Venezuela has one of the largest gold reserves in the world, yet it does not appear in any ranking of producing countries. This is because up to 90% of the extracted gold is trafficked, causing losses estimated at around $1.7 billion a year. In this article you’ll learn how criminal groups and corrupt officials smuggle gold from Venezuelan mines to international markets and how this leads to massive human rights abuses and environmental degradation.
A day in El Dorado
In southern Venezuela, in the heart of the Amazon rainforest, lies a place called El Dorado. No, it is not the mythical city of gold that has obsessed for centuries explorers from across the world, but a humble town of about 5,000 inhabitants. In one regard, though, the legend is right: this region is a giant gold mine.
Hearing gunfire is commonplace in El Dorado. Gold fever has turned this area into a battleground for criminal organizations, corrupt authorities, and guerrillas who vie for territory with the local population, the National Armed Force, and, of course, each other. The strongest and most enduring gang in El Dorado is that of Fabio Enrique González Isaza, known as El Negro Fabio.
According to Transparency Venezuela and other local sources, El Negro Fabio is the “pran” of El Dorado. “Pran” is a term coined in Venezuelan prisons that roughly corresponds to that of “godfather” in Sicily. Indeed, both his attitude and organization are reminiscenti of Italian mafias, particularly of the Neapolitan Camorra.
Fabio is a criminal entrepreneur: he controls four large gold mines (San Luis de Morichal, El Chivato, La Pelota, and La Pelotica), as well as gold deposits in the Cuyuní and Yaruani rivers. This does not mean that he puts his men to extract the precious metal, but rather that he imposes a levy, in fact, a racket, called “vacuna,” on the miners. To make this business model work, Fabio must resort to violence: according to the Life Defense Observatory Odevida, he would have no fewer than 1,000 men under his command, equipped with war weapons such as Kalashnikovs, M4 assault rifles, and M6 automatic rifles. If in the early years Fabio had to recruit young boys, he has now managed to attract into his ranks former military professionals, especially snipers, who have no qualms about killing anyone who gets in the way of the gang.
In addition to controlling the mines, Fabio and his men also engage in gold smuggling, trafficking in weapons, human beings and drugs, extortion, kidnapping, as well as the exploitation of sex work. All this happens with complete impunity, despite the fact that Fabio was briefly detained for resisting authority in 2017 and at least two warrants to his name, one from 2018 and one from 2021.
The explanation for such impunity is most likely collusion with the authorities, another Mafia trait. Indeed, witnesses from El Dorado have seen him on numerous occasions with ministers and politicians, as well as members of the security forces. While Fabio is consolidating his relationship with the powerful, he is also trying to secure the consent of the population. Indeed, he has founded a charitable institution, the Fundación Corazón de Azucar (Sugar Heart Foundation), which provides meals to the poor, repairs schools and sets up clinics. He allegedly even paid for foreign singers to perform at events held in El Dorado to please the residents. At the same time, according to other reports, Fabio has a habit of throwing discord among citizens to prevent them from joining forces against him.
As usual, it is the marginal segments of the population, especially indigenous people, that suffer the most from this system. To cite one example, in 2017 Fabio was trying to extend his control to the San Luis de Morichal goldfield, located near a village of the Pemones indigenous people. Their chief, Omar Meya Lembos, opposed the invasion and payment of the vacuna and requested the protection of an army contingent. During a firefight with the military, eight of Fabio’s men were killed. In retaliation, Fabio ordered that the village be placed under siege for 6 months, denying its 600 inhabitants access to El Dorado for supplies. Not content, Fabio inflicted an even worse punishment on Omar: in 2018, he kidnapped and brutally killed his brother Oscar.
El Dorado is unfortunately just one of the many examples from Guayana, a mountainous region between the Amazonas and Orinoco rivers covering an area larger than Italy and Greece combined.
But how has such a dramatic situation come about? To understand its origins, we need to take a few steps back into the country’s history.
A long history of exploitation
Venezuela’s modern history is intertwined with that of its natural resources, particularly oil and, more recently, gold. After countless failed missions in search of El Dorado, mineral and hydrocarbon deposits were finally discovered in the second half of the 19th century- more specifically, the finding of gold in Guayana dates back to 1877.
The real breakthrough came a few years later, in the 1910s, when General Gomez rose to power as dictator and initiated the large-scale exploitation of oil deposits. Since then, the extraction of natural resources has become a central part of the country’s political and economic life, enriching and consolidating the power of a narrow elite at the expense of the majority of the population. After the establishment of a fragile democracy in 1935, Venezuela experienced another oil boom in the early 1970s, only to pay for its dependence with decades of recession, skyrocketing inflation and high unemployment rates.
