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The search for the mint's missing gold Add to ...

The mystery of the mint's missing gold now looks less like an accounting glitch and more like the stuff of heist movies.

An independent review of the Royal Canadian Mint's records has concluded that the disappearance of 17,500 troy ounces of gold - worth about $19-million at current prices - does not appear to be an accounting error.

With that ruled out, it's seen as more likely that the metal was stolen from the mint's gold-refining operations, not only without anyone noticing, but with officials scratching their heads for months about whether there was really a theft at all.

In fact, despite suspicions of crime, they still don't know for sure.

The Mint alerted the RCMP to the missing gold on June 9.

In a joint statement last night, Transport Minister John Baird and Minister of State (Transport) Rob Merrifield said Mint executives' bonuses will be withheld until the matter is resolved.

"The Mint's still unexplained loss of precious metals is inexcusable," the ministers said. "The Mint will be held accountable."

From now on, they said, the Mint will have to give quarterly reports on inventory levels of all precious metals.

The mint refines so much gold, 5.4 million troy ounces a year, brought in as raw metal or scrap jewellery and turned into 400-ounce gold bars, that an error in processing or analyzing the metal could, in theory, account for losses. A spokesman for the Mint, Christine Aquino, said the Crown corporation won't "speculate" on whether it was theft, as they consider all possibilities.

But the independent review conducted by accounting firm Deloitte & Touche recommends security measures be analyzed for holes. In its own release, the Mint recognized, in bureaucratic language, that the report gives further justification for the June 9 decision to call in the RCMP.

"The involvement of the RCMP is indeed consistent with the Deloitte and Touche report, which recommended a more in-depth review of systems security and an assessment of potential inappropriate activity by both internal and/or external parties," the Mint said.

All of the Mint's refining and gold-minting operations are conducted at a high-security facility on Ottawa's Sussex Drive, where sneaking away with the equivalent of 41 gold hefty bars was thought next to impossible.

The report heightened criticism from the opposition Liberals, who said the government dawdled after the discrepancy was first reported eight months ago, only calling in the RCMP three weeks ago. That made it clear theft was the likely cause, he said.

"You can no longer ask, 'Is it possible that happened?' They've already answered that question - it is," said Liberal MP Joe Volpe.

"What in heavens name is going on? There's a Keystone Cops thing going on now, but there's also a gross indication of total incompetence."

The Mint discovered after its October, 2008, inventory that it was missing 17,500 troy ounces of gold - gold is now worth $1,085 an ounce - but has been struggling to see if it was a paper error or a real one. The Mint counts its gold every six months.

The Deloitte study ruled out accounting errors of various kinds, either from the way Mint employees recorded the ins and outs of gold over a six-month period, or the way they counted it in October.

What Deloitte cannot say for sure is whether previous physical counts of the inventory were done correctly, although the report said the firm had analyzed available records to see whether those previous results were reasonable. And presumably, red flags would have been raised if a previous count showed far more gold than the Mint thought it had.

Because of the complexities of refining operations, the physical count of gold is rarely exactly what the paper records indicate, but the discrepancies are always much smaller, within 1,000 ounces.

Deloitte's report said it wasn't able to test the complex series of scientific calculations and estimates involved in refining gold, so errors could account for some of the shortfall. But the margins of error for most processes are typically small - the Mint could not have lost all of the missing gold by producing bullion that was purer gold than usual, for example.

The report suggests that the Mint consider reviewing its processes and its calculations.

But it also suggests that the Mint look at whether somebody could have accidentally, or deliberately, manipulated the agency's records.

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