By Samantha Cole of Tanzania Business Ethics
Barrick Gold loses their Appeal in the Australia Supreme Court.
No surprise that the Judges found Barrick “inappropriate” and “not reliable” in their methods. When will someone be accountable?
Last week, in Australia, following THREE lost appeals by Barrick Gold, the High Court of Australia ruled that Barrick must pay $55 million in a case that goes back to 2005 when Barrick acquired 100 per cent of the shares in Placer Dome Inc.
The majority judgement was delivered by Chief Justice Kiefel and Justices Bell, Nettle and Gordon. Very briefly, the background of the case involves the Commissioner of Revenues’ assessment of Land-Rich Duties at the time of Barrick Gold’s acquisition Placer Dome. Barrick objected to the Commissioner’s assessment. And the case went on for years and of course the lawyers got rich on the fees.
One the reasons put forward by Barrick for rejecting the land valuation, was the fact that it resulted in a large, unexplainable gap between the value of Placer’s land assets and the purchase price paid for the shares. The Judges responded: “That gap necessarily raised a question about the reliability of the DCF valuations [relied upon by Barrick] and, in turn, a question about the content of the $6.506 billion allocated to goodwill in Barrick’s accounts”.
(Discounted cash flow (DCF) is a valuation method used to estimate the attractiveness of an investment opportunity. DCF analysis uses future free cash flow projections and discounts them to arrive at a present value, which is then used to evaluate the potential for investment.)
The Judges held that the $6.506 billion that had been allocated to goodwill was based on the conventional accounting practice of allocating to Placer’s assets amounts nominated as their “fair value”, and allocating the residual of the purchase price to “goodwill”.
The amount that was recorded in the accounts as goodwill was not legal goodwill.
Further, a number of the “sources” of goodwill that had been identified by Barrick should not have been taken into account as part of the statutory valuation exercise under the land-rich rules and, of those sources that could be taken into account, a number were of no material value. It followed that the direct valuation approach of valuing Placer’s land was inappropriate, in the circumstances, as it was not a reliable method of valuing Placer’s assets.
This is yet another example of how Barrick Gold tries to write their own rules in countries where they operate. And the most important factors are: Which executives are running the operations? Which executives are responsible for decision making?
Here in Tanzania, we have learnt the hard way with Barrick Gold for over 20 years.
In our Holy Bible, Ecclesiastes 1:9 states in Kiswahili:
Kile kilichokuwapo kitakuwapo tena, kile kilichofanyika kitafanyika tena, hakuna kilicho kipya chini ya jua.
That which has been, is that which will be, And that which has been done, is that which will be done. So there is nothing new under the sun.
Let us not be fooled by these sophisticated global businessmen who hide behind their hi-power lawyers. In fact, Barrick Gold is only “the vehicle” driven by people who are responsible for the actions of the vehicle. When Courts of Justice, anywhere in the world, rule on cases involving motor vehicle accidents involving different parties, the ruling is on the drivers, not the vehicles. Similarly, in cases involving companies, there should be a mechanism to rule against the responsible people who take decisions within their companies (the vehicles).
In 2016, Barrick Gold was found guilty to have evaded tax for four years consecutively from 2010. They lost their appeal against being found to have evaded tax for four years consecutively from 2010, amounting to US$ 81,843,1327. Barrick threw all its weight behind their appeal to fault the judgment issued on March 31, 2016, by the Tax Revenue Appeals Tribunal on the matter. Hakuna kilicho kipya chini ya jua.
The March 31 guilty verdict by the Tax Tribunal, headed by a High Court Judge, concluded that Barrick had failed to pay any corporate taxes in Tanzania from 2010 to 2013 while still paying more than $400-million in dividends to its shareholders from its gold-mining profits in Tanzania. The Tribunal noted that the company’s three Tanzanian gold mines were its only source of profits for the dividend payout. So, the Barrick Head Office overseas has income of enough billions to pay out astronomical dividends whilst in Tanzania, their ONLY three gold mines were making losses that prevents paying local corporate taxes.
The Tribunal stated that Barrick’s explanation for its lack of corporate tax payments was “far from plausible” and that they engaged in a “sophisticated scheme of tax evasion”. Needless to say that Barrick’s Tanzanian subsidiary immediately announced that it would appeal the Tribunal’s tax ruling (of March 31, 2016) to Tanzania’s highest court, calling it a “fundamentally flawed” decision. Hakuna kilicho kipya chini ya jua.
The Tribunal’s ruling sparked much publicity worldwide. The Guardian newspaper wrote: “Mining companies have long been suspected of being tax cheats, causing the government to get less than its fair share of revenues from the sector”.
Six months later, in October 2016, The Court of Appeals in Tanzania ruled against Barrick Gold and that the Tribunal’s verdict in March 2016, was correct and to be upheld.
All things being equal, why are the Barrick decision makers not held responsible and accountable in some way, with some form of mechanism, so that they may not be permitted to continue in this way and to rock the legal systems of so many countries in which they operate. Take Kelvin Dushnisky, for example. Until recently, Dushnisky, himself a lawyer, was the President of Barrick Gold and also the Chairman of the Board of Directors of Barrick’s Tanzania subsidiary, Acacia Mining. He joined Barrick in 2002 as Director of Regulatory Affairs.
During Dushnisky’s 16 years at Barrick Gold, he held senior management positions and would always have had first hand access to full details from all their operations all over the world. In 2015, he was appointed the President of Barrick. Who could possibly say he was NOT involved in decision making? Nonetheless, there are patterns of recurring Barrick problems over and over, worldwide, and one must wonder how many times must Barrick experience the same category of problem before they will learn how to prevent OR when it happens, how to rectify quickly and quietly.
Morally and ethically, the world should take Dushnisky to task over his knowledge, consent and involvement of everything that happened at Barrick during the past 16 years. He should be made accountable for crimes, violations, human-rights abuses, damages and more in many countries around the world. Please download the detailed lists of crimes, violations, human-rights abuses, tax evasion, environmental damages, and worse, by clicking here: K. Dushnisky Accountable Lists
There are those cynics worldwide who criticize our Hon. President, John P. Magufuli for whatever reason they come up with. However, Dushnisky, who recently became the CEO of AngloGold Ashanti, another Tanzania gold mine, will one day soon have to sit with our Government officials on a host of issues. As he is unquestionably responsible (even partly) for the fraud, corruption, murder, rape, environmental devastation, tax evasion, illegal exports, and many more crimes in Tanzania, whether these crimes were committed under Barrick’s period of management or Barrick’s subsidiary, Acacia Mining’s period of management, in all cases Dushnisky is accountable and our President will undoubtedly take this into consideration in relation to future dealings with Dushnisky.
Should we be surprised if Dushnisky is arrested when he arrives in Tanzania? Will our President grant him some form of conditional amnesty? Will Dushnisky manage AngloGold Ashanti in the same immoral and despicable manner in which he managed Barrick Gold? Hakuna kilicho kipya chini ya jua.
Sources out of London tell us that following the arrests in Tanzania of Acacia Mining’s top in-country executives and the ongoing fraud and corruption investigations of Barrick-Acacia in Tanzania, the UK Serious Fraud Office (SFO) is AGAIN opening investigations of Acacia Mining. Dushnisky, Brad Gordon, Andrew Wray, Gary Chapman, Katrina White, Peter Spora, and all the other Acacia executives who jumped ship – be assured that law enforcement is coming after you!