Investor loses Shs5b in Uganda’s gold smuggling underworld

Between $300m (Shs1.1 trillion) and $600m (Shs2.2 trillion) worth of gold is smuggled outside the DRC annually and the precious stones continue to sustain brigand and militias operating inside the lawless jungles in eastern DRC.

Today, the German national is scared to return to Uganda after professional cut-throats involved in the deal threatened to harm him. He is also battling charges in Dubai courts filed by his business partners. 

Arndt is relying on documentary evidence, which includes videos of the transactions he secretly filmed, including footage where he is visibly seen paying the dealers cash in the dollar currency; payment receipts, sales agreements, and forged documents, including some purported to have originated from URA and the Commissioner for the Mines department at the Energy ministry. We could not independently verify the authenticity of these videos, which are in the possession of Arndt.

Arndt accuses Peters K Musoke, a lawyer, of being involved in the deal, which included two gold firms—Exxaro Mineral Ltd and Euro Gold Refinery.

In all the transactions, Arndt alleges that Mr Musoke was hired as a facilitator to conduct due diligence on the firms he intended to enter into contractual obligations with. To prove his claims, Arndt secretly filmed most of these transactions, including payments of substantial amounts of dollars, which The Monitor has viewed. We could not independently verify the authenticity of the videos.

READ: Army officials quizzed over gold scam

Some of the transactional records indicate that on June 13, 2023, Arndt executed an EFT payment of $421,000 (Shs1.5b) as payment of storage facility fees for a 576kg gold consignment, which was purportedly being held in Nairobi, Kenya. 

On August 23, 2023, Arndt paid the racket of scammers another $125,000 (Shs458m) through Western Union to transport another fictitious consignment of gold from Butembo in the restive North Kivu Province, DRC to Dar es Salaam in Tanzania. 

On January 8, 2024, Exxaro Minerals International Limited received $450,000 (about Shs1.7b) as part of the pre-financing for a bogus gold consignment in DRC, and Euro Gold Refinery on April 16, 2024, received another $187,200 (about Shs687m) from Arndt through Hawala Money Transfer, which operates parallel to traditional banking, financial channels and remittance systems.

Facing pent-up frustration, the German investor, on July 23, 2024, petitioned Brig Henry Isoke, who heads the anti-graft unit at State House, detailing how he had been scammed three times.

The State House Anti-Corruption Unit spokesperson, Ms Mariam Natasha, told The Monitor: “[Christian’s] case was received and allocated but it is yet to be handled.”

The German investor lived and worked in Uganda between 2010 and 2012 at Tullow Oil, a British firm, which was exploring the Albertine sub-region fields where he said he met someone who identified himself as Ronald Kanyerezi.

The Monitor has seen a copy of a passport registered in the name of Kanyerezi but efforts to speak to him were unsuccessful by press time.

Kanyerezi has not been formally charged with any offence in regard to this matter.

Arndt had earlier founded Jumeirah Golf Estate firm, a chain of businesses, which pooled resources from various partners in Dubai. They entrusted him with establishing a stable regular gold supply.

Enter lawyer Musoke

Arndt claims he asked his friend Kanyerezi about dealing in gold and he recommended Musoke.

“Mr Musoke advised that he represents a number of Congolese gold sellers and mining cooperatives and we decided to meet in Nairobi for introduction purposes but equally to sign SPAs [sales purchase agreements] in which he confirmed to be the legitimate custodian of the product for his clients,” Arndt said in the letter to State House Anti-Corruption Unit dated July 23.

“After thorough assessment of all facts, I am of strong conviction that Mr Musoke, a lawyer of supposedly high standing in Uganda, was the orchestrator of all transactions. He sourced the suppliers, received several payments, advised them to the next course of action, and subtly ensured I make payment to all such requests,” he said. The Monitor cannot independently verify that Mr Musoke was the orchestrator of all transactions as Arndt claims.

On July 4, the investor wrote another letter seeking the intervention of the President.

“I have made several requests for a refund of the sums spent to no avail. On June 25, I received a WhatsApp message from Mr Peters Musoke in which he acknowledged that the person he introduced to me stole our company money bag in the same vein and tried to introduce me to a new agent in Dubai. This was done in addition to making veiled threats in a bid to deter me from pursuing my refund,” reads part of the letter.

The Monitor visited Mr Musoke’s known workplace three times but failed to meet him. The receptionist declined to receive a letter which The Monitor and its sister station NTV authored containing questions in regard to the transactions. 

