15. Whose Corruption?

 

“Traditionally, the corruption indices, such as from the World Bank and Transparency International always end up pointing the finger at African countries, but, with the recent arrival of measures such as the Financial Secrecy Index, we are beginning to see the finger pointed back at the handlers, the facilitators of illicit financial flows: western banks and tax havens.”

– Nicholas Shaxson, Treasure Islands

 

The story so far has been the use of military and economic force by powerful interests to get what they want from Africa. But, some may argue, the continent is corrupt and cannot be trusted so we must do what we do simply to make things work.

But, while bribery and theft of public resources are no doubt a problem on the African continent, Canadian commentators tend to exaggerate their role in impoverishment. These commentators also define “corruption” narrowly and downplay the role of Western capitalists therein.

Canada is quick to denounce African corruption, but lags behind the rest of the G7 countries in criminalizing foreign bribery. For example, into the early 1990s, Canadian companies were at liberty to deduct bribes paid to foreign officials from their taxes, affording them an “advantage over the Americans”, according to Bernard Lamarre former head of Montréal engineering firm Lavalin (now SNC Lavalin).1

In 1977, the US Foreign Corrupt Practices Act outlawed bribes to foreign officials. Ottawa failed to follow suit until the Organisation of Economic Co-operation and Development (OECD) launched its anti-bribery convention in 1997. The OECD convention obliged signatories to pass laws against bribing public officials abroad and two years later Canada complied, passing the Corruption of Foreign Public Officials Act (CFPOA). Still, for the next decade Canadian officials did little to enforce the law. The RCMP waited until 2008 to create an International Anti-Corruption Unit and didn’t secure a significant conviction under the CFPOA until 2011.2

Anticorruption watchdogs have repeatedly criticized Ottawa’s lax approach. A March 2011 report from the OECD Working Group on Bribery criticized Canada’s framework for combating foreign corruption with Ottawa repeatedly faring poorly in Transparency International’s (TI) rankings. In 2013 TI complained that between 2005 and 2011, Canada exercised “little to no enforcement of the OECD Anti-Bribery Convention.”3 The group ranked Canada the worst performer among G7 countries on this front for eight of the last 10 years.4

Canada’s laidback pursuit of corruption is compounded by poor legislation. As a purely criminal statute, the CFPOA requires higher standards of proof than the mix of criminal and civil provisions that allow US authorities to lay civil charges when a firm “cooks its books” to disguise illicit payments.5

While the evidence is clear that this country has repeatedly failed to seriously combat corruption, most Canadians would likely be surprised at the extent to which our governments and corporations have engaged in what (in any sane world) should be illegal practices.

What follows is a list of just some of the publicly reported incidents of Canadian governments and corporations alleged to have bribed African officials or engaged in corruption:

 

Between 1985 and 1989 the federal government provided almost $140 million in assistance to Zaire during Mobutu Sese Seko’s rule. In 1990 alone, reported an Ottawa Citizen editorial, “Canadian taxpayers contributed $52.95 million to Zaire: almost $16 million went direct to Mobuto’s corrupt regime.”6

A June 2014 Wall Street Journal exposé headlined “Barrick Gold Unit is Accused of Bribery in Africa” detailed payments the company made to Tanzanian officials. “As part of a process to buy land near the mine starting last year, African Barrick paid more than $400,000 in cash mostly to Tanzanian government officials and consultants responsible for valuing the land, according to company invoices and copies of checks reviewed.”7 Barrick paid expenses, honorariums and “night out allowances” to members of the task force overseeing its land valuation. The payments were made in cash. A Barrick spokesperson said they paid hard currency due to inadequate banking services. This may be true of far-flung regions, but in the half dozen cities this author visited on a recent journey to Tanzania, the widespread presence of ATMs and phone-based “mobile money” stands was apparent. While media outlets across the globe picked up the Wall Street Journal story, the Canadian media essentially ignored Barrick’s dubious tax payments. More significant, there’s no indication that the RCMP’s International Anti-Corruption Unit investigated actions that likely contravened the CFPOA.

