For the past three days, the headlines have been filled with news about the Perth Mint.
First came concerns about the mint's regulatory compliance defences, after a notorious former bikie was able to buy $27,000 worth of gold with little more than his driver's licence.
Then, it was revealed the 123-year-old institution had, between 2018 and 2021, sold gold to China that met broader industry purity standards for 99.99 per cent pure gold, but not Shanghai Gold Exchange (SGE) stricter standards for silver content.
The mint has accepted the "doping" was "damaging and unacceptable", while the premier has pointed to a $34 million investment in fixing issues at the mint.
But what does any of this actually mean, and should WA taxpayers really be worried?
What's the big issue?
An investigation by the ABC's Four Corners raised a number of red flags about what's happened at the mint, and that's a problem because if anything goes wrong with the mint, it's WA taxpayers left to foot the bill.
One of the major concerns is that the mint could face fines of more than a billion dollars from financial crime watchdog AUSTRAC, which is investigating whether it had adequate anti-money laundering and counter-terrorism funding safeguards in place.
Financial regulation expert Nathan Lynch said on top of that, "the public will be quite concerned" that the extent of those issues "wasn't voluntarily made a matter of public knowledge" by the government.
"To find out that we had really serious breakdowns … for that to come out through a documentary, a journalistic report is very concerning," he said.
Explain this money laundering compliance thing?
Commonwealth laws place strict regulations on certain organisations which are at a high risk of unwittingly facilitating money laundering or terrorism funding.
But the WA government told parliament last year the Perth Mint did not realise some of those laws applied to its activities until 2021.
Once it realised, it told the regulator and has been registered since March 2021.
"But unfortunately … changing your behaviour going forward doesn't absolve you of mistakes in the past," Mr Lynch said.
The mint also failed to historically declare international movements of money, as required by AUSTRAC.
The WA Parliament was last month told not a single report had been filed in the 2020-21 financial year, or any year before.
Four Corners alleged the mint failed to register more than 5,000 transactions over just a nine-month period.
Each failure to report carries a $21 million fine – creating "a potential $105 billion theoretical exposure", Mr Lynch pointed out.
The Perth Mint told Four Corners the matter was complex, it was obtaining specialist legal advice and would take appropriate action once that was finalised.
It also admits it has not complied with civil anti-money laundering regulations in the past.
What's all this talk about gold 'doping'?
Gold bars can never be made 100 per cent pure, so there will always be some other material that makes up bullions.
The industry standard is for bars to be 99.99 per cent gold, known as 'four nines' gold.
Perth Mint CEO Jason Waters explained on Tuesday that it was standard for refiners, like the mint, to keep their gold as close to 99.99 per cent as possible – because any gold over that threshold wasn't paid for by the customer.
The mint's processes produced 99.996 per cent pure gold, meaning about 0.006 per cent of each bar was "giveaway", so to reduce that amount, silver was added to the mint's bars.
That wasn't a problem for most places where the mint's gold was sold – but it was for the SGE, which requires no more than 0.005 per cent of each bullion to be silver.
"During the period in question, the gold that was produced by the Perth Mint and sold by the SGE, at least some of that gold, exceeded that amount," Mr Waters acknowledged.
Mr Waters was appointed CEO in 2022, after the alleged compliance failures and after the gold doping program had ceased following concerns raised by SGE.
On Thursday evening, the London Bullion Market Association (LBMA) announced they had commenced an "incident review process" over the matter.
The LBMA, an international trade association representing the London market for gold and silver bullion, said it was taking the allegations relating to the Mint "very seriously" and could not give a time frame for the completion of the review.
The Perth Mint said it welcomed "this engagement with the LBMA, which is a long-term partner of our business".
"We value the relationship and are committed to working openly and transparently throughout the process," the Mint said in a statement.
Is it really that bad?
The issue isn't just that the Perth Mint supplied the SGE with gold below the standard it requested, but that it did not reveal the scale of the issue to the exchange.
