Museveni’s gold dealer in trouble

Questions about AGR’s gold were raised almost immediately when it was announced that it had exported US$ 200 million worth of gold. Given that Uganda’s gold exports for the last year were just US$ 40 million, activists warned that the facility could be using raw gold from conflict-ridden South Sudan and Eastern Congo. In that case AGR could be seen as directly fueling violence in the region. But AGR’s directors dismissed these concerns.

Just four months after its commissioning, however, global transparency campaigner, Global Witness, published a report raising concerns about Uganda’s mining industry and specifically about AGR.

According to the report, it appears that in order to hide its dealings from the authorities, Goetz has operated several secret companies.

Global Witness analysis of the URA export figures shows that for the vast majority of its official exports, the exporter name recorded is ‘Goetz Gold LLC’ and ‘AGOR DMCC’ and not the official company name which is ‘African Gold Refinery Limited’.

Goetz has also allegedly exported as ‘Belgian Precious Metals Indust’ and ‘Alain Goetz.’ Global Witness concludes that it appears all these companies are related and are trading in gold.

The report, titled, `Undermined: How corruption, mismanagement and political influence is undermining investment in Uganda’s mining sector and threatening people and environment’, was released in June. It caused a stir in the mining sector because of the names it put at the centre of corruption in Uganda’s mining sector.

Kaijuka, Saleh, his wife Jovia Saleh and sister-in-law, Kellen Kayonga, brother-in-law, Taremwa, former Energy PS, Kabagambe Kaliisa, international investors, politicians and technocrats at the Directorate of Geological Survey and Mining (DGSM) were all named in the report.

The report also raised concerns about how President Museveni, without following due process, directly influences the award of deals to investors, who sometimes turn out fake. Others evade taxes, abuse human rights, and harm the environment.

Dodging taxes

On AGR, the report noted how Museveni had while launching the refinery in Entebbe ordered a tax waiver on gold to be processed by AGR that is either produced in or transits through Uganda. The President said that would prevent smuggling of unprocessed gold and promote the refinery.

“This will provide a strong incentive for regional gold to be channeled through African Gold Refinery before making its way into international markets,” Museveni said.

But Global Witness warned that it was not clear that Museveni’s tax waiver would lead to an improvement in the recording of production and imports.

“It will certainly undermine potential tax revenues for the government,” Global Witness warned and it now appears to have been right.

Global Witness says while the refinery AGR owners are shipping hundreds of millions of dollars’ worth of gold out of Uganda without disclosing its origin and paying very little tax in the process.

The company reportedly processed nine tons of gold during 2016 and official estimates of the tax exemption and unpaid taxes over that period are over Shs80 billion; which is bigger than the annual budgets of many government ministries and departments.

An AGR press release from February 2017 showed that the company had paid a total of US$515,000 in taxes since they started their operations. AGR said that “all duties are correctly paid by AGR as per our formal agreement with the government of Uganda.”

But when asked to provide detailed information on the origin of the gold the refinery processes, AGR did not provide it.

Instead, the company said it “is not a trading company but a service company providing industrial services such as assaying, melting, refining, and the shipment and delivery of precious metals. AGR does not trade in any precious metals.”

It added that the company “is therefore exempted from certain taxes and royalties that only apply to mineral exporters.”

Global Witness wants further investigations into AGR’s dealings and asks that the company publishes information on the volume and country of origin of its annual gold purchases.

“AGR should also conduct supply chain due diligence on the gold it purchases or processes and report publicly and on an annual basis on its efforts, in line with the OECD Due Diligence Guidance,” the campaigner notes.

It adds: “This should include information on risks identified and how these have been addressed. Goetz Gold LLC and AGOR DMCC, as government recorded exporters of gold from Uganda, should also meet these standards.”

But its past behavior shows that AGR is not likely to comply. What is not clear is whether Museveni will allow the IGG, FIA, the DGSM and other government agencies to either reign in AGR or prosecute it for flouting disclosure laws under the Anti-Money Laundering Act, to uncover the truth.