A second incident involving Barrick Gold took place in 2007, when it signed a sweetheart concession for its Buzwagi mine with Tanzania’s Energy and Minerals minister Nazir Karamagi.8 The transaction took place thousands of kilometres from Dar-es-Salaam, in London, England.9 Ordinarily, Tanzania’s Parliament was supposed to review mining contracts, but this deal was signed without its oversight. Upon obtaining a leaked copy of the accord, ThisDay reported that the Canadian firm was granted reprieve from tax payments, duty and fees associated with the East African Customs Management Act.10 The contract also committed the parties to arbitrate disputes in British, rather than Tanzanian, courts. A joint 2008 report from the National Council of Muslims in Tanzania, the Christian Council of Tanzania, and the Tanzania Episcopal Conference, criticized the manner in which the deal was concluded and its low benefit to Tanzanians.

A third incident involving Barrick took place in Canada. In 2011 Barrick Gold transferred $122,000 to a bank account set up by Zambia’s high commissioner in Canada, Nevers Mumba.11 When Mumba was accused (and later charged) with raising funds illicitly he claimed the money was for a Zambian cultural ensemble’s tour of Canada. Formerly vice president, Mumba ran for president in 2015 as head of the main opposition party. During the campaign he called for a reduction in mining royalty rates. “The moment you raise it [royalties] to those levels without engaging those in that field you paralyze your efforts to build an economy,” Mumba told Bloomberg. “I’ve already made a passionate appeal to Barrick Gold. I’ve told them to hold their fire [on shuttering their Lumwana mine] and see what happens” after the presidential election.12 While the Zambian media focused on Mumba’s alleged corruption, it’s hard to imagine that the Toronto miner would put up $122,000 without expecting something (beyond a logo placement) in return.

In 2003, Acres International, which had benefited from $100 million in CIDA contracts, was convicted of paying an official in Lesotho a minimum of $300,000 US to win a contract for a major water project. The Oakville-based company deposited the money into a Swiss bank account belonging to Masupha Ephraim Sole, a Canadian-trained engineer at the helm of the project.13 Prior to the ruling, Foreign Affairs spokesperson Richard Chappell dismissed the matter, saying it was “not treating this issue at all.”14 This apparent disinterest was odd given that Acres’ representative in Lesotho had been Canada’s honorary consul in the country.15 To make matters worse, Canadian officials lobbied the World Bank to avoid suspending Acres from bidding on its contracts and the company continued to receive CIDA contracts.16

TSX-listed Addax Petroleum became the leading independent oil producer in Nigeria after its former country representative, Richard Granier-Defferre, paid the country’s oil minister $10 million for drilling rights during the years spanning 1993 to 1998.17 Addax executive and founder Granier-Defferre also helped open bank accounts in Europe for the oil minister, Dan Etete. The oil minister served in the government of dictator Sani Abacha, a president infamous for looting huge sums of the country’s wealth. Etete was convicted in France of money laundering in 2007, part of a probe into kickbacks paid by oil companies for contracts. Granier-Defferre, Addax’s representative in Nigeria until 2000, was tried as an accessory. In 2006 Addax and its well-connected Nigerian partner, Emeka Offor, acquired additional Nigerian concessions. Forbes reported: “When the deal was announced, the Nigerian media exploded with allegations of corruption.”18

Bombardier quietly paid $35 million in “success fees” to a controversial arms dealer and middleman, Youssef Zarrouk, who helped the Montréal-based company win a multibillion-dollar South African railway contract in 2010.19 As part of this sum, CBC News discovered “that a secret deal was brokered by Bombardier to pay $5 million to a South African middleman, Peter-Paul Ngwenya, who described himself as an ‘influential individual in political circles.’”20 At press time South Africa’s anti-corruption agency announced an investigation into Bombardier’s payments. Canada’s anticorruption unit, however, ignored the questionable dealings.21

UN reports, media and NGOs have criticized numerous Canadian mining companies for their deals in the Congo. A 2002 report by the UN Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the Democratic Republic of the Congo accused Vancouver-based First Quantum of bribery. The report referred to the “collusion” between foreign mining companies and “highly placed government officials who provide mining licenses and export permits in return for private gain. … For example, in its attempts to buy rights to the Kolwezi Tailings, First Quantum Minerals (FQM) of Canada offered a down payment to the State of $100 million, cash payments and shares held in trust for Government officials. According to documents in the possession of the Panel, the payments list included the National Security Minister, Mwenze Kongolo; the Director of the National Intelligence Agency, Didier Kazadi Nyembwe; the Director General of Gécamines, Yumba Monga; and the former Minister of the Presidency, Pierre-Victor Mpoyo. The FQM share offer to those officials was premised on a sharp rise in its share price once it was announced that it had secured some of the most valuable mineral concessions in the Democratic Republic of the Congo.”22