According to the Four Corners investigation, after the SGE raised concerns in late 2021, the mint knew there wasn't just a problem with one bad batch, but that many of the gold bars it supplied between 2018 and late 2021 could have been non-compliant.
The mint immediately changed its processes to fix the problem, but allegedly did not tell the SGE what had happened.
While that carries reputational risk for the mint, Mr Lynch said it was "symptomatic of an organisation that just didn't have an idea of risk".
"For a $600,000 [saving per year] benefit to risk a reputation of delivering sub-standard gold to a major client, a major exchange, really reflects an organisation that just doesn't have its hands correctly applied to dealing with risk," he said.
At the time there were concerns the mint could be left buying back 100 tonnes of gold, worth $8.7 billion at today's prices, although the premier has dismissed that possibility as "extremely unlikely".
Mr McGowan said since the issue had been resolved, "tonnes and tonnes" of gold had been sold to the SGE by the mint.
How much did the government know?
Issues around anti-money laundering and counter-terrorism regulation came to light in March 2021 and are still being addressed.
The concerns around the doping program were addressed by the mint in September 2021, but that wasn't communicated to Bill Johnston, the minister responsible for the mint, until January 2022.
The premier on Wednesday said Mr Johnston was only advised of what he described as an "operational decision" around the content of the gold bullions last year.
"The minister was advised last year, 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.
Mr McGowan was told even later, only finding out on Monday evening, the same night Four Corners aired the allegations.
"It was a historical, operational matter which had been addressed," a spokesperson for Mr Johnston said when asked about the delay, echoing comments by the premier.
But Mr Lynch was among those who felt the premier and treasurer should have been told sooner.
"Ultimately that's a treasury matter," he said.
"It's critical that the treasurer knows about that, so I think there's some questions there about governance in government to ask why isn't information flowing to the people that should know."
Opposition Leader Shane Love was similarly critical.
"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?" he asked on Wednesday.
Should you care?
Mr Lynch certainly thought so, pointing to possible "multi-billion-dollar unfunded liabilities" the Perth Mint could be carrying – something that could come home to roost with WA taxpayers.
"I think it would be a mistake to think that you can just bury these matters and move forward, because that is not the way that the financial crime regulatory regime works," he said.
Even still, the premier did not seem particularly worried about the government having to chip in for fines when asked about the prospect yesterday.
"I would expect the mint will deal with any of those issues," he said.
What's the reaction overseas been?
The SGE, to which the mint sold its doped gold, did not hold back in a statement published on its Chinese-language website yesterday, accusing the media of damaging its reputation.
It said unspecified media reports could result in "false information spreading on the internet, it causes serious damage to the reputation of Shanghai Gold Exchange," it read.
"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."
One Chinese news website, as it shared the ABC's reporting, described the mint's actions as "deceitful".
"No matter how much the Perth Mint quibbles, its credibility has now collapsed under the exposure of the Australian Broadcasting Corporation," its article read.
Another wrote: "The problem is that [if] there is a problem with such a large tonnage, why didn't we find it through inspection?"
What's next?
While Mr Johnston is still yet to face media questions over the matter because he's on a trade mission overseas, the next major event will be the conclusion of AUSTRAC's audit of the mint.
The findings of that report will decide whether or not taxpayers face the possibility of hefty penalties being levied by the regulator.
But Mr Lynch pointed out that before that even happened, questions would linger over whether the mint could afford to keep running.
"Once they [the mint] start spending properly on risk and compliance, the $40 million profit could evaporate very quickly," he said.
"So if we see that take place it could turn out that the mint is actually no longer profitable, particularly once they start fixing up historical issues which can cost tens if not hundreds of millions of dollars."
The opposition is also likely to continue demanding a royal commission the government almost certainly would not call, although Mr Lynch said there were good reasons for them to, after the Perth Casino royal commission last year.
"It would be difficult for the government to argue that a royal commission was justified for a private sector company but not for a government-owned corporation," he said.
Mr McGowan said yesterday a royal commission was not necessary because issues either had been resolved, or would be soon.
