Suspicions of corruption in Kinross-Tasiast, Mauritania: what are our leaders waiting for?

During the month of July, Kinross Mining Company was ordered by the US Securities and Exchange Commission (SEC) to explain allegations it had received undue payments made to government officials and some internal control deficiencies in their operations in Mauritania and Ghana. This follows two earlier requests by both the SEC and the Justice Department of the United States.

These allegations have been raised since August 2013 by several external sources as well as internal whistle-blowers who alerted the company about their suspicions of fraudulent activities.
To reassure its shareholders, managers of Kinross-Tasiast hired Canadian and American consultants to conduct an internal investigation.

According to Raphael Sourt, the company’s communication manager in West Africa: “Allegations of this kind are frequent”, before adding “when we assign a contract, it is not unusual for a company that has not received the contract to complain through local media. This allegation is completely unfounded and proven by the fact that this information is published by minor sites … “.

Mike Sylvestre, Vice President of Kinross’s operations in West Africa, has a similar message, stating that the government is not involved in the company’s process of awarding contracts. “Besides”, he added, “the Mauritanian government has never had a case of embezzlement in relation to Kinross at its local operations.”

In 2013 Kinross Tasiast Mauritania abandones its expansion project that would have created over 3,500 new jobs. On top of dropping out of this commitment, more than 600 company employees lost their jobs in the space of two years. To justify these measures, the company has argued that this is down to operating costs. While the decline in the price of an ounce should not be overlooked, this alone can hardly justify the situation given the enormous benefits we know the company has amassaed between 2009 and 2013. During this period the price per ounce has increased from about $1,000 to nearly $1,800.

The involvement of US agencies in the fight against corruption in this case and the latest revelations in the national and international press for making states granted to certain persons close to the regime prove, if need be, the majority of costs brandished by the company are not necessarily intended to direct business.

The abandonment of its expansion program, which led to the dismissal of over 350 employees in 2013, did not prevent the company to record a deficit of 65 million US dollars in 2014 and to announce another round of layoffs of around 250 employees in October 2015.

The operation of a mine as Tasiast which is done in the open, halfway between two export ports and close to its main customers, can never justify the phobia of costs that we administer even if the price per ounce has fallen. Moreover when the company commit to resume Tasiast mine in Red back Mining the price per ounce was around 1,100 dollars. Today the price per ounce still is around 1200 dollars gold. If one refers to the curve of prices of gold the past 50 years, we realize that n is not fire in the home for gold which is the safe haven. This is a management problem, especially dyeing s account the period of great splendor known as the company.

While most articles mention embezzlement at the national level, they forget that the majority of purchases are made by mining companies through subsidiaries sisters who make large purchase transactions freely at prices they set together. It happens that we bill for services that are used elsewhere. Very often overcharged while the product or the machine was either recycled or simply used elsewhere in another country for the cost, they are loaded on the n Mauritania, and deducted from income in Mauritania.

Several organisations transparencies are now in the process of pushing the states to pay greater attention to this phenomenon-called “transfer pricing”, which is one of the juiciest niches for corruption and illicit flows to the detriment of the interests of resource-rich countries.

Publish What You Pay has always worked to attract the attention of the authorities on the issue of costs and illicit flows that take advantage of flaws in our tax system. We still grasp once this opportunity to encourage our government to a lot more vigilance to make the most of our mining resources through transparent and accountable management that takes into account the interests of communities, workers, the private sector but also and especially for future generations. The resources belong to Mauritania and its people. It is the duty of our leaders to assume all the responsibility entrusted to them and to report to the people through an independent inquiry.

Mohamed Adbellahi

Ever since I was young, I have always been committed to great causes. When I was very young I advocated in what we then called in Africa the progressive or revolutionary movements. Since, I have nurtured my ambition of serving my country, my people and above all fight for democracy, civic rights and later for good governance, transparency and the battle against corruption.
I’m conscious of the fact that the fight for transparency can help our country better use and benefit from its natural resources, therein lies my motivation.

I am a trained journalist and have also been an investigative journalist. For ten years, I have campaigned as part of civil society organisations and so in their call for information. If there is no transparency, I cannot have information. And if I cannot have information, I cannot give an opinion, take a position, act, or importantly contribute to change. I therefore campaign for transparency in order to access information, in order to be aware of what is happening and more particularly in the extractive sector as it is particularly opaque. My country, like many in Africa, is rich in natural resources that are not renewable. When they are properly managed, these resources can ensure the well-being of the people. However, when they are poorly managed, they can cause problems to our country and people – as has been the case elsewhere.

Mauritania

Since its launch in 2006, PWYP Mauritania has focused on four key goals to uphold transparency in the extractive industries: implementing the EITI, influencing national legislation, promoting social responsibility through transparent revenue use, and campaigning for contract transparency. The coalition has formed groups on advocacy techniques and allocating revenues back to communities located in mining areas. In recent years, it has focused on capacity building for civil society, raising awareness among elected representatives about the need for transparency in the extractive industries, and engaging with the authorities to improve sector regulations. PWYP Mauritania also works on the rights of communities living alongside the mining industry, protecting workers’ rights, monitoring environmental impacts and including the fishing sector within the scope of the EITI.