Amidst the Second Congo War in the early 2000s, Kinross Gold negotiated a generous deal with the state’s mining company, Gécamines, for pieces of its infrastructure as well as valuable copper and cobalt leases. Shortly following this, the Vancouver-based company entered a partnership on their new Katanga concession with a company owned by George Forrest, a former chairman of Gécamines.23 Rights and Accountability in Development (RAID), a London-based organization, found that representatives of Kinross negotiated the deal while Forrest was still Chairman of Gécamines. The transaction faced major scrutiny. A Congolese parliamentary commission questioned Kinross’ deal with Gécamines and international groups called on the World Bank to investigate the company’s activities. In 2006 Paul Fortin, a Canadian who was then chief executive of Gécamines, said he wasn’t interested in investigating deals signed during the multi country war that stripped the public company’s assets. “I am not here as Sherlock Holmes,” he told Corporate Knights magazine.24

Over the past half-decade, Canada’s biggest engineering company, SNC Lavalin is alleged to have greased palms in Libya, Algeria, Tunisia, Angola, Nigeria, Mozambique, Ghana, Malawi, Uganda and Zambia. A joint CBC/Globe and Mail investigation of a small Oakville based division of SNC uncovered suspicious payments to government officials in connection with 13 international development projects. In each case between five and 10 per cent of costs were recorded as “‘project consultancy cost,’ sometimes ‘project commercial cost,’ but [the] real fact is the intention is [a] bribe,” a former SNC engineer, Mohammad Ismail, told the CBC.25

In Libya, the RCMP accused SNC of paying $50 million to Saadi Gadhafi, son of the late Libyan dictator, in exchange for a series of contracts.26 The company is also alleged to have defrauded $130 million from Libyan public agencies.27 In a less high profile incident, the RCMP accused SNC of paying $6-million to the son-in-law of former Tunisian dictator Zine al-Abidine Ben Ali in exchange for assistance securing contracts.28

In Angola, SNC allegedly paid millions of dollars to government officials in exchange for a hydro dam contract. Former SNC employee Joseph Salim sued the company for wrongful dismissal, claiming he was terminated after he blew the whistle on the illegal payments. Salim alleged that SNC’s former CEO, Jacques Lamarre, agreed to pay a ten percent “agent fee” but company officials were unwilling to declare more than five percent on the books, which necessitated artificially increasing the price of the dam.29

In northern Nigeria, SNC officials allegedly paid 1.2 million naira in cash — nearly five times the annual average Nigerian salary — to a government official responsible for a World Bank-funded water and sewer project.30 One company spreadsheet noted that money was “paid to Musa Tete [the Nigerian bureaucrat overseeing the World Bank-financed project] through Yaroson”, SNC’s Nigerian partner.31

Another company spreadsheet cited by CBC revealed SNC distributed 7.5 per cent of its project budget in “project consultancy cost” to a number of employees for an African Development Bank financed road project in Mozambique.32

In yet another questionable dealing, SNC employee Ramesh Shah requested Verona Parkinson, then managing director of the Mozambican consulting company AGEMA, to invoice $50,000 US for a nonexistent “geophysical survey”.33 The money was channelled into the accounts of Parkinson’s daughter and ex-husband and then wired to Ramesh Shah’s personal bank account. As allegations of SNC bribery seeped out, the Montréal company continued to win billions of dollars in Canadian government contracts, maintained the backing of the Canadian Commercial Corporation and garnered support from Canadian diplomats abroad.

