UK probes Acacia over bribes

Dar es Salaam. The UK’s Serious Fraud Office (SFO) is investigating Acacia Mining over allegations of corruption in Tanzania, according to news reports.

The British investigations into Acacia focus around accusations that employees of the company bribed Tanzanian government officials and consultants, according to The Wall Street Journal, quoting people familiar with the matter.

Acacia, which operates North Mara, Bulyanhulu and Buzwagi gold mines traded formerly in Tanzania as African Barrick until 2014. Gold giant Barrick Gold Corp is the majority shareholder in Acacia.

The interest of British law enforcement in Acacia will heighten scrutiny over the company and add another headache for Canada’s Barrick, the world’s largest gold producer by output.

Acacia corruption probe will also be the third time in recent years for SFO to get involved in high ranking corruption investigations in Tanzania, after the 2010 $12.4 million bribery case involving the purchase of a security radar system and the 2015 $6 million Standard Bank bribe to secure a private sovereign debt bond for the government worth $600 million.

Acacia, listed in London, is separately being investigated by Tanzanian authorities over allegations of corruption and tax evasion, with its former Vice President Deo Mwanyika, acting managing director Asa Mwaipopo and liaison officer Alex Lugendo currently in remand prison.

Acacia has also been caught in the middle of a negotiation between Barrick and the government for a $300 million cash settlement and handover of 16 per cent ownership of its mines to Tanzania to settle a record $190 billion tax dispute that has halted some of the company’s exports. Acacia has, however, filed an arbitration case at an international court over the dispute.

Following leakage of the fresh probe by SFO, Acacia said in a statement posted on its website that it is not aware that the SFO is investigating the company.

“However, Acacia has been in contact with the SFO about the allegations of corrupt activities in Tanzania which are the subject of proceedings in Tanzania,” it said.

According to The Wall Street Journal, Acacia’s trouble in Tanzania is being watched closely by global miners, who see it as one of several key test cases about resource investment in the region. The SFO’s probe is also one of a number of high-profile investigations by Western authorities into miners operating in the developing world.

Barrick, meanwhile, has struggled recently to boost gold production, as it focused on selling assets and cutting costs and has experienced operational problems at some of its mines.

Executive Chairman John Thornton, who has run the company without a chief executive since 2014, clinched a deal in September to buy Rangold Resources Ltd. in a $6 billion merger. The deal will elevate Rangold’s chief executive to run the combined operation.

Barrick has declined to comment.

Acacia has linked the corruption allegations in Tanzania courts to its wider disputes with Tanzania. Acacia has also said on its website that the allegations date back as far as 2008, when the business was still a wholly owned subsidiary of Barrick. Barrick floated the company in a public offering in 2010, and currently holds around 64 per cent.

The SFO probe comes amid frayed relations between Barrick and Acacia.

Acacia has said that it has been effectively locked out of negotiations with Tanzania’s government over its tax bill.

It is unclear how advanced the SFO’s investigation is. Around two years ago, the SFO reached out to a whistleblower who had information on the alleged payments to officials, a person familiar with the matter said. Several months ago, Acacia handed over documents to the agency, according to another person familiar with the matter. An SFO spokeswoman declined to comment.

In Dar es Salaam, neither the ministry of energy nor the Prevention and Combating of Corruption Bureau (PCCB) were available for comment.