Graft probe on in mining licence dispute

What you need to know:

The Citizen has learnt that both the ministry of Energy and Minerals and the Prevention and Combating of Corruption Bureau (PCCB) are probing claims that ministry officials acted improperly in handling the matter.

Dar es Salaam. An investigation is on to establish whether corruption may have influenced actions that resulted in a $115 million (Sh230bn) mining permit dispute pitting a local company against gold mining giant, Acacia Mining, formerly Barrick Gold.

The Citizen has learnt that both the ministry of Energy and Minerals and the Prevention and Combating of Corruption Bureau (PCCB) are probing claims that ministry officials acted improperly in handling the matter.

The investigations follow a report by a private anti-corruption lobby that says its enquiry shows that some ministry officials and Acacia may colluded to cover up the circumstances around Barrick’s loss of the local company’s mining licence.

Energy and Minerals Minister Sospeter Muhongo has directed his permanent secretary to investigate the claims by the lobby group, according to emails on the matter seen by The Citizen. His officers are implicated.

PCCB Director of Investigations Alex Mfungo was also said to be looking into the same corruption conspiracy report, which is part of the lobby’s self–declare initiative to expose malpractices by multi-nationals. This new development comes at a time when mediation continues between Acacia Mining and Bismark Hotels, the Tanzanian company which lost its mining permit in the said conspiracy.

Bismark Hotels filed the claim for $115 million compensation against Acacia for the loss of the mining permit in May 2015. The concession was for gold exploration and mining in an area covering about 17 square-kilometres.

Their partnership began in 1994 and came to an end in 2012 when Bismark accused the gold conglomerate, which operated the disputed licence and three others under the Pangea Minerals title, of gross negligence that occasioned the loss of one of the licences. All the four licences were owned by the Tanzanian firm and covered about 68sqkm.

According to Bismark, Acacia failed to renew the licence for the 17sqkm of the original concession, exposing it to a loss of a potential mining business worth billions of shillings.

Lawyers representing the Tanzania firm say the company only discovered the permit hadn’t been renewed after the partnership was terminated and new talks were in progress to bring in international investors.

The disputed concession at Mgusu in Geita district is now owned by Mogaka Wambura & Hamada Hamduni, a local mining firm that plans to start mining operations with a Chinese partner this year. The licence had been put up for bidding when its date for renewal lapsed.

Acacia is challenging the huge demand for compensation in the ongoing mediation case in Dar es Salaam. The London-based company has in the past termed Bismark’s claim as “vexatious and baseless.”

“The claim related to a prospecting licence with no attributable reserves, resources or value to the company and has no impact on any current or future operations in Tanzania,” the company was quoted as saying in an email sent to Bloomberg news agency last year when the matter was first made public.

But after months of research and inquiries, the private anti-corruption lobby group based in Dar es Salaam says it has proven how Bismark lost its land and licence through negligence and inefficiency on Barrick-Acacia’s side in 2011 and then almost four years later, Acacia’s attempts to upset the legal processes of the Mining Act of 2010 by collusion with dishonest officials of the Ministry of Energy and Minerals.

Loss of licence

The private citizens argue that Acacia negligently failed to renew the 17sqkm concession as required by law. It, however, renewed the other three licences. This licence in question expired on May 17, 2011 and should have been renewed exactly 4 months later, on September 17, 2011 but Barrick-Acacia failed to act and the land was lost.

“The Mining Act of 2010 states that licence renewals may only be submitted to the ministry but since the 17th fell on Saturday, the application date was moved to September 19,” says the lobby in documents filed with the ministry and PCCB.

“They knew perfectly well about the licence renewal laws in the Mining Act of 2010. Acacia has dozens of lawyers,” a member of the lobby said when contacted by The Citizen.

The source said it was not a coincidence that on the same Monday, September 19, 2011, four companies were present at the ministry headquarters ready to submit their applications for the Bismark land. Acacia was not present.

“Through this negligence, Acacia lost the gold-rich land and didn’t fulfil their contractual obligations to Bismark and return their land with licence intact,” said the source.

The lobby has attached letters written by an official of the ministry to Acacia and Bismark between April and July 2015, which it contends was meant to cover up the multi-national’s costly mistakes from almost four years prior.

“The letters were inaccurate, untruthful, and inconsistent and assisted to cover up the massive losses and financial damages by a local company,” the source noted.

The source told The Citizen that top government officials, including those in State House, have been informed on the possible corruption conspiracy in the whole matter.

On January 6, the lobby wrote to Acacia president Kelvin Dushnisky telling him of the alleged conspiracy, to which he sent an email to say he had asked company CEO Brad Gordon, to ensure that an investigation is conducted.

In the mediation, Bismark is being represented by former Prime Minister, Judge (rtd) Joseph Warioba as its adjudicator whilst Acacia has Karel Daele, a partner in Mishcon de Reya Law Offices, London.

Lawyer Rosan Mbwambo who is also acting for Bismark told The Citizen the case was still being adjudicated for the amount filed as compensation and would therefore not speak on the reported report by the said anti-corruption lobby.

Efforts to reach Barrick-Acacia officials both by email and phone proved futile.