Calgary-based Griffiths Energy International gave $2-million US and discounted stock to Nouracham Niam, the wife of Chad’s ambassador to the US and Canada, Mahamoud Bechir, in return for her help in securing an oil concession in Chad for the energy company.34 After the death of the company’s CEO, Brad Griffiths, new management alerted Canadian authorities to the payments in 2011. Griffiths Energy was charged under the Corruption of Foreign Public Officials Act and agreed to pay a $10.35-million fine. No one was jailed and the company maintained its concession in Chad. The concession, the company’s most valuable asset, was the main reason it was later purchased by Glencore Xstrata for $1.35 billion.35 At the end of the day, the cost of a $2 million bribe and $10 million fine were good business for the Calgary-based company. Prime Minister Jean Chrétien helped Griffiths Energy win its concession in Chad. In late 2008 he arranged an introductory meeting between Brad Griffiths, Chadian President Idriss Déby, ambassador Bechir and himself.36 He set up a second meeting a year later that also included Chad’s oil minister.37 A Globe and Mail summary of a 2013 interview with former ambassador Bechir, noted that Chrétien “helped Griffiths’ senior management gain access to key officials in the Chadian government. The ex-ambassador said his wife, Nouracham Niam, wrote a formal letter to the embassy proposing the meeting, which he approved ‘because this is Jean Chrétien. … He has the priority because he was the former Prime Minister of Canada’.”38

Just a few bad apples or symptoms of a structural problem? The fact that Canadian politicians can look forward to a corporate gravy train once they are out of office suggests that these examples represent a bigger problem.

Canadian corporations regularly employ former politicians to advance their interests on the continent. Almost every prime minister since Pierre Trudeau (Joe Clark, Brian Mulroney, Paul Martin, Jean Chrétien) left office and lobbied on behalf of Canadian corporate interests in Africa. A number of provincial premiers and foreign ministers have done so as well.

Companies generally appoint politicians to their board of directors or contract their services through a law firm. The hope is that they can open doors. The smaller, poorer and more aid-dependent a nation, the more likely this is so. When asked why he appointed Brian Mulroney to his board, Peter Munk, chairman and founder of Barrick Gold, told Peter C. Newman: “He has great contacts. He knows every dictator in the world on a first name basis.”39

A month after leaving office in December 2003, Chrétien joined the law firm Heenan Blaikie and over the next 13 months traveled to Niger, Nigeria, Gambia, Angola and the Congo to advance the interests of its clients.40 According to the Globe and Mail, Calgary-based TG World Energy hired Chrétien to help it “get out of a pickle in the impoverished African nation of Niger.”41 TG’s rights to explore 18 million acres of Niger’s wilderness for oil and gas were revoked by the government, which argued that TG failed to fulfill its investment targets. Niger then awarded the concession to a subsidiary of the China National Petroleum Corp. The Calgary company sued Niger’s government and went to arbitration with the Chinese firm. “It also asked Mr. Chrétien to intervene”, reported the Globe and Mail.42 “The former prime minister spoke with officials of China National Petroleum during a trip to Beijing and then in March of 2004, he flew into Niamey, the Niger capital. In normal circumstances, the best TG World could have hoped to get on its own was a meeting with the energy minister. But Mr. Chrétien managed to snag a meeting with the president.”43 Chrétien’s lobbying led to a new agreement between TG World, Niger and the Chinese corporation, which saw the company’s stock increase from eight cents to more than a dollar within a year.

Chrétien used his reputation to advance Canadian corporate interests in Gambia as well. In 2004 he visited Gambian dictator Yahya Jammen to discuss offshore petroleum concessions for Calgary’s Buried Hill Energy. After the meeting, Chrétien said: “I met the President, when I was the Prime Minister of Canada. … We have been negotiating with the government of The Gambia to find out if there is oil off-shore here. And it is a very complicated trial and we’ve made a lot of progress and we hope we can build the company if we negotiate.”44

In 2014, the firm that employed Chrétien disintegrated. A Financial Post article headlined “How Heenan Blaikie’s Stunning Collapse Started with a Rogue African Arms Deal”, discusses how Chrétien and colleague Jacques Bouchard Jr.’s efforts to drum up African business sparked a rift within the law firm.45 But Chrétien’s services remained highly prized. Soon after Heenan Blaikie’s demise, Dentons Canada made Chrétien a partner and appointed him vice president of the law firm’s board of directors.46

Not unlike the role Chrétien played at TG World, Toronto-based Teranga Gold employed the services of former Québec Premier Jean Charest to lobby Senegalese officials. The mining company claimed the royalties mandated by Senegal were above the agreed upon rate and commissioned Charest to help navigate the issue with this active member of la Francophonie. “With his credibility and contacts, he was the right person to get the attention of the government and a fair deal for both sides,” Teranga CEO Richard Young told La Presse in 2014.47

