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Barrick in alleged tax evasion scandal

by Dar Es Salaam ReporterThis Day
November 21st, 2006

Transnational mining giant Barrick Gold Corporation has been accused of evasion and delay in payment of taxes amounting up to 2 bn/- in connection with its operations in Tanzania.

Documentary evidence availed to THISDAY to support the allegations shows that the Canadian mining firm has since 2003 systematically failed to comply with 14-day grace periods extended to them to pay duty on imported machinery spare parts, chemicals and mining equipment.

Efforts by THISDAY to get a response to these allegations from top officials of either Barrick Tanzania Limited or the regional office in South Africa have so far drawn a complete blank.

According to sources within the mining sector, Barrick, through its former subsidiary Kahama Mining Corporation (KMC, enjoys the C21 importation facility which allows provisional clearance on all imports upon arrival in the country.

Barrick, like other mining companies, is supposed to pay five per cent import duty on all mining related consumables instead of the normal duty rates of between 10 and 25 per cent imposed on all imports by the Tanzania Revenue Authority (TRA).

The company is also supposed to apply for Value Added Tax exemption within 14 days after arrival of such consignments. This, the sources alleged, is the provision that Barrick appears to have been abusing most of all.

’’It has come to our attention that over 2,500 items imported into the country by Barrick Gold between 2004 and March this year were cleared through C21 provisional clearance, but did not go through the proper procedures for VAT exemption,’’ sources within TRA’s Mwanza branch office said.

They added that this discrepancy made Barrick liable to pay penalties for the cited items. ’’However, nothing has happened so far,’’ they said.

The Mwanza branch sources disclosed that another multinational mining company operating in Mara Region was recently fined $1m (approx. 1.29bn/-) for similar abuse of TRA tax concessions.

They however, expressed skepticism about whether the Barrick case would be treated as firmly, alleging that some officials at the branch worked in tandem with the mining companies to ’facilitate’ such tax evasions.

The TRA Mwanza branch manager, identified only by the single name of Lusana, said when contacted for comment that he is still very new at the branch and thus does not know much about the issue.

He however, confirmed that such tax payments are supposed to be paid in regions hosting the mining projects in question. ’’What we do is simply facilitate the transit of such imported goods and, in this case, the taxes are paid in Shinyanga,’’ Lusana told THISDAY in a telephone interview yesterday.

Our investigations have revealed out that KMC, the former Barrick local subsidiary now operating as Barrick Bulyanhulu Limited gold mine, has been clearing its imported consumables through a local company called Freight Forwarders Tanzania Limited.

Documents further show that, through the use of the same C21 declaration forms, Barrick has imported machinery spares, mining equipment, chemicals and lubricants via Mwanza Airport, all of which have been cleared before payment of any import duty at all.

’’This documentary evidence is just a tip of the iceberg to show to what extent the company has been evading taxes over the years. It should amount to billions of shillings in total. They need to pay this, plus penalty to the government,’’ a TRA Mwanza branch source said.

In a few examples of the alleged unpaid taxes, the documents show that the company imported 242 kilogrammes of potassium superoxide valued at 300,000 South African Rands, but did not pay import duty amounting to over 3.06m/-, while value added tax was exempted altogether.

In another transaction, KMC imported 10 packs of mining spare parts weighing over three metric tonnes valued at 544,858 SA rands, without paying duty worth over 5.5m/- in February last year.

In summary, the documents show that KMC has not paid import duty worth 80m/- since 2003, with unapproved VAT exemption amounting to over 300m/-.

When sought by THISDAY for comment on the allegations, Barrick Tanzania Limited’s executive general manager Gareth Taylor was twice reported by his secretary to be out of office, attending meetings. Questions emailed to both Taylor and South African-based Barrick regional manager Warwick Morley Jepson have also gone unanswered.

An official from Barrick Tanzania’s Dar es Salaam office, identified only as Richard, promised to liaise with Taylor to respond to the allegations through electronic mail. But until we went to press yesterday, nothing had been done.


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