Thursday, July 13, 2017

What is Magufuli hiding about Acacia?

What is Magufuli hiding about Acacia?

Chambi Chachage

The government of Tanzania is about to start negotiations with Barrick Gold Corporation. With a stake of 63.9 per cent in Acacia Mining PLC, the stakes are high for the Canadian multinational. In March 2017 President Magufuli suspended the shipping of concentrates and subsequently ordered the impounding of its local subsidiary’s export-bound containers.

In line with the ‘Art of War’, the President has publicly taken an offensive approach. This is hardly a strategy of someone who is willing to compromise unless he is bluffing. “I was not crazy”, he recently reiterated in a rally, “when I impounded the containers of...big shots.” They “say it is ‘sand’, he further pointed a finger to them, “but transport it with police escort…there are more than 12 minerals there…they just take.” Isn’t this smuggling? 

Playing it safe legally, on 4 July 2017 Acacia announced that Notices of Arbitration were served in Tanzania. Doing so at that time, its press release insists, was necessary to protect it. However, it further noted, “Acacia remains of the view that a negotiated resolution is the preferable outcome to the current disputes and the Company will continue to work to achieve this.”

Such an affirmation from a company that unequivocally dismisses the two presidential reports seems contradictory when one reads its following take on the negotiations that are about to take place:

What these statements mean in their totality is that Acacia is not ready to meet us halfway. Doing so would imply that the President and his committees are right, albeit partially. It would entail that they would have to comply with his demands to bring back our money or minerals.

Casting doubts on the presidential reports is thus one way of dealing with all this. International tax experts have joined the fray. For instance, Maya Forstater and Alexandra Readhead have published an article on ‘A brutal lesson for multinationals: golden tax deals can come back and bite you.’ Therein they inform us that there “are several reasons why the findings of President Magufuli’s committees are hard to believe.” Yet they cite Acacia’s statistics and arguments on why they are confident the two professors got it all wrong as the first reason.

Probably what is more puzzling is that after doing so they present this rhetorical argument that draws heavily from Acacia’s self-defense regarding its integrity and compliance:

How does the reaction of shareholders lead these experts to conclude that the “committees’ findings are implausible”? Why did the Executive Chairman of Barrick, Professor John L. Thornton fly all the way to the Julius Nyerere International Airport if this was simply a matter of setting the records straight since our very own professors missed the mark glaringly? The official website of Barrick informs us that at “present, Mr. Thornton holds 2.4 million Barrick common shares, roughly 65 percent of which have been purchased using personal funds (not associated with incentive compensation).” So, how did they measure his reaction?

Nevertheless, some of our own leading experts find their analysis compelling. This is worrying given that they should also read it with the same healthy dose of skepticism that they used when reading the report summaries of the presidential committees. One would expect them to underscore that the article that has been gaining traction since it was published in the prestigious British daily, The Guardian, hardly engage with other Tanzanian sources.

By simply asserting that the Tanzanian President is “accusing the company not only of striking an unbalanced deal but of massively under-reporting its gold exports to evade tax,” the article is missing or dismissing a key argument. Smuggling. When its writers opt to insinuate that “Acacia may not have stolen billions of dollars worth of minerals” without engaging with the possibility of smuggling, they are bypassing a wealth of clues and cues out there.

Let us recall that Professor Osoro’s summary uses the Kiswahili word “magendo”, which means ‘contraband’, when describing the disappearance of containers. The summary does not only provide the shipping number of containers that were shipped without trace, but also the dates of shipping. In total, they were 43 containers that were not accounted for in one year alone. 

Does one need an independent committee to even verify this? How many presidential committees since the times of Mwalimu Nyerere were subjected to such verification? As a friend asked, rhetorically,  why is it so easy for us to trust researchers other than our own?

One may, by way of proxy, revisit the Controller and Auditor General’s (CAG) reports on the Tanzania Port Authority(TPA) and Tanzania International Container Terminal Services (TICTS) to get a glimpse of why it easy for companies to collude to smuggle stuff inside or outside our country. “We noted”, CAG stated on 28 March 2016, “that TPA does not have controls to monitor total number of containers handled at TICTS.” Why? Because “TPA only relies on information received from TICTS and does not reconcile this with the actual number of containers handled by TICTS.” Moreover:

Fast-forwarding to 27 March 2017, one notes CAG reiterating that TPA should collect data from TANCIS showing all containers handled at TICTS and reconcile this information with actual containers received at TICTS.” Now, if such was the state of importation, why should we expect that the conditions for exportation did not have a room for smuggling our minerals? 

Reducing the issue to tax deals or evasion can thus be misleading. “We have tax experts – good ones”, President Magufuli indeed points out. “But”, he firmly stresses, “they were just allowing the containers to be carried away after being given a bit of money.”

Maybe the President should just share the committees’ reports publicly in their entirety.


Kadoda Masumbuko July 13, 2017 at 2:10 AM  

Hi Chambi,

This is a long winded piece.

Your last sentence should be your first, and a couple of paras summarising both sides should suffice.

The Bible tells us, "It is for freedom that Christ has set you free." Also, "The truth will set you free."

The last sentence will settle the matter.

Thanks and keep blogging.

Ubarikiwe ndugu yangu,


Anonymous July 13, 2017 at 9:52 PM  

All in all the end of this saga will not be sweet to most of the people who think/believe /hope the president is doing it right and fairly. However we shouldn't forget that Magufuri is a politician and therefore he must be the sole beneficiary in the end. Keeping my fingers crossed.

NeyK July 14, 2017 at 3:31 PM  

This is a great read. I have noticed too, that the skepticism is one sided. But then again we shouldn't expect "them" to be objective either.

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