Working on behalf of Bay Street law firm McCarthy Tétrault, Charest aggressively promoted Canadian mining on the continent. “The Africa question is certainly on the minds of a lot of Canadian mining companies,” said Charest at the 2014 Mining Indaba conference in South Africa.48

Former prime minister and long-time foreign affairs minister Joe Clark worked for several companies operating in various African countries. Clark helped a small Calgary-based company secure exploration rights for oil and gas in Tanzania and Mozambique. The company, Suprex Energy Corporation, sent out a 1997 press release announcing they acquired these exploration rights “with the assistance of the Right Honourable Joe Clark and the Honourable Harvie Andre [another former Mulroney cabinet minister].”49

First Quantum appointed Clark its special adviser for African affairs to lobby on its behalf in the Congo. He reportedly facilitated a 1998 meeting between Canadian officials and Congo’s Minister of Mines Frédéric Kibassa Maliba, and later pressured Canadian diplomats to demand a review of a 2002 UN report criticizing the manner in which First Quantum acquired its concession.50 Alongside his corporate work in the Congo, Clark engaged in diplomatic work and led the Carter Center’s delegation of election observers that gave Congo’s controversial 2007 presidential election its stamp of approval.

In Ghana, Clark used his name recognition as former chair of the Commonwealth Committee of Foreign Ministers on Southern Africa to assist Triton Logging secure the world’s largest underwater logging license. BC Business magazine reported: “Confronted by a former Canadian Prime Minister, the Ghanaians in the room are spellbound. Clark, who is a director of the Canadian Council of Africa, might as well be Canada’s sitting prime minister.”51

Clark secured an agreement for Triton that had the potential to generate multiple billions of dollars, which also allotted the Vancouver-based company 80% of all profits. Ghanaian Chronicle publisher Kofi Coomson criticized the generous deal and called on Clark to “do the right thing”. In an interview with BC Business, Coomson said: “Ghana’s interests should come first, and Mr. Clark’s personal interests come second.”52

Clark remains influential on the continent partially because he continues to engage in African politics. His diplomatic roles have included leading international election observation teams in Cameroon, Congo and Nigeria.

While corruption is widely identified with bribing or looting by public officials, Africa loses much more from corporate tax evasion. According to a 2015 UN Economic Commission for Africa/African Union panel, companies and government officials are illegally moving up to $60 billion US a year out of the continent.53 Chair of the UN/AU panel, former South African President Thabo Mbeki told the press: “Large commercial corporations are by far the biggest culprits of illicit outflows, followed by organized crime.”54

The Washington DC-based Global Financial Integrity Forum found that between 1970 and 2008 “total illicit financial outflows from Africa, conservatively estimated, were approximately $854 billion. Total illicit outflows may be as high as $1.8 trillion.”55 Three percent of this total was thought to be bribes to government officials or theft of public funds. Fifteen percent of all illicit outbound transfers were found to be money derived from drug smuggling, counterfeit goods, racketeering and other common criminal activities. The vast majority of the illicit funds, up to two thirds of the total, were cross-border commercial transactions designed to reduce or eliminate taxes.56 Most of this money consisted of corporations shifting goods and profits between jurisdictions to reduce or eliminate their tax bill.

Often called “transfer pricing” or “trade misinvoicing”, multinational corporations artificially adjust the price of goods sold between their subsidiaries or partner companies in order for profits to end up in low (or no) tax jurisdictions while costs appear in high tax countries where they’re deducted from a company’s tax bill. Alain Deneault describes transfer pricing thusly: “First, the corporation creates one or more subsidiaries in a tax haven. Then, it maintains business relations with the subsidiary as if it were an independent party. Transactions are always designed to benefit the subsidiary, because money earned by the offshore entity will not be taxed. In other words, the goal is to establish bogus operations with the subsidiary in order to record a large proportion of the company’s earnings in offshore accounts, removing them from taxation in countries where the corporation has real and substantial activities.”57

US Senator Carl Levin described transfer pricing as “the corporate equivalent of the secret offshore accounts of individual tax dodgers.”58 The director of Global Financial Integrity, Raymond Baker, employs even stronger language. Baker calls the offshore financial system “the ugliest chapter in global economic affairs since slavery.”59

“Transfer pricing” and falsified invoicing between seemingly unrelated companies deprives African governments of the tax revenues required to build schools, hospitals and other vital infrastructure. In most African countries government expenditures represent a small percentage of GDP, which exacerbates impoverishment.

