Thursday, December 8, 2022

Malawi: ACB Arrests Ministry of Mines Top Officials for Receiving Bribes to Grant License to Ilomba Granite Mining Company

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Two top officials in the Ministry of Mines and Natural Resources, Cassius Chiwambo and Gibson Nyirenda, have been arrested by Anti-Corruption Bureau (ACB) for allegedly receiving bribes in order to facilitate a license renewal for Ilomba Granite Mining Company in Chitipa.

A statement from ACB’s Principal Public Relations Officer, Egritta Ndala said the Bureau received a complaint on December 2020 alleging that an investor at Ilomba Granite corruptly enticed some some Government officials with US$300,000 to have his mining license renewed.

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And after carrying out investigations, the Bureau has established that Chiwambo (Director of Energy in the Department of Energy) and Principal Mining Engineer at the Ministry of Mines and Natural Resources, Gibson Nyirenda, facilitated the renewal process.

It was established that the Ministry officials demanded US$15,000 and received US$5,000 plus K500,000 cash to facilitate the process.

The two were arrested on Friday and had not been recorded caution statements as we went to press, but Ndala said they will be taken to Court after they have been interviewed.

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The country’s mining industry is embroiled with many irregularities and just in July, the Government demanded US$309.6 billion from Columbia Gem House of Vancouver, USA as claim for unpaid tax revenue in respect of ruby and sapphire minerals extracted from Chimwadzulu Mine in Ntcheu District by the US company’s subsidiary, Nyala Mines Limited.

A letter from Attorney General Thabo Chakaka-Nyirenda to the US company indicated that Chimwadzulu Hill on which the mine is situated, has rare deposits of rare rubies, which is said to be the best in the world as it does not require heat treatment.

These rubies are said to be 30 to 50 times rarer than diamonds, hence they are sometimes priced more than diamonds and that the hill also has deposits of sapphire — another rare mineral.

The Attorney General said the first company that was issued with a Mineral Exploration Licence for Chimwadzulu mine was Mineral Exploration Pty Limited in 1994 — a 10-year licence up to 2004 and the company had a 100% foreign shareholding, with York Fidelity of Singapore as the main shareholder.

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On expiry of the licence, the Attorney General said the government was reluctant to renew it wholesale and instead issued a licence of only 2 years “because it was the desire of the government to afford local participation in the mining sector”.

“The government issued a notice to that effect, inviting local participation in the mining,” said the Attorney General. “Then Mineral Exploration Pty Limited, which had been denied renewal of the initial 10-year licence, later changed its name to Nyala Mines Limited and was issued a straight 10-year licence.

“The shareholders of Mineral Exploration Pty Limited remained the same shareholders of Nyala Mines Limited. Columbia Gem House owns Nyala Mines Limited as its subsidiary.”

The government of Malawi indicated that ruby and sapphire at Chimwadzulu Mine are mined and sold to the world market by Nyala Mines Limited through Columbia Gem House in the USA, which then sends it to China for cutting and polishing.

The polished minerals are then sent back to the USA and marketed through Trigems, which is a retail outlet for Columbia Gem House owned by Eric Brauwart.

“Columbia Gem House branded the ruby from Malawi as Nyala Ruby. This branding is not known in Malawi but has been declared worldwide in the same way as the Tanzanite from Tanzania,” Chakaka-Nyirenda argued.

The Government argued that:

(a) The US company dishonesty changed the name of the mining company from Mineral Exploration Pty Limited to Nyala Mines Limited to disguise the origin of the company, i.e., so that the new name of the company sounded local to avoid suspicion and detection;

(b) It dishonestly exported ruby and sapphire from Malawi;

(c) It has been unjustly enriched by your failure to pay appropriate taxes and royalties in Malawi and consequently you have become a constructive trustee for the State of Malawi;

(d) It failed to carry on your investment in Malawi pursuant to international investment law and international law; and

(d) It was required to account for all unpaid taxes and all the gains realized from the unpaid taxes and royalties.

Thus Chakaka-Nyirenda emphasized that the State of Malawi will concurrently institute civil proceedings against the two entities without further recourse to them whatsoever should they fail to pay the demanded amount nor should they fail to indicate how they intend to pay the sum of money as indicated.

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