Tanzania Fighting an Economic War; to Win it There Must be Cohesion—Justice Minister



President Magufuli announced in the press briefing Barrick Gold has agreed to pay ACACIA evaded taxes and royalties.

Tanzania Minister for Justice and Constitutional Affairs, Prof. Palamagamba Kabudi


By TZ Business News Staff.


Tanzania is fighting an economic war, and the Government intention is to win it, the Tanzania Minister for Justice and Constitutional Affairs, Prof. Palamagamba Kabudi has said in Dar es Salaam.

The Minister made the remarks in a joint videotaped press briefing with President John Pombe Magufuli of Tanzania along with the  Executive Chairman  of the Canadian multi-national Barrick Gold, Prof. John Thornton. The press briefing made available to the media was made to inform the public about proceedings at a meeting between Thornton and President Magufuli.

The Barrick Gold Executive Chairman  flew to Dar es Salaam to resolve a dispute in which Tanzania is accusing Barrick’s subsidiary company, ACACIA Mining PLC of evading the payment of  trillions of Tanzania shillings estimated to amount to nearly USD 49 billion.

The Minister for Justice and Constitutional Affairs repeated President Magufuli’s order instructing Tanzanians to stop linking the massive tax evasions to retired Presidents  Benjamin William Mkapa and Jakaya Mrisho  Kikwete, although the massive evasions took place during their tenure of Government leadership.

“We are in an economic War. In this war, the country’s purpose and the President’s purpose  is to win the war; and in order to win this war we need cohesion among all the people [of Tanzania],” Prof. Kabudi said, adding that it would be counterproductive to start focusing on names of retired presidents in relation to the problems identified as some newspapers have done. The shift of focus would detract the war, he said.

The Minister said it was at this material time more plausible to focus on the positive things the past presidents did for the country as we correct any wrong things they may have during their leadership,adding that people around the country  should avoid focusing on blame but rather focus on the fight in which laws creating loopholes for tax evasion should be changed.

The laws that govern the extractive industry must be changed to plug loopholes, Pro. Kabudi said, urging Tanzanians to start giving ideas on what needs to be improved in the laws governing minerals, oil and gas and other laws.

President Magufuli announced in the press briefing that Barrick Gold has agreed to pay the evaded taxes and royalties, explaining that the payments would be made after negotiations to be done by a joint team comprising Government representatives and Barrick Gold representatives. Barrick Gold owns 64% shares in ACACIA Mining PLC.

Two presidential probe teams in Tanzania have determined that the world’s number one gold miner has under declared the value of its mineral sand exports since 1998 todate. The under declarations calculated to facilitate tax evasions were being masterminded by  the company ACACIA, a  Barrick Gold subsidiary registered  on the London Stock Exchange with a cross listing at the Dar es Salaam Stock Exchange in Tanzania.

But ACACIA has operated in Tanzania for 19 years under past administrations without any legal registration or certificate of compliance, according to the presidential probe teams set up in March 2017.  The latest probe team report has named numerous government officials still in Government service and those in retirement understood to have colluded in some way or neglected their duties to facilitate the massive tax and royalties evasions.

According to the second probe team report, Acacia Mining Plc has for 19 years committed various offences, including providing wrong information, obtaining minerals by false pretence, evading tax, economic sabotage, transfer pricing manipulation and occasioning loss to the government. Barrick Gold owns 63.9% shares in Acacia Mining. The offences committed by the subsidiary are criminal and punishable by a jail sentence.

The government has imposed a travel ban on everybody mentioned in the probe teams. The Minister for Home Affairs, Mr Mwigulu Nchemba, imposed the ban through his instagram page, according to the Government owned Daily News which quoted the minister as saying “there is no patriotism that exceeds protection of national resources. . . Congratulations honorable President for displaying high level of patriotism by protecting national resources with actions.”

The newspaper  then quotes the minister imposing the travel ban through his Instagram page through the statement, “I order all officials mentioned (in the report) not to travel outside the borders of the country, except under special government permit.”

Prof. Thornton said the discussions in Dar es Salaam were fruitful and a joint meeting comprised of a team to agree on a win-win solution to the dispute will be convened soon.  President Magufuli said Barrick Gold has agreed to pay any payment amounts agreed during the forthcoming joint discussion.

Acting on an advance tip-off in March, 2017, President Magufuli paid an impromptu visit at the Dar es Salaam port where he found shipping containers filled with undervalued unprocessed ‘mineral sand’.  The President  formed an eight-man probe team of experts, led by Prof Abdulkarim Mruma, to investigate and establish the amount of minerals and their correct values in the shipping containers which were just about to be exported abroad.

Some 277  containers with capacity for 20-tonnes of mineral concentrates each were detained at the Dar es Salaam Port and later at other Inland Customs Depots to await verification of content. The mining companies exporting the mineral ‘concentrates’, which included ACACIA Mining Plc, claimed each of the containers carried only 3Kg of gold and only 3 tonnes of copper in individual containers.

The presidential probe team found individual containers to hold between 28 and 47.5kgs of gold each. The probe team also established there was between 6 and 7kgs of silver in the individual containers and between 5.2 and 6.75 tonnes of copper. The mining companies started exporting mineral sands since 1998. President Magufuli said over 3,000 containers with mineral sand were being exported every year. The probe team established that the total value of the seized 277 containers was between Tsh. 829.4bn/- and 1.439 trl/- where the exporting companies put the total value of the containers at 85.87bn/-.

The containers were seized. The President formed a second team to determine the extent of cheating and evasions since 1998 when the export of mineral concentrates in containers started. The second probe team has revealed that Acacia Mining Plc has operated in the Tanzania for 19 years without legal registration or certificate of compliance.

Presenting the report findings at State House in Dar es Salaam, the chairman of the committee, Professor Nehemiah Osoro, said the documents obtained from the Business Registration and Licensing Authority (BRELA) indicated that the company did not have permission to conduct mineral activities and business in Tanzania. The committee found out that Acacia had under-declared revenues and tax payments over a number of years, occasioning loss to the government of over 380 trillion/-.

In the wake of the revelations, President Magufuli has directed that the company pays all the outstanding taxes and royalties and that the Ministry for Energy and Minerals renegotiates all large-scale Mineral Development Agreements, Government ownership in the mines.

The 8-member second probe team found out that Acacia Mining Plc which claims to be the sole owner of Bulyanhulu Gold Mines Limited (Kahama Mine Corporation Limited), North Mara Gold Mine Limited and Pangea Gold Mine Limited) had never submitted any document or information to substantiate that it owns the three companies or has shares in them.

“Because Acacia Mining Plc is not registered and because it has no legal recognition in the country, it lacks criteria to be given a licence for mining activities or business in Tanzania,’’ the committee chairman, Professor Osoro said, adding that the company was operating in the country illegally.

According to him, the committee found out that Bulyanhulu Gold Mines Limited and Pangea Minerals Limited were the producers and sellers of mineral concentrates outside the country. The committee further found out that Bulyanhulu and Pangea companies had been exporting mineral concentrates illegally, as well as concealing information on the 277 containers at the Dar es Salaam Port whose exportation was blocked.

The report further indicated that according to ACACIA documents the royalties paid by Bulyanhulu and Pangea between 1998 and 2017 was US Dollars 111.3 million; but according to documents at the Ministry of Energy and Minerals the royalties paid during the period were only US Dollars 42.7 million.