and the physical stockpile of precious metal in previous years, although it concedes “it would be difficult to complete such a review due to the passage of time, the availability of supporting documentation and the turnover of mint staff.”
– The theft of the material and “potential inappropriate activities by both internal and/or external parties.”
About 17,500 troy ounces of gold, which represents 0.32 per cent of the mint’s stock, were unaccounted for, the report said. “A higher amount of gold should be on hand than the physical amount of gold counted,” it said. (Gold is measured in troy ounces, which is heavier than the much more common avoirdupois ounce used for measuring weights in food.)
The $15.3-million figure is based on gold prices on Dec. 31, 2008, the mint’s fiscal year-end date. At Monday’s prices, the precious metals would be worth about $16.3 million.
An unaccounted for difference in silver also was identified, the report noted.
Despite the $15.3-million inventory difference, the mint still says a “record profit is projected” for 2008.
The government said late Monday that it has “instructed the board to withhold all bonuses payable to executives until this matter is resolved to our satisfaction.”
The annual report and financial statements have been submitted to the auditor general’s office and are expected to be approved by the mint’s board of directors in early July.
The ministers have also ordered the mint to report on its precious metals inventory on a quarter basis, rather than twice-annually. “Our government is committed to effective governance and accountability to Canadians,” they explained.
The corporation said the unreconciled precious metals only relate to metals owned by the Royal Canadian Mint, and not to the stockpile owned by the mint’s customers stored in Ottawa.
“All individual customer holdings and metal deposits entrusted with the Royal Canadian Mint are secure and have been fully accounted for,” the corporation said.
On March 23, the Crown corporation sent a letter to Minister of State for Transport Rob Merrifield, whose department is responsible for the mint, saying the mint had lost track of the metals.
Ian E. Bennett, president and CEO of the Royal Canadian Mint, said Monday the mint continues to work with third parties to assist the corporation in its review of specific aspects of its operations.
“We have also requested the RCMP’s assistance to investigate the matter and the mint has committed to fully co-operate with them.”
RCMP spokeswoman Cpl. Caroline Poulin said Monday that the police force’s review is “ongoing.”
The opposition parties told Canwest News Service that the situation reflects the government’s “gross incompetence.”
“Either they’ve got to admit that they’ve got somebody stealing the gold, or they’re incompetent and they lost $15 million worth of gold because they’re not very good at refining and re-refining,” NDP finance critic Thomas Mulcair said.
He chastised the Crown corporation for releasing the report after the House of Commons adjourned.
“Again, it’s again a scandalous inability to handle the public interest and the public purse. It’s shocking.”
Liberal transport critic Joe Volpe said he’s holding the ministers responsible for the issue and called for their resignation.
“It does beg the question: when is the minister leaving? When is the chairman of the mint leaving? When are they going to change the CEO?” he asks. Ottawa Citizen