Gov’t loses Gold exports worthy 62Billions

The Government is counting losses to a tune of about sh62b ($16.95m) in royalties from gold exports from Uganda, according to a new audit report. An audit by the Auditor General, John Muwanga, into the 2017 financial statements of the Ministry of Energy and Mineral Development puts the Entebbe-based African Gold Refinery (AGR) as Uganda’s leading exporter of gold at the centre of tax evasion and using an illegal mining licence.

Export statistics show that over 99% of gold officially exported from Uganda worth $377m (sh1.4 trillion) was by AGR. Muwanga says: “The Directorate of Geological Surveys and Mines (DGSM) issued gold export permits for the only 16.281kg, compared to records from Uganda Revenue Authority (URA), which indicated that 8,691kg of gold valued at $339m (about sh1.2 trillion) was exported from Uganda in 2016/2017.”

The aforementioned sh1.2 trillion revenue that AGR attracted from illicitly exporting 8,691kg of gold was meant to attract between $3.3m (about sh12.1b) and $16.95m (about sh62b), but this went undeclared, thereby costing the taxpayer billions of shillings, according to the report.

The audit report to Parliament’s public accounts committee (PAC) also indicates that gold export permits for AGR were supported by an export licence from the Ministry of Trade, Industry and Co-operatives as opposed to being issued by the DGSM in the energy ministry. The Mining Act of 2003 reserves the mandate of issuing gold export permits and licences to the DGSM.

“There was equally no evidence of payment of royalties on the exported gold, which implies that the country lost revenue ranging from $3.39m (sh12b) to $16.95m (sh62b) in royalties from undeclared gold exports and imports on the applicable rate of 1% and 5% for the imported or locally mined gold respectively,” Muwanga said.

Uganda’s mining regulations of 2004 require that minerals obtained under a mineral right or under a mineral dealer’s licence may only be exported under an export permit granted by DGSM, but an analysis of AGR’s gold exports proved otherwise. An investigation by The Sentry, a US organisation, revealed that AGR exported about $377m in gold to Tony Goetz NV, based in Dubai.

Goetz co-owns Tony Goetz NV, the Belgian refinery whose apparent affiliate directly imports gold from AGR. It is also believed that another bulk of the gold refined by AGR is not from Uganda, which offers a zero per cent tax but illegally trafficked from conflict areas in eastern DR Congo and sold to the US and Europe.

In March this year, the Police raided the offices of AGR after getting reports that 7.4 tonnes of pure gold in bars worth $300m had been smuggled into the country from Venezuela. The raid followed a tip-off from a concerned citizen that the purified gold had been brought to the AGR offices in Entebbe under unclear circumstances.

AGR deals in the purification of gold before they sell it. Jessica Keigomba, the commandant of the Police Mineral Protection Unit, said the gold came in in two shipments reportedly from Venezuela, which was recently banned from dealing in gold by the US. Sources said the gold arrived at Entebbe on a Russian charter jetliner. Some of the gold was later exported under unclear circumstances without paying any taxes after the Government said it was a normal shipment.

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Patrick Luwagga is the editorial director of cross-platform content for UGANDANZ. He works across the newsroom and with business partners to drive and develop ambitious editorial projects that include digital journalism, video, data research, polling, live events, and thought-leadership series that are supported by outside underwriting. As executive director, he is responsible for the creation of Political news section, prior to joining UGANDANZ, Patrick was the chief editor for the national weekly news magazine of Kasese Times. In that role, he covered several presidential elections, wrote and produced two television documentaries, and was a regular commentator on television and radio news programs. Patrick was born in Masaka and grew up in Kasese. He earned a bachelor’s degree in Journalism from Makerere University where he was a Knight Foundation journalism fellow.