Kenya a conduit for illicit shipment of minerals

By Peter Orengo

Kenya is a major transit point for minerals illegally acquired from Central Africa.

This came out yesterday during the launch of a study on how mining firms deprive mineral-rich countries of huge tax revenue.

Poor policing of borders and easy access to exit points were cited as the major loopholes fueling the illegal mineral trade.

Mr Jack Ranguma, a Senior Adviser to Tax Justice Network said gold and diamonds smuggled from the Democratic Republic of Congo usually end up in Kenya before being exported.

"Judging by the Goldenberg scandal and the gold that is currently stuck at JKIA, it is obvious the country is a conduit used by smugglers to ferry their ill-gotten wares from Africa to Europe," Ranguma, also a former Commissioner of Domestic Taxes, said.

Last Monday, it was reported that four tonnes of unrefined gold from the DR Congo en route to Zurich, Switzerland, was ‘abandoned’ in Nairobi in unclear circumstances.

Ranguma said such deals were common but said authorities were doing little to combat them.

"There is a possibility that the State has knowledge of the smugglers. This kind of practice is depriving the Congolese of revenue which could have been used to end poverty in the rich but war-torn country," he said.

Mining firms

The report, Breaking the Curse: How Transparent Taxation and Fair Taxes can Turn Africa’s Mineral Wealth into Development, launched yesterday, highlights methods mining firms use to pay as little tax as possible in Africa.

It places at more than $480 billion the amount leaving Sub-Saharan Africa as capital flight, with Kenya contributing a substantial amount.

This comprises 30 per cent of Sub-Saharan Africa’s GDP being moved offshore.

Globally, the Tax Justice Network estimates that $11.5 trillion has been siphoned offshore by rich people.

This is done by transfer mispricing by multinational companies and the political elite.

Among the report’s recommendations is a call for a new international accounting standard that would require multinationals to report their profits, expenditures, taxes, fees and community grants paid in each financial year in countries they operate.