Canada has helped build the global offshore financial system. Alain Deneault details the work of Canadian politicians, businessmen and Bank of Canada officials in developing taxation and banking policies in a number of Caribbean financial havens in his book Canada: A New Tax Haven: How the Country That Shaped Caribbean Tax Havens Is Becoming One Itself.

The offshore system relies on the financial infrastructure of the leading capitalist countries. CBC reported that Canadian “banks play a role” by “setting up accounts for offshore companies, or providing essential assistance to do so.”60 In a 2013 story, the public broadcaster pointed out that Canada’s big banks had 75 subsidiaries in locales considered offshore havens. Additionally, Canadian banks were cited when the Consortium of Investigative Journalists released a cache of leaked files concerning secret tax havens that year. Scotia Bank, CIBC and the Royal Bank of Canada were named a combined 5,000 times in the leaked documents.61

The CIBC is apparently popular with wealthy, well-placed Africans. Economist Thierry Godefroy and legal expert Pierre Lascoumes write that the “Canadian Imperial Bank of Commerce is known as the bank of many African dignitaries” while French Africa specialist François-Xavier Verschave called it “the nefarious CIBC, favourite bank of African oil dictators.”62 In 1997, for instance, the Toronto-based financial institution was the conduit of a $22 million transfer from Geneva to the British Virgin Islands for Kourtas, which was owned by Gabonese dictator Omar Bongo.63

Ottawa has signed tax treaties and Tax Information Exchange Agreements with a number of Caribbean tax havens. Due to a 2011 Tax Information Exchange Agreement, Deneault writes, “subsidiaries of Canadian companies that record their profits in the Caymans can now transfer them to Canada without paying any taxes — a clear incentive to practise transfer pricing.”64 Co-founded by Calgary lawyer Jim Macdonald, who greatly influenced the Cayman Islands banking legislation, Maples Fund Services explains to its clients: “With no income, corporate or capital gains tax, no estate duty, inheritance tax or gift tax and no withholding tax, the Cayman Islands is well situated to be used in structuring investments for Canadian corporations.”65
While they’ve proliferated in recent years, the first double taxation treaty Canada signed with a Caribbean tax haven dates to Wayne Gretzky’s inaugural season in the NHL. In 1980, Joe Clark’s short-lived Conservative government signed a double taxation treaty with Barbados.66 This allowed Canadians to park their international profits in Barbados, which taxes companies at between 0.25% and 2.5%, and transfer them here without paying tax in Canada.67

In 2015, Barbados was the No. 2 destination for Canadian foreign investment after the US. With thousands of mailbox head offices Canadians invested $71 billion in the tiny island, equal to the sum Canadian companies invested in Germany, China, Brazil and Mexico altogether.68

At $36 billion, the Cayman Islands was the fourth biggest destination for Canadian investors in 2015. (Britain was the third biggest recipient of Canadian investment.) In fact, Canadian capitalists have some $200 billion ‘invested’ in the ten leading tax havens.

Ottawa actively defends the Caribbean financial system. In response to a push for greater regulation of the offshore world, in 2009 Minister of Finance Jim Flaherty told the Board of Governors of the International Monetary Fund (where Canada represents most members of the Commonwealth Caribbean as well as Ireland): “Some of our Caribbean countries have significant financial sector activities. There is a risk that changes to financial sector regulation in advanced countries could have negative unintended consequences on these activities. In particular, there is a risk that measures taken against non-cooperative jurisdictions, including tax havens, could have unintended negative impacts on well-regulated, transparent, financial centres. I believe that this should be avoided. Countries that comply with international standards should be protected from such measures.”69 Staying true to this position, Canadian officials were rumoured to have undermined efforts to tackle “the scourge of tax evasion” at the 2010 and 2013 G8 summits. In private, officials from the French Ministry of Finance reportedly blamed Canada for undermining international cooperation to combat tax evasion.70