This publication also understands that on August 27, the lawyer appeared before the Minerals Police. Sources at police told this publication that the lawyer acknowledged knowing the investor but denied defrauding him, saying he only played a fringe role. The Monitor cannot prove any wrongdoing on the part of Mr Musoke.

Video footage and photos shown to this publication show a man who Mr Arndt alleges is Mr Musoke holding what appears to be gold pieces and certificates of clearance. We could not independently determine the authenticity and the persons in the video.

The Monitor has seen the sale and purchase agreement, which Arndt as the purchaser, claims was executed on January 8 between Comipa Cooperative Miniere de Pangi, the seller— Exxaro Minerals International Limited, the vendor, and Mr Musoke as the facilitator.

The first transaction

In the first transaction, Arndt claims he lost $209,000 (Shs767mm) after Mr Musoke reportedly introduced agents who claimed to have 576kgs of a gold consignment which was allegedly held up in Tanzania and was awaiting to be shipped to Nairobi. 

The funds were meant to clear the storage, duties, and agent fees. The Monitor could not independently verify this claim against Mr Musoke.

The dealers later purportedly claimed that the consignment was then in Kenya and other dues were placed on the consignment, leading to the surrender of the file to another agent in Nairobi.

This new agent demanded an astronomical fee of $2.6m (Shs9.5b) for the payment of charges, including storage facilities in Kenya, which Arndt says he was not prepared to clear.

“He [Musoke] just made me aware that such anomalies can happen, but I shall be ensured to recover the loss as he has other opportunities on the table. The invested amount, however, was lost,” he said.

Second deal

In September last year, Arndt claims Mr Musoke introduced other gold dealers, which in his view would help him recover the losses he incurred earlier on.

In Kampala, where the duo held a meeting on September 17, 2023, Mr Musoke, according to Mr Arndt, introduced a new gold dealer— Kelvin Inongba— a Congolese national. Luckily, he [Arndt] had secret cameras to record this meeting. The Monitor cannot independently verify the authenticity of these videos.

During this meeting, Mr Arndt says he was told by Musoke that Mr Inongba was in possession of two gold consignments— one was between 307kg and 523kg, and the other 215kg.

One of these consignments, he was told, was in Butembo, eastern DRC, and required $125,000 (Shs458m) to be transported to Dar-es-Salaam. Arndt instantly paid the transportation fees with the promise that the money would be reimbursed.

Relatedly, the dealers claimed that the second consignment, which was already in Dar-es-Salaam, had overstayed and attracted additional penalties and charges. Arndt claims Mr Musoke alleged that he was aware of the consignment from Tanzania’s Chamber of Commerce and it would require Arndt to pay $550,000 (Shs2b) for the additional penalties, which he rejected.

“I rejected the payment and asked Mr Musoke to finally provide a lead that does not involve any legacy consignments that carried issues for a successful export scenario to Dubai with the objective to retrieve the lost investment. The invested amount, however, was lost,” Mr Arndt said.

The third transaction involved another fictitious claim of a consignment worth 4,000kg.

Between 8,200kg and 9,000kg of gold is produced every day globally and it is not clear why some of these claims did not compel Arndt to question the authenticity of the transactions.

Arndt claims Mr Musoke later introduced Mr Athanase Banankusu, who posed as the president of Pangi Mining Cooperative in DRC and ‘was in dire need of a buyer for a large consignment of gold.’

This deal involved firms such as Exxaro Mineral Limited, which claims to be one of the leading mineral agents in the East African region, and Euro Gold Refinery. This company claims it specialises in mineral purchases, especially gold and diamond.

Arndt claims Mr Musoke and the seller introduced him to Mr George Kalema, the owner of Exxaro Mineral Limited, which resulted in the execution of a sales purchase agreement between the four parties, including Mr Banankusu as a supplier, Mr Kalema as an agent, Mr Musoke as facilitator and Arndt as the buyer.

According to the agreement seen by this publication, the consignment from the DRC was meant to be broken down in smaller shipments of 100kg each, which obliged the buyer to make a subsequent payment of $450,000 (Shs1.7b). The Monitor could not independently verify the authenticity of the sales purchase agreement.

“The quantity of the gold to be sold to the buyer under the terms of this agreement by the vendors is 4,000kgs to be delivered to the buyer in Dubai, United Arab Emirates….The buyer and the seller shall execute a trial/initial transaction of 100kg to be delivered to the nominated destination herein according to the terms and conditions of the instant agreement,” reads part of the agreement.

