WA Premier Mark McGowan says he only became aware on Monday of issues concerning gold that was sold to China by the Perth Mint, as the exchange it was allegedly sold to accused the media of damaging its reputation.
In a statement released on its Chinese-language website on Wednesday – but not available on the English-language version – the Shanghai Gold Exchange said it had "noticed some media reported 'Australian Perth Mint sold diluted gold bars'".
"False information spreading on the internet, it causes serious damage to the reputation of Shanghai Gold Exchange.
"The relevant parties must stop violating reputation of Shanghai Gold Exchange.
"Shanghai Gold Exchange will reserve the rights for taking further actions to maintain the lawful rights."
The CEO of the Perth Mint, Jason Waters, on Tuesday acknowledged that "at least some of the gold" sold to the SGE between 2018 and 2021 did not meet the exchange's strict standards for silver content, despite meeting international standards for 99.99 per cent pure gold.
Mr Waters was appointed CEO of the Mint in April 2022.
It followed Mr McGowan admitting he first learnt of the issue the night an ABC Four Corners investigation went to air.
Those issues were the result of a 'doping' program run by the mint between 2018 and 2021, which was stopped after the Shanghai Gold Exchange raised concerns in September 2021.
Mr McGowan, who was the minister responsible for the mint between 2017 and early 2021, has told reporters he had no knowledge of the program.
"We've done a full check of everything, all briefing notes and so forth, and no I wasn't advised," he said.
Mr McGowan said his successor in that role, Bill Johnston, was advised of what he described as an "operational decision" around the content of the gold bullions last year, but he would not be drawn on whether Mr Johnston should have told him sooner.
In a statement on Wednesday afternoon – nearly two days after the issues were made public – a spokesperson for Mr Johnston said he was first made aware of the issues in January 2022.
When asked why Mr Johnston did not tell the Premier at the time, his spokesperson responded: "It was a historical, operational matter which had been addressed."
They said the Minister only learnt of the potential $9 billion cost of buying the bullion back "this week".
Ministers don't meddle in operational matters: premier
"The minister was advised last year [that] it was an operational matter that was resolved with the purchasers of the gold at the Shanghai Gold Exchange, so the matter was resolved,” he said.
"In relation to operational matters in government trading enterprises [like the Perth Mint], that's often something ministers don't get involved in and if ministers do get involved in those things, then that raises a whole range of other questions as to why a minister would be involved in operational matters.
"As a minister or a premier, you don't go into the mint and inspect the gold.
"You don't go and run the books and you don't go and do these sorts of things and you'd all think that was inappropriate if we were to do that."
Premier should shoulder more responsibility: opposition
Opposition Leader Shane Love said the premier should be taking more responsibility, and that it was "staggering" he was not aware of the issue until Monday.
"The premier, as the treasurer, is the guarantor of the quality of the gold [sold by the mint]," he said.
"Now if Bill Johnston knew about the situation over a year ago, why did he not speak to the premier and why did he not pass that information along?
"It's clear that there's been decisions which have been made which were not being made in a transparent manner, they'd not been reported transparently and even now we're getting very little information from the minister and the premier about the goings on."
Call for royal commission rejected
Mr Love said the number of lingering questions strengthened his calls for a royal commission.
He said other avenues available to the opposition, like parliamentary committees, were "limited" because of the power the government holds in parliament.
The premier rejected the idea of a royal commission being necessary.
"Obviously the issues were resolved in September 2021 in relation to the silver content in each bar of gold and since then a great deal of gold continues to be sold," Mr McGowan said.
"In terms of the AUSTRAC review and so forth, that's ongoing but we are investing $34 million in upgrading all the IT systems, compliance systems and staffing levels in the mint as we speak.
"I'm confident that all the processes and all the changes that were needed have been in put in place and there is an ongoing review as to what else should be done."
Gold recall 'extremely unlikely'
An internal investigation by the Perth Mint at the time considered the possibility that up to 100 tonnes of bullion could have to be recalled, worth about $8.7 billion at today's gold prices.
"The advice I have is that is extremely unlikely but we are working with the Shanghai Gold Exchange, we want to continue to make sure we have a continuing, great relationship with them," Mr McGowan said.
"Since this issue was identified in 2021, tonnes and tonnes of gold has been bought by the Shanghai Gold Exchange from the Perth Mint and we want to make sure that relationship and that good commercial activity and relationship continues."
But the issues have been noticed by another major gold exchange the mint is accredited by — the London Bullion Market Association (LBMA).
"LBMA is aware of the allegations raised by the Four Corners TV show and is in close contact with Perth Mint to gain an accurate understanding of the situation," a spokesperson said.
"LBMA is also awaiting publication of the report of the AUSTRAC investigation, announced last August, into questions about Gold Corporation's compliance with Australian anti-money laundering and counter-terrorism financing rules."
Premier plays down potential cost to taxpayers
The AUSTRAC investigation, which will consider whether the mint complied with anti-money laundering and counter-terrorism funding obligations, could leave the mint facing fines into the billions of dollars, but the premier played down the idea taxpayers would be left to foot the bill.
"I would expect the mint will deal with any of those issues. The mint is a business and they will manage any of those issues," he said.
Questions over the Mint's regulatory defences were raised after former bikie Dayne Brajkovich was able to buy $27,000 worth of gold by presenting just his driver's licence.
It is not suggested that Mr Brajkovich sourced the money from illegal activity, but the mint was required to ask him where the money came from.
"We work really closely with government agencies in particular around suspicious transactions," WA Police Deputy Commissioner Allan Adams told ABC Radio Perth.
"In this instance though, we haven't received any advice from any of those trusted partners that has led us to investigate this matter at this time."
Issues raise questions about mint's future
This week's news has also raised questions about the future of the mint and its ties with the state government, which Mr McGowan said was already being looked at.
"The mint has been there since the 1800s and owned and run by government so it's had that ongoing role," he said.
"It supports the gold industry out in the Goldfields where tens of thousands of people work.
"It's actually not a large income earner for government, it actually works on very narrow margins ... but it supports the industry in the Goldfields which is its big benefit, plus the 700 people who directly work for it."
Mr McGowan, Mr Johnston and their respective offices were unable to answer detailed questions from the ABC on Tuesday about when the government became aware of issues with the Shanghai Gold Exchange.
The premier said he was unable to take questions from the media on Wednesday for personal reasons.
"Yesterday morning I got up early, I drove a very direct and close family member to hospital where that family member had to undergo some surgery," he said.
"After that I went and chaired cabinet, I went straight back to the hospital. I'm sorry I was unavailable for your interviews."
Mr Love said there was no excuse for Mr Johnston not taking questions.
"Now Bill's overseas, but hey, there are telephones," he said.
"I'm sure if someone rang him up he could make comment and he could actually explain what he knows about the situation and what his view of the situation is."