Ba Aliou Coulibali

There isn’t a moment where I am not affected by what is happening in the extractive sector. Especially as my country, Mauritania, is a mining country. We have been exploiting iron and copper for over a half century. Two foreign companies are currently exploiting gold and produce about 15 tonnes of gold a year. With only 3 million inhabitants, I am shocked when I see that the rate of poverty in Mauritania is above 45%. Every time that I mention these figures to someone not from Mauritania they are stunned – indeed the situation is incomprehensible.

I was really affected by a visit that I made to the site of a Mauritanian mining company, SNIM. It’s supposed to be a company that respects standards, but when I went to visit the site I saw that the overwhelming majority of workers – and those who do the most painful and risky work – are subcontracted, underpaid and do not benefit from any health or sanitation coverage. The employers and companies do not hesitate to get rid of the workers for the slightest of things, such as if they are ill. Every day these workers see gold pass through their fingers and with the amount this sector makes it really struck me to see their living conditions: the lack of comfort, lack of growth and the lack of even minimum standards.

Mauritania to include the fishing sector in its implementation of EITI

The fishing sector will now be included in the Extractive Industries Transparency Initiative (EITI). The official announcement was made by the President of the Islamic Republic of Mauritania, Mr Mohamed Ould Abdel Aziz, on 19 January 2015 in his opening speech at the high-level conference on “Transparency and Sustainable Development in Africa”.

According to statistics from the Mauritanian Ministry of Fishing and the Maritime Economy, the fishing sector represented 6% of gross domestic product (GDP) in 2009. In 2010, the sector generated 16% of the country’s revenues and 13.3% of export revenues.

In terms of their fishing potential, Mauritanian waters are some of the richest in the world, with catches of around 900,000 tonnes a year.

The sector is also a significant source of jobs. In fact, over 30,000 people earn their living from fishing and “the sub-sector of small-scale fishing is by far the leading source of direct job creation,” explains the Ministry. The majority of revenues recorded in Mauritania come from foreign companies with operating licences, mainly based in the European Union, which has a fishing agreement with Mauritania. Under the terms of the agreement, the European Union pays the country a sum of money each year so that its trawlers can fish in Mauritanian waters. Under the agreements signed for 2008-2012, the European Union paid Mauritania €86, €76, €73 and €70 million respectively for the first four years. This is in addition to the fees paid by European fishing vessels.

Mauritania’s decision to extend the scope of the EITI to fishing is seen as the result of advocacy by civil-society organisations in general and the Publish What You Pay (PWYP) coalition in particular. Mohamed Abdallahi, journalist and founder member of the Mauritanian PWYP coalition, explains that “we have been demanding the inclusion of the fishing sector in the EITI for years, given the economic importance of the sector and its capacity to generate financial resources for sustainable development in Mauritania”. He explains that, although the government was initially reticent about the extension, it subsequently changed its view, in particular thanks to the support provided to Mauritania by the World Bank to organise the sector more effectively. “The fishing sector could help drive sustainable development since, unlike mines, oil and gas, fish stocks are renewable,” he concludes.

Nonetheless, it is important to note that even though fish stocks are a renewable resource, good management and controlled use are needed on the one hand, to avoid an increasing scarcity of certain species, even to the point of extinction, and on the other, to help maintain the jobs created by small-scale fishing. Indeed, overexploitation of fish stocks as a result of industrial fishing presents a danger to the survival of small-scale fishing. Senegal is a case in point: its waters have been stripped bare to the extent that Senegalese fishermen have turned to Mauritania so that they can continue to work. Senegal has negotiated fishing agreements with Mauritania as a result. Under the terms of these agreements, in 2014 Senegal was granted “400 fishing licences for the capture of 50,000 tonnes of fish, 12,000 tonnes of which will be landed in Mauritania,” according to the EITI Permanent Secretariat in Mauritania. Senegal pays Mauritania €747,000 in return.

Including fishing in the scope of EITI will unquestionably increase transparency in the sector, as it will now be possible to obtain exhaustive information on the income generated by the activity and monitor how it is used. According to Ba Aliou Coulibaly, Technical Coordinator for PWYP Mauritania, extending the EITI to fishing is not an isolated fact. In reality, it is a good opportunity for civil-society organisations to engage in monitoring and advocacy, making use, in particular, of the opportunity provided by European directives with regard to obligatory disclosure of income from the extractive industries. “As the European Union is Mauritania’s main partner in the fishing industry, we believe that the directives on obligatory disclosure that are currently being transposed into law in the Member States will provide access to reliable information on the payments made by the companies that exploit our resources,” concludes Coulibaly.