Malawi demands billions from US firm over gems

https://www.rt.com/africa/609677-malawi-us-gemstone-firm-unpaid-taxes-dispute/

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The African nation’s attorney general has accused Columbia Gem House of underreporting the value of precious stones it has exported from the country

Malawi’s government is demanding $309 billion in unpaid taxes and royalties from the US firm Columbia Gem House for precious stones exported over the last decade, the BBC reported on Thursday, citing the southern African nation’s attorney general.

Thabo Chakaka Nyirenda told the British outlet that the country is also seeking $4 billion in unpaid revenue from French oil and gas major TotalEnergies, as well as $9.5 million from the Turkish tobacco firm Star Agritech.

The amount being sought from the three corporations is reportedly nearly 300 times Malawi’s national debt of about $1.2 billion. Last year, the country received a loan of approximately $178 million from the International Monetary Fund (IMF) amid its economic crisis.

The landlocked country is rich in minerals, including phosphate, coal, limestone, uranium, iron ore, rock aggregate, and precious stones. However, official figures have revealed that the mining sector contributes only 1% to the Malawian GDP. The government is targeting an increase of up to 10% by 2063.

While speaking on the BBC Focus on Africa podcast, Attorney General Nyirenda accused Columbia Gem House of underreporting the value of rubies exported from Malawi.

“Some of the evidence that we’ll be using comes from Columbia Gem House itself, such as declarations they have made in the US and what they have reported on their website, which they have now deleted,” he stated.

“The amount is not just [for] one year, it goes over 10 years back. It also includes the interest,” Nyirenda said.

The US-based firm has dismissed the claim as “baseless and defamatory,” noting that the figures are flawed. It argued in a statement cited by the BBC that the $309 billion claim “implies Malawi has somehow produced and exported trillions of dollars’ worth of colored gemstones.”

The family-owned company said it does not operate in Malawi; instead, it acquires its gemstones from the local company Nyala Mines, in which the government holds a 10% stake. But Nyirenda claims that as a minority shareholder, the government had no involvement in the company’s day-to-day operations, and “the name of Nyala Mines had been changed to disguise its ownership.”

The US embassy in Malawi has made an attempt to settle the dispute but failed.

TotalEnergies reportedly declined to comment on allegations that it had failed to honor a 2001 agreement with Malawi to supply fuel in exchange for tax incentives.

According to Nyirenda, the profits from the contract were to be shared equally, but the French energy giant “only paid for two years and stopped paying in 2006.” He said the government has filed a lawsuit against TotalEnergies and wants it to pay $4 billion in a settlement.

Star Agritech International (SAI), also accused by Malawian authorities of refusing to pay for three million tons of tobacco worth $15 million that it purchased from Malawi through three subsidiaries registered in Mauritius, Hong Kong, and South Africa in 2013, has denied the charges.

The Turkish firm told the BBC that it bought tobacco worth $5 million, not $15 million, as Malawi claims.