Report Claims Massive Corruption At Mines Directorate Top story

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In short
The Global Witness report exposes incidents where employees at the Directorate of Geological Survey and Mines have been setting up private companies to cash in on mineral licenses. Global Witness says it has discovered that it is routine for investors to pay certain Directorate employees a fee to ensure that mining applications meet all requirements.

An extractive industry watchdog group has unearthed what it calls massive corruption in Uganda's Directorate of Geological Survey and Mines (DGSM).    

London-based Global Witness on Monday released a report from its 18-month investigation into activities of Directorate of Geological Survey and Mines housed under the Ministry of Energy and Mineral Development.  

The 37-page report in a chapter focusing on the Africa Gold Refinery says in Uganda, regardless of what you are mining, access to the ruling elite helps protect your investments. 

In the case of Africa Gold Refinery, the report says businessmen, including a former government minister, Richard Kaijuka and Barnabas Taremwa the brother-in-law to General Salim Saleh, have been processing and exporting hundreds of millions of dollars' worth of gold. The report suspects the mentioned individuals to be getting gold from the Democratic Republic of Congo (DRC), South Sudan, as well as Uganda, paying little tax in the process.

The report says  in one of the many examples of legal but exploitative tax avoidance, African Gold Refinery (AGR), whose employees have close links to top Uganda government officials, declared exports of gold worth over 200 million US dollars but paid only half a million dollars in tax. 

Barnabas Taremwa is quoted by the report to have revealed how he helped arrange the tax exemptions for AGR and setup supply routes for gold. AGR, a 15-million-dollar refinery located in Entebbe, was early this year launched by President Museveni.

The refinery is considered the second largest in Sub-Saharan Africa after the one operating in Johannesburg, South Africa. 

Tony Goetz, the AGR chief executive director, could not be reached for a comment about the Global Witness Report.

Bank of Uganda data indicates annual gold exports fluctuated between zero to just about 40 million dollars in the period between mid-2009 and mid-2015. The exports, however, later rose to 204 million dollars in the financial year ended in July 2016.

Rot in Directorate of Geological Survey and Mines

The Global Witness report exposes incidents where employees at the Directorate of Geological Survey and Mines have been setting up private companies to cash in on mineral licenses. 

It says corruption in the Mines Department is systemic and goes from some junior officials all the way to the top. 

Global Witness says it has discovered that it is routine for investors to pay certain Directorate employees a fee to ensure that mining applications meet all requirements. 

The report gives an example of Flemish Investments Limited to illustrate how the Directorate employees can potentially exploit their public positions to private companies' advantage.

It says two of Flemish Investments former directors held positions at the Directorate of Geological Survey and Mines at the time Flemish was applying for, and was granted, mining exploration licenses. 

It says Flemish Investments acquired and entered into agreements to sell at least 21 mining licenses in two deals worth hundreds of thousands of dollars between 2007 and 2013. 

Zachary Baguma, the Principal Geologist at Directorate of Geological Survey and Mines, was simultaneously employed as a director at Flemish during most of this period. 

Baguma according to the report resigned in December 2011, handing over the directorship to Joshua T. Tuhumwire, who had previously been a Commissioner at the Directorate between April 1980 and June 2010.

Global Witness said some exploration licenses had been granted in protected wildlife areas, including in Bwindi National Park which has the largest remaining mountain gorillas.
George Boden, a Team Leader at Global Witness in a statement said: "This evidence is damning - Uganda's mining sector is built on a parallel economy that strongly favours abusive companies and corrupt elites over its people and environment. The appalling mismanagement of the sector will alarm investors, human rights advocates and environmental campaigners alike."
 
 
Uganda Radio Network tried without success to seek comment from Energy Minister, Irene Muloni whose known phones were unavailable. A secretary at her office said the Minister was in Entebbe for a meeting. State Minister for Minerals, Peter Lokeris could also not be reached on phone.