The last 25 years of Venezuela’s history have been dominated by two men: General Hugo Chavez and his successor, Nicolas Maduro. Chavez was elected president in 1998, at a time when inflation exceeded 30% and more than half of Venezuelans were living below the poverty line. Animated by a populist leftist ideology, Chavez invested oil profits in food aid, education and social services and nationalized the oil, mining, telecommunications, electricity, steel and cement industries. Chavez died in 2013, during his third presidential term, leaving vice president Maduro, with a country in dire economic conditions. After the 2014 oil crisis, inflation exceeded 50%, shortages of basic items such as milk, flour, and toilet paper became recurrent, and crime reached record levels. Defeated in the 2015 legislative elections, Maduro reacted with an authoritarian attitude, giving special powers to the police and army and bribing members of the opposition. These decisions, combined with electoral fraud in 2018, cost his regime expensive sanctions from the United States and the European Union. By the end of 2018, Venezuela’s GDP was in free fall, inflation had reached 2400%, and food and medicine shortages had become endemic. To cope with plummeting profits from oil and tourism, Maduro had to turn to other sources of revenue. In 2016 he established the Arco Minero del Orinoco, an arc-shaped area of almost 112,000 km2 between the states of Bolivar and Amazonas, where it became legal to mine gold, bauxite, diamonds, magnetite and many other minerals. El Dorado and the other gold deposits are located in the easternmost sector of the Arc.
On paper, this project was supposed to regularize mining, eradicate organized crime, increase safeguards for miners and the environment, and most importantly, replenish state coffers. Data from 2021, however, show that only 10% of the extracted gold reaches the Central Bank of Venezuela. Where does all the rest go?
The gold smuggling system
Gold is perfectly suit for smuggling. It is easy to mold and transport and retains its value even in times of crisis. Once smelted, it is almost impossible to trace its origin, and what is more, it is a legal material, so it is easy to launder in lawful activities.
In the system devised by the Maduro government, gold should be mined in state-owned mines by licensed miners, refined by the state-owned enterprise Minerven, and finally delivered to the Central Bank, which should keep a part for the national gold reserve and resell the rest abroad legally.
In practice, only 10% of the gold mined in Venezuela follows this process -the rest is smuggled following a variety of routes. A 2021 study by the Organization for Economic Cooperation and Development (OECD) distinguishes between two types of flows: centralized flows (which go through the Central Bank) and decentralized flows (which escape the official system altogether). Centralized flows are further distinguished into domestic and international.
Let’s start with national centralized flows. Corrupt military and security officials may get hold of the gold meant for the Central Bank directly from the mine, after refining in the state-owned enterprise Minerven, or from buyers in controlled centers such as El Callao, near El Dorado. Military personnel usually buy gold below the market price, obtain it in the form of bribes at checkpoints, demand it as vacuna from the miners, or divert it from gold deliveries to the Central Bank. Only the largest mines deliver gold directly to politicians, otherwise the army acts as an intermediary. Lastly, it is members of the elite (called “enchufados,” “connected”) who export the precious metal for their own personal gain.
In centralized international flows, instead, it is Maduro’s own government that sends large amounts of gold to other countries, notably Turkey, the United Arab Emirates, Uganda, and Iran, often on foreign aircrafts-in 2019, for example, the use of a Russian aircraft caused quite a stir. Officially, the gold is exported to be refined abroad. That is because the processing capacity of Venezuela is at an all-time low since the sector was nationalized and has suffered from the shortage of skilled personnel, rampant corruption, and the meddling of organized criminal groups. However, there is no evidence of gold being returned to the Central Bank of Venezuela. On the contrary, there is growing evidence that gold is being used by the government to purchase foreign currency and essential goods and services from foreign companies. Facilitating these deals are usually brokers with long criminal records, such as Colombian-Venezuelan Alex Saab or Belgian Alain Goetz. Saab is currently on trial in the United States for money laundering on behalf of the Maduro regime.
But let us turn now to decentralized flows. These involve sindicatos minerarios, i.e., criminal gangs like Fabio’s, but also Colombian militia groups (particularly FARC-D and ELN), and Mexican and Colombian drug cartels. These organizations are liked by a complex and highly variable network of alliances and rivalries that also involves the corrupt Venezuelan military. These groups do not always export the gold they take by force: they also use it as a means of payment, with a locally established value, to fight the staggering inflation. When criminals decide to smuggle gold out of the country, they usually do so by air, taking advantage of the many formal and informal airports built in mining areas. A part of the gold also leaves Venezuela by land and sea, often along the drug and arms routes. The main destinations are neighboring countries, particularly Colombia, the Dominican Republic, Brazil, Suriname and Guyana, and, to a lesser extent, Panama, the Cayman Islands, Aruba and Curaçao, and Mexico. Here the gold is laundered: instead of Venezuela, the origin of the gold is replaced with that of the country to which it was sent. This explains, for example, why the Dominican Republic is among the top 30 countries for gold production in the world while Venezuela does not even appear in the ranking.
