PARLIAMENT WILL DEBATE BARRICK-ACACIA PROBLEMS IN TANZANIA

BARRICK GOLD – ACACIA MINING PROBLEMS ON THE AGENDA TO BE DEBATED IN PARLIAMENT
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Business Times April 22, 2016

Political sources close to BUSINESS TIMES have indicated that the TRA/Barrick-Acacia legal tussle over a tax evasion dispute – as well as the recent TRA Tribunal’s ruling, together with the Acacia/Bismarck dispute over the loss of a mining licence where Bismarck is claiming US$115 million in compensation – have all been put on the agenda to be debated in Parliament.
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The sources claim that some members of the ruling and opposition political parties are closely watching the up and coming appeal on the taxation dispute, as well as the prolonged Bismarck/Acacia litigation which has now made it into foreign courts!
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Formerly operating as African Barrick Gold Plc, ‘Acacia’ is a gold mining business operating in Tanzania, with exploration properties in Kenya, Burkina Faso and Mali.
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Acacia’s majority shareholder is the world’s largest gold miner, the Canada-based Barrick Gold Corporation, which owns 63.9 per cent of the company.
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On the other hand, Bismarck Hotels Co. is a closely-held Tanzanian company.
The subject-matter of the tussle with the Tanzania Revenue Authority (TRA) appears to be linked to ‘price transferring,’ whereby Acacia showed a loss in its Annual Financial Statements of its operations in Tanzania – yet it declared a dividend pay-out to the shareholders in London!
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In the event, observers queried: how could Acacia have made a loss in Tanzania, when Tanzania is about the only income-bearing investment in Acacia’s worldwide operational portfolio? Where did Acacia get the hundreds of millions of dollars which enabled it to declare and pay mouth-watering dividends to its shareholders abroad?
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“Price transferring is a criminal offence,” said one analyst, who then expressed surprise that the Acacia parent company at its Head Offices in Canada, Barrick Gold Corporation, and Acacia-London, continue to remain silent on such an earthshaking matter in terms of general good governance and best corporate practice!
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Investigative sources close to BUSINESS TIMES have confirmed that Tanzania’s premier anti-corruption Czar, the Prevention and Combating of Corruption Bureau (PCCB) is investigating possible aspects of serious fraud and grand corruption. This is in addition to the already ongoing inquiries by the Revenue Authority into the ‘Price Transferring’ shenanigans in particular, as well as the processes of gold valuation and export taxes procedures in general!
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“Needless to belabour the point,” the analyst volunteered, “all the findings will be lodged with the TRA Tribunal in time for dealing with the Barrick-Acacia appeal against the Tribunal’s earlier decision on tax evasion which went against the miner.”
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Acacia’s woes do not end with the alleged evasion of public tax revenues. The mining conglomerate is also in the midst of another major judicial litigation with Bismarck Hotels regarding fraud and corruption allegations which have become ‘Big News’ in local and international mass media organs!
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The Bismarck case has become a highly-charged issue which has perforce entered the domain of judicial institutions in foreign lands! This is partly because the indications are that the case that is being built against Barrick-Acacia runs into hundreds of millions of US dollars – also reportedly relating to issues of serious fraud and criminal libel!
Sources working out of the New York Stock Exchange (NYSE) have confirmed that the financial markets in New York have started to question the Barrick and Acacia Boards’ competency!
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Reliable sources have it that the fraud aspect to the case is about a termination letter that Barrick sent to Bismarck in 2012, purporting to end a 12-year Joint Venture agreement on mining that warranted the return of land which both were exploiting. The reality on the ground was that the miner had already lost the land in a Mining Ministry’s tender renewal processes which were accomplished seven months prior to the miner’s ‘termination letter!’
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According to legal experts, if Acacia is found guilty on this one, then –besides their CEOs and Board Members being held personally liable, and some or all of whom could face incarceration as a result – there is also bound to be pecuniary penalties and costs for damages running into hundreds of millions of US dollars to be paid by Acacia!
With regard to the pending litigation in Tanzania, Acacia claimed in press statements that the lost land had no attributable reserves or value!
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However, the ‘new’ miners who are currently operating on the very same land in collaboration with Chinese partners recently stated in writing that the concession is, in fact, “brilliant;” and the “potential is outstanding!”
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This is in clear contradiction to Acacia’s press statement – and may, in fact, prove to be clinching evidence in favour of Bismarck’s stand in the litigation!
Bismarck has engaged a New York-based legal firm. For what it is worth, it is the same firm that represented O J Simpson, the retired world-famous American football player, broadcaster and actor, in his highly-publicized murder case! The New York lawyers will work closely in conjunction with Bismarck’s Europe-based Legal Counsel.
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Both Acacia Mining and Barrick Gold are publicly listed on the London and Toronto Stock Exchanges (LSE and TSX) respectively. [Acacia is also listed with the Dar es Salaam Stock Exchange (DSE) under the ticker ACA].
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The two are also listed with the American Stock Exchange Nasdaq. The Nasdaq Stock Market (Nasdaq) is the second largest exchange in the world in terms of market capitalization.
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Reliable sources allege that a Director of Bismarck recently travelled overseas, to meet with the company’s Legal Counsel in an unnamed location. A BUSINESS TIMES associate working out of Johannesburg, confirmed that the unnamed Bismarck Director had been seen at a Hotel in Sandton, Johannesburg, with a group of five persons speaking with American and English accents!
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The Director was accosted to comment on the fraud and libel allegations. In the event, he unequivocally confirmed that Bismarck have already initiated the requisite processes!
Investigators who spoke to this paper on condition of anonymity confirmed that all export consignments of gold from Tanzania are currently being checked and crosschecked as a matter of course in concerted efforts to detect any and all possible incidents of fraud, corruption, tax evasion and other irregular activities.
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Squarely behind the exercise are, of course, PCCB and TRA in Tanzania; Britain’s Serious Fraud Office (SFO), the Royal Canadian Mounted Police (RCMP), the Ontario Securities Commission (OSC-Toronto) and the US Securities & Exchange Commission (SEC) – as well as Citibank Ethics & Compliance Officers!
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The ‘roaming’ Bismarck Director was also asked if he had any contacts with the PCCB. He only confirmed that he was summoned to the PCCB – but refused to give further details!
Questioned specifically on his Johannesburg trip — and claims that he had in fact met with investigators from both the United States and Britain, and also with his Legal Counsel from New York — the Director went blank, refusing to confirm or deny the claims!
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http://www.businesstimes.co.tz/index.php?option=com_content&view=article&id=6124:the-acaciabarrack-bismarck-tra-judicial-wrangle-hots-up&catid=1:latest-news&Itemid=57