Clause 6 of the agreement partly reads: “The facilitator will meet the costs for smelting and assay [testing og a metal] of the goods prior to the same being exported to its nominated destination in due course of the transaction…..The logistics and transportation of the goods to the government laboratory shall be conducted following the company's internal enhanced covert and secure logistics procedures that shall be briefed to the vendor within a reasonable time before the goods transportation to the government laboratory,”

Arndt told the President and Brig Isoke in the two separate letters he authored thus “…to convince me that all export papers have been diligently paid, George Kalema provided a forged export permit with a fake signature of Mrs Agnes Alaba, the Commissioner for Geological Survey and Mines Department. Soon thereafter, Mr Kalema advised me that - upon URA obligation - we required an ICGLR certificate with an attendant cost of $217,800. 

Though a commitment was made that this cost would be reimbursed as part of the transactional export costs, a separate control at a later stage confirmed that the document was a forgery too,” he said.

Mr Kalema has not been charged under a court of law for forgery.

When contacted, Ms Alaba told The Monitor that the certificate was fake.

“We no longer use these books, [secondly that] signature [is] forged. Normally [in] January [I] am [always] on leave. [The] minister is the one who grants licences and permits during that period,” she said.

Exxaro Mineral Limited ceased working on the shipment and surrendered the file back to the seller, Mr Banankusu, despite the former receiving funds from Arndt.

The murky faces behind the deal

To "salvage" the situation, Mr Musoke, Arndt claims, introduced a new company Euro Gold Refinery (EGR), to take over the consignment. EGR, he adds, said smelting the entire consignment would cost $400,000 (Shs1.5b).

“Having lost a lot of money in prior operations, I refused to pay the entire amount but agreed to pay $130,000 (477m). My request to receive a receipt for this service remains unanswered up to date,” he said.

Arndt revealed that EGR, the new exporter, advised that to ease the transportation of the gold, he needed to part with $150,000 (Shs550m), which he was obliged to pay.

“We received another forged document from Uganda Revenue Authority [URA] whose shipment reference has been traced back to United Nations cargo. Confronting Mr Musoke with the new and never-ending issues, he advised that such system mistakes could happen and it should not frustrate me."

He claims upon asking for answers, he was introduced to a prominent member of the First Family at Speke Apartments in Kampala, who informed him that Mr Musoke and Mr Banankusu would honour their part of the agreement.

“From all the information and evidence presented, I have lost a total sum of $1,431,800 [about Shs5.2b] without counting travel, communication, and miscellaneous costs. Kindly note that one of my investors has pressed charges against me and I am still subject to a court case in Dubai after having spent 72 hours in police detention,” Mr Arndt revealed.

Despite their addresses being on their officials’ websites, EGR and Exxaro Mineral Limited were untraceable based on the addresses in Bugolobi and Lubowa in Kampala respectively. The phone numbers of these companies, which were placed on the website, were all unavailable.

Relatedly, all our calls to Mr Musoke went unanswered and when we wrote to him seeking an interview, receptionists at the law firm refused to receive the letter claiming that they had no instructions from the lawyer.

The following day, we were asked to return to his known workplace where we met two partners who pleaded for ‘more time to find out details about the case, which their colleague handled in his individual capacity and had no instructions from the law firm’. It is a well-established legal principle that the actions of a partner in his individual capacity are not binding on the firm.

WhatsApp chats

The Monitor has also seen alleged WhatsApp chats between Mr Arndt and Mr Musoke, where the lawyer informed the investor that he was not part of the racket that scammed the investor. We could not independently verify the authenticity of the chats shared by Mr Arndt.

Mr Musoke, in the chat on June 25, told Mr Arndt that the goods belonged to a powerful member of the First Family (names withheld).

“I am just an innocent victim as well. That said, I do have a moral but not legal obligation, to help you to recoup your losses, and I hope that you realise that I am as much a victim as you are. I am quite sure that your investigators will find no evidence that I in any way received any benefit from the funds you paid,” he said.

Musoke further said in the chat that he was aware of the $450,000 which Mr Arndt paid to Exxaro and he was given a receipt for it. This publication has seen this receipt dated January 8, 2024. 

“I am also aware of the $218,000 which you also paid to the same people for the certificate from Burundi. I am also aware that you paid Athanase $150,000 to get a separation for the 4,000kgs. The rest went into your hotel and travel expenses, which I estimate at about $50,000,” Mr Musoke wrote.

Musoke in the chat wondered why Arndt opted not to pay taxes for the 200kgs of gold that were shown to him by Athanase when he was in Uganda.