Countries in the Global North are also involved. In the United States, for example, several enchufados own shell companies and real estate used to launder gold, especially in Florida, where there is a large Venezuelan community. Europe plays a part, too. Refiners in Belgium and Switzerland have allegedly bought and laundered gold directly from companies in the El Dorado area.
The Middle East isn’t exempt either: it appears that the Syrian-Lebanese diaspora in Venezuela relies on a network of intermediaries in El Callao and Cucuta, Colombia, to smuggle gold or to transfer its value indirectly through the Arab hawala system. These movements are under particular scrutiny by authorities because they allegedly serve to finance terrorist groups such as Hezbollah.
In 2018, the Maduro government tried to put an end to this veritable Wild West with Operation Manos de Metal (Metal Hands), which aimed to eliminate criminal organizations engaged in illegal gold mining and smuggling. Fabio, the character we met at the beginning of this story, was also involved, but as we know, he always escaped justice. According to local sources, Manos de Metal is more of a witch hunt for groups competing with the elite than a genuine attempt to eradicate corruption in the industry.
Working in a gold mine
Aside from the lack of genuine political will to put an end to the phenomenon, another reason for the persistence of the sindicators minerarios is that they have established complex and strongly hierarchical systems-another term that is reminiscent of the Napolitan Camorra.
Indeed, at the top of each sindicato there’s a man known as the “pran” or “patron,” who leads the organization along with his two close aides, known as the “second” and “third.” Below them are the “trains,” that is, the groups in charge of running the mines, each of which is called a “base.” At the head of each train is an “area leader,” who is in turn aided by an “auxiliary” and a “right hand.” Within the train there are several teams with diverse tasks. The so-called “cocos secos,” for example, are in charge of supervising the miners and applying punishments on those who do not abide by the rules, while the “grupos de choque,” made up of young men aged 20 to 25, are in charge of defending the mine and invading other mineral deposits. Both of these groups are often on drugs, which help them find the courage to carry out violent and often very bloody actions. Yet another group are the “luceros,” mostly made up of slightly older men, between 25 and 30 years old, who are responsible for intelligence. Since their job is to listen and gather information, they don’t necessarily carry a gun. There is also a “logistics management” group, made of former police or army officers aged 35 to 40, in charge of traveling to town to purchase supplies for miners living by the mine. The “social management” group, made of people aged 35 to 60, is in charge of providing services to the miners. Lastly, the “gariteros,” who are at the bottom of the hierarchy, guard the entrance to the mine.
The rules of the mine are not written anywhere, but all miners know them by heart. A woman named Carolina interviewed by Transparencia Venezuela could recite six of them:
- No gossip nor leaks, neither inside nor outside the mine;
- No thefts;
- No fights;
- No photos or videos;
- Respect of “lights,” i.e., hours of leave from the mine,
- Payment of the “vacuna,” every day.
Violation of these rules leads to an escalation of punishments that in the past used to be carried out in the forest, away from the mine and the eyes of the miners, but are increasingly performed publicly as a warning to others. The first offense is punished with beating; the second, by mutilation of one or more body parts; the third, is a sentence to death by quartering.
A gruesome example is that of Sergeant Leocer José Lugo Maíz, who was mutilated by one of El Callao’s sindicatos in late 2018. A National Guard informant had mistaken him for another person and reported him to the gang, who kidnapped him on December 28, 2018. Leocer was found only 17 days later, not in life danger but in a calamitous state: the criminals had in fact cut out his tongue, gouged out his eyes, and severed his hands.
The consequences for the people, the economy and the environment
The stories of Oscar, Carolina and Leocer are a snapshot of the very serious violations of human rights and of the rights of workers and indigenous people currently taking place in the Venezuelan states of Bolivar and Amazonas. These violations affect not only the indigenous population, but also a growing number of immigrants from the northern cities of the country, where the economic crisis is so acute that people from all walks of life and levels of education are converting to mining or mining-related activities. It is not uncommon, for example, to find former university professors wielding an axe or former fishmongers providing sexual services. Many of these people never return home — to ease the pain of the families, a group of journalists in Ciudad Guayana, the capital of Bolivar State, has launched a blog called “Fosas de Silencio” (Pits of Silence) where they reconstruct the stories of these contemporary desaparecidos.
Added to this tragedy is the potentially irreversible damage to the country’s natural heritage, which is suffering from deforestation, pollution and illegal mining. Case in point is Canaima Natural Park, once Venezuela’s main tourist attraction thanks to Salto Angel, the world’s highest waterfall. Today the park is in danger of losing its UNESCO status because of illegal mining initiated by the local indigenous population, the Pemones, who have no otherway to make a living since the collapse of tourism.
It is difficult to imagine how Venezuela, which is losing its human, environmental and economic capital at a worring rate, can reverse course and embark on a path of inclusive and sustainable development. A change in the ruling class could be the first step in this direction.