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BARRICK GOLD – ACACIA MINING GUILTY OF US$ 41 MILLION TAX EVASION

(Clearly they think we African’s are stupid !!!!)

LONDON-based giant gold mine company, African Barrick Gold Plc (ABG), has been found to have evaded tax for four years consecutively from 2010 and ordered to pay a total withholding tax amounting to 41,250,426 US dollars (about 82bn/-).
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In a judgment issued last week, the Tax Revenue Appeals Tribunal noted that ABG, currently known as Acacia PLC, had declared dividends in UK to its shareholders on the income generated from gold mines operated in Tanzania amounting to 412,504,257 US dollars for 2010 to 2013 years of income.

However, it was further revealed that, ABG, which operates Bulyanhulu Gold Mining Limited, North Mara Gold Mining Limited and Pangea Minerals Limited, which operates the Tulawaka and Buzwagi Gold Mines, had declared to have incurred loss in Tanzania, where the three gold mine companies operate.

“Indeed, we share the (Tax Revenue Appeals) Board’s surprise as to how could this be possible,” the Tribunal composed of three members under the chairman of High Court, Judge Dr Fauz Twaib, stated in its judgment dated March 31, 2016.

The tribunal dismissed the appeal lodged by the company to challenge findings of the Board, saying it was inconceivable that ABG could pay so much money in dividends for four consecutive years, while its only assets were the three loss-making entities incorporated in Tanzania that do not make any profit. “The board expected some clarification of this rather strange state of affairs and proof as to how it could be possible.

That proof, unfortunately, was not forthcoming from the appellant and its witnesses and counsel’s explanation fell short of an adequate discharge of relevant burden,” the Tribunal observed.

One important issue and which attracted fierce criticism from the appellant’s counsel stems from the Board’s acceptance of the contention by the Commissioner General of the Tanzania Revenue Authority (TRA), the respondent, that ABG has serious plans to avoid tax.

The tribunal found that the Board reached such conclusion relying on the fact that all the appellant’s subsidiaries in Tanzania were loss making and therefore not paying dividends to its shareholders and yet at the same time the ABG has consistently been declaring dividends.

“In the circumstances, it is fair to conclude that the respondent’s argument that the transactions were simply a design created by the appellant (ABG) aimed at tax evasion was justified,” the Tribunal declared.

According to the tribunal, since the company’s only entities that carry on business anywhere in the world were the three Tanzanian gold-mining companies, the ABG’s only source of revenue that could create net profits or retained earnings would be the three Tanzanian companies.

While none of them was allegedly making any profit and since the appellant has no other subsidiary anywhere in the world engaged in business, one is compelled to further conclude that at least one, of not more or all, of the appellant’s three gold producing subsidiaries in Tanzania was making profit.

“We see no other plausible explanation. To borrow the words of Lord Browne-Wilkinson, this tribunal cannot accept to be relegated to a mere spectator, mesmerized by the moves of the appellant’s game, obvious of the end result.

“Ultimately, the fact that none of ABG’s subsidiaries is declaring profit that could provide its holding company with such huge net profit sufficient to distribute to its shareholders for years in a row is what in our respective opinion constitutes evidence of a sophisticated scheme of tax evasion,” the Tribunal held.

The Tribunal, therefore, concluded that the Commissioner General of TRA was justified in invoking his powers under section 133 (2) of the Income Tax Act, 2004 and section 19 (4) of the Value Added Tax Act to register the appellant under the two Acts and issue it with TIN and VRN Certificates.

http://dailynews.co.tz/index.php/home-news/48516-gold-firm-guilty-of-tax-evasion