“The last time I spoke to Athanase, he was waiting for you to pay taxes and shipment would follow. I know that you were shown the goods at Cyclopes the last time you came to Uganda. For some reason, after meeting [the member of the First Family], you just left Uganda without even informing me. I do not know what exactly he told you to make you leave in a hurry without even saying goodbye to me. I think you assumed that I was working in concert with him. It was not true at all,” read the text of the chat, which Mr Arndt shared.

He further said, “You can opt to recover money from me on the basis that I introduced Athanase to you, but that does not make me legally liable, for you know who you paid and you also know the real owner. I am just a soft target. Making an introduction of a seller who you met several times and whose goods you personally saw and tested does not make me an accomplice. I think that you should try to ship the 200kgs, especially as you have a contract with Pangi.”

Musoke's proposed solution to the investor

According to Mr Arndt, Musoke texted him claiming that he was under a moral obligation to help him recover his funds.

“Having said all that, someone who can help both of us to recover your investment and probably help you to make some money will contact you from Dubai in the next two days. Kindly listen to him and do not give him threats. If you work with him, he will make you money. He will show you that even from Uganda, it is possible to ship gold successfully,” Musoke said.

He further warned Mr Arndt that the new person would walk away, if he (Arndt) opted to be belligerent to him.

“I have told him about you and advised him not to say too much about himself because the last thing I would want for him is for you to send his name to Military Intelligence, which would bring unwanted attention to his business. Of course, the fact that he is shipping out of Uganda shows that it can be done. I have asked him to get you a sample. He says he will do it. But that is after coming back to Uganda, then flying back to bring it to you,” Musoke said.

“I have asked him to get you a 3kg sample delivered in Dubai. But he will have to meet you first to assess you. I have told him only good things about you. Once you pay for those 3kgs, he will use the money to ship you more kgs. And so on. He has quite a large chunk here in Uganda, and he has enough capacity and connections to ship. I personally did not believe that he could ship but I know him, he was a cool man unlike Anthanase. So the choice is yours. You can listen to this man and follow his advice or you can try to trash me,” Mr Musoke added.

How opaque gold scams operate

Kampala continues to gain notoriety as one of the leading underworld regional capitals in the illicit trade of gold, much of which is smuggled from the restive eastern DRC and South Sudan.

The latest case is the Kampala District Land Board (KDLB) chairperson David Balondemu, who was arrested for allegedly scamming a Korean national Hyun of $600,000 (about Shs2.2b) in a fake gold deal in March and November 2021.

In 2021, lawyer Simon Peter Musangala, along with two others, Martin Bwayo and Enock Katwesigye, also known as Colonel Frank, faced charges of money laundering, facilitating money laundering, and cheating. They were accused of obtaining $5.5m (about Shs20b) from an American national, Anastasia Belesis, under the pretence of selling him gold.

In an interview with this publication, a highly-placed source, who has witnessed several fake gold transactions, detailed how the entire scam is planned.

The textbook scams usually have several actors, including a member of the First Family, a senior army officer, a prominent lawyer, officials at Entebbe International Airport, and illicit runners who form the bulk of cartels inside DRC in charge of smuggling gold across the porous border points.

“Most of the transactions are always done in cash to avoid traces, that’s is why all the people scammed cannot show the trace of transactions because the money is carried in cash,” a source says.

The role of immigration officials and security personnel at Entebbe International Airport is to ensure the investor is duped by ensuring he passes through the VVIP section where their luggage is not checked and it is where huge sums of money are transferred to evade detection from Uganda Revenue Authority (URA) officials.

“The army general now provides high security, the investor is driven in a sports utility vehicle [SUV] with a lead car and police escorts. He is then taken directly to the hotel where the deals are always finished,” the source said.

For Arndt, the deal involved paying four months’ rent at Speke Apartments in Kampala for the shady gold dealers. It is at this place where he met a prominent member of the First Family, who reportedly assured him that the gold dealers and Mr Musoke would honour their  agreement.

“I just knew I had been scammed because I wondered why this member [names withheld] would come in a transaction which does not concern them. I was later advised to leave the country and never return to Uganda if I really loved my life,” he said.

Usually, these dealers have both fake and genuine gold bars. According to the source, the genuine gold returns a positive test at the laboratory to complete the ruse. The gold is sometimes switched and the purchaser is handed the fake gold.

“Those are the lucky ones. Some of the investors do not even see the fake gold, they are deceived from day one until they are frustrated,” he said.