Mining companies are some of the leading culprits in misinvoicing. With commodity prices constantly in flux and their products entirely for export, resource companies are well placed to abuse countries’ limited means of investigating false invoices and transfer pricing. A number of Canadian companies operating on the African continent have been accused of evading their taxes:

 

Mopani Copper Mines (MCM), a sixth of which is owned by Vancouver’s First Quantum, cheated Zambia out of millions of dollars. At the request of the Zambia Revenue Agency, Grant Thornton audited MCM, which “resisted the pilot audit at every stage.”71 The global accountancy firm found an “unexplainable” increase in MCM’s costs between 2006 and 2008, which allowed the company to significantly reduce its stated profits and tax bill.72 Leaked to the public, the audit also suggested that MCM underreported cobalt extracts and manipulated internal prices to shift profits to First Quantum and Glencore subsidiaries in the British Virgin Islands and Bermuda, allowing it to evade tax in Zambia. “Based on the Grant Thornton analysis, we estimate that the company’s practices potentially cost the Zambian government up to £76m a year in lost corporation tax,” said Anna Thomas, head of tax policy at ActionAid.73 In 2011, half a dozen international NGOs filed a complaint against majority owner Glencore and First Quantum before the Swiss and Canadian National Contact Points for violating OECD Guidelines for Multinational Enterprises.74

To the east, a series of reports suggest that Barrick Gold short-changed Tanzanians. A 2003 Alex Stewart Assayers audit concluded that mining companies overstated their losses by $502 million US between 1999 and 2003, which cost the Tanzanian government $132.5 million US.75 The audit also suggested that $25 million US in royalties went unpaid.76 Another report found that between 2003 and 2008, foreign mining companies exported $2.5 billion in gold from Tanzania with only $110 million reaching the government in royalties and direct taxes.77 In 2014, Global Financial Integrity calculated that transfer pricing by Tanzanian mining companies cost the government a quarter billion dollars a year in tax revenue.78 As Tanzania’s top gold producer during this period, Barrick consistently declared losses in order to pay minimal corporation tax. With many subsidiaries, including in the Cayman Islands and Barbados, Africa Barrick Gold (now called Acacia) made it difficult for Tanzanian tax collectors to trace exactly what the country was owed.79

Tenke Fungurume mine (a quarter of which is owned by Toronto-based Lundin Mining) was accused of overstating its investment in eastern Congo in a bid to reduce its tax bill. In 2013, a half-dozen NGOs claimed the company short-changed the government and violated Congolese law by holding its financial statements outside the country.80 Lundin Mining’s Tenke holdings are officially held by a subsidiary based in Bermuda.81

Tax authorities in Mali concluded that IAMGOLD owed the country over $15 million in taxes.82 In the mid-2000s, the Toronto-based miner engaged in a multiyear legal wrangle to avoid paying the bill.83

The Ghana Revenue Authority sought $6.6 million Gh ($2 million) from Prestea Sankofa Gold.84 The Vancouver-based company was accused of failing to pay royalties on $130 million Gh in exports from 2012 to 2013.85

To the south, Senegalese tax authorities accused Teranga Gold of diverting funds to an offshore bank. In 2011 they claimed the Toronto-based company skipped out on $24 million in payments and then again failed to pay $2 million more in 2015.86

Next-door, Semafo was accused of failing to pay both taxes and dividends to the government of Niger. Despite owning a 20% share in the Samira Hill mine, the government received nothing from the Montréal-based majority owner between 2004 and 2010. “Since this company started its activities, Niger has not seen a single franc despite its being a shareholder,” noted Abdoulkarim Mossi, head of a government committee set up to tackle economic and financial irregularities in the country.87 The committee found a discrepancy between the quantity of gold mined and the royalties paid. Between 2004 and 2010 SEMAFO extracted 350,000 ounces of gold from Niger worth about $350 million.88

Starving governments of much-needed income, Canadian companies evade their African taxes through various morally and legally questionable means. Some corporations also pay public officials to advance their interests. Ottawa has enabled the tax evasion and largely turned a blind eye to the bribery.

Some might blame Africa for a culture of bribery. Others might point to the ideology of extreme capitalism, which decries government spending and regulation, argues “greed is good” and that the world is made better by people only caring about their own interests.