Mining company fingered in new report for massive tax diversion
(GIN)—Taxes diverted by a uranium mining company in Malawi could have paid the salaries of 39,000 teachers or 8,500 doctors for a year.
That was one of the findings of a new report called “An Extractive Affair” released by the social action group ActionAid which looked at the southeast African nation of Malawi. “People here live to an average age of 55,” wrote Martha Khonje, Malawi’s ActionAid country director. “Our health service is threadbare, with a great shortage of nurses and doctors and our schools need teachers.
“The country desperately requires investment in public services, including health and education programs.”
Khonje echoed the views of tax policy activists calling for reform.
“Although Malawi is poor, the country has natural resources that are hugely valuable. By allowing large companies to mine these resources and then tax those operations, our government could raise millions of dollars.”
The Times of Malawi, in a recent article, highlighted from ActionAid’s report how Paladin Africa beat government at its own game in the Kayerekera Uranium Mine development agreement.
“Lack of negotiating skills, knowledge of mining technicalities and tax avoidance tricks cost the country at least US 43 million dollars within the six-year operating period by Paladin,” according to the story posted by Kingsley Jassi.
“This happened… through a trick the company used to create a ‘briefcase’ company in Netherlands, a country known to be a tax haven, which allowed Paladin to skip thousands of dollars of tax payments from the standard rate of 15 percent.”
A company spokesman defended the arrangement, saying they obtained the average rate in Africa at the time.
“As a result, Malawi has enjoyed the economic benefits arising from this very significant investment,” said Paladin’s general manager.
Further, according to Paladin Energy CEO John Borshoff, the taxation deal was worked out between Malawi’s Finance Minister Goodall Gondwe, a former director of the International Monetary Fund’s Africa division, and economist Keith Hammond of the British Ministry of Finance.
“Low tax revenues mean that governments are able to fund only the most basic services, such as policing, the courts and the armed forces,” wrote Dutch minister Lilianne Ploumen in the Guardian newspaper. “Universal access to healthcare or education, infrastructure and a social safety net–in short, the foundations for decent, prosperous lives–call for much higher tax revenues.”
U.N. chief Ban Ki-Moon added: “The Addis Ababa conference on financing for development can mobilize the means for funding what people want most – better health, quality education, decent jobs, good roads and a cleaner, greener world. It can secure concrete commitments on issues such as finance, trade, debt, technology and innovation for the next generation.”
