Tanzania’s president hacks friend out of ministerial position over tax evasion

Tanzania’s president has fired his friend mining minister and the chief of the state-run mineral audit agency on Wednesday, after receiving a report into whether mining companies were under-declaring the value of their exports.

President John Magufuli’s decision, announced in a speech, signals an escalation of tensions between the government and the industry, which has denied engaging in tax evasion. Mining accounts for about 4 percent of Tanzania’s gross domestic product.

“The minister and the Commissioner for Minerals (Paul Masanja) deserve to be taken to task for their failure to effectively supervise the sector. I call upon the minister to relinquish his post even though he is a personal friend of mine,” said President Magufuli Wednesday.

In March, the president initiated an investigation that has revealed that containers that had been impounded held 15.5 metric tonnes of gold instead of the 1.1 tonnes declared. Mr Magufuli made the announcement Wednesday on state television.

The committee (investigating the exports) found that there were many other minerals in those shipping containers that were not declared, such as sulphur, iron, iridium, titanium and zinc,” Magufuli said.

“They were also under-invoicing the actual gold, copper and silver content in those shipping containers.”

Acacia Mining denied any wrongdoing and said it had not yet seen the report.

“Acacia reiterates that it fully declares everything of commercial value that we produce and pay all appropriate royalties and taxes on all of the payable minerals,” the company said in a statement.

President Magufuli also fired the Energy and Minerals Permanent Secretary Justin Ntalikwa for lying to Parliament about the amount of gold and copper concentrates in mineral sands held in the seized containers.

President Magufuli also dissolved the board of Tanzania Mineral Audit Agency (TMMA), sacked the chief executive Mr Dominick Rwekaza, and asked that its staff be investigated.

“I want you [authorities] to immediately start investigating staff at TMAA, starting from the CEO, who should step aside, to find out how they have contributed to the loss that the country has incurred. However, I will spare the Commissioner for Minerals because I recently appointed him but, the person before him should be investigated by relevant security organs,” said the president.

Tanzania is estimated to be losing over $620 million in royalties of undeclared minerals.

“For all these years even with the TMAA in place, the country has been shortchanged and continues to be cheated out of the much needed revenue that would greatly boost our health sector, infrastructure and others,” he said.

Tanzania is Africa’s fourth-biggest gold producer mined by Acacia Mining Plc, AngloGold Ashanti, among others.