Organized crime at Ministry of Mining: Officials own shares in firms, cut corners on license processing

The leaked audio in which a Chinese investor is offering a bribe to a senior official at the Ministry of Mining to facilitate the cutting of corners in processing the renewal of a license for Ilomba Granite Mine Company in Chitipa is not even a tip of the iceberg.

An investigation Nyasa Times undertook following the leakage of the audio has delved into even shocking revelations such that the said US$300, 000 the Chinese investor John Zhang was offering is merely a small particle out of a big rock.

Our investigation has found that some senior mining officials connive with foreign investors to deprive Malawi of the much-needed royalties and taxes by striking long-run deals that eventually see them becoming shareholders in the mining firms.

“I can assure you that a number of senior officials at the ministry own shares in mining companies,” said our source. He mentioned three officials whose names we have deliberately concealed for now.

Nyasa Times has further established that the audio trending on the social media is actually one year old as it was captured between September and October 2019. It was further found out that Faisal Hassen  of Ilomba Granite Company Limited in Chitipa set the plot and sent the Chinese miner to record Dr. Cassius Chiwambo since he knew that his Licence was likely not to be renewed due to his failure to comply to the Mines and Minerals Law of Malawi and the defaulting of the Mining Development Agreement (MDA) signed between himself and the community surrounding Ilomba Mine.

In the audio, the Chinese investor is offering a bribe to Chief Mining Engineer, Dr. Cassius  Chiwambo, to facilitate the renewal of the license without following procedures.

Chiwambo refused to comment on allegations that some officials own shares in mining firms, but confirmed that he is indeed the one discussing with the investor in the audio.

He suspected that the investor might have set a trap against him as he did not disclose that he was recording the conversation.

However, Chiwambo stated that he conducted his business with the indulgence of the former Minister of Mining, Bintony Kutsaira.

“I hope you are aware that in Chitipa, we have granite, which is used to make tiles and other high value items. It’s a very beautiful stone. About 25 years ago, the Malawi Government issued a license to Faizal. So, Faizal has been working on this particular project for about 25 years until last year when the license was about to expire. And for the 25 years that he was operating at Ilomba, Faizal was very elusive when it comes to payment of royalty to government. Sometimes he would pay if he has been squeezed,” said Chiwambo.

“He was not doing any corporate social responsibility such that the people of Chitipa started feeling that they haven’t benefited anything from the project therefore not any more important to the area. But the mine was still in operation. Now, when Faizal noticed that the license was about to expire, he decided to work hard to identify people who could buy the license from him. So, he identified a Chinese national who accepted to buy the license at a price of US$1 million. I don’t know whether he was in desperate need of the money or it was by his plan, he got an instalment 25 percent of the price, which is US$250,000,” he added.

Chiwambo further stated the action by Faizal was against the Mines and Minerals Act of 1981, which states that before you sell the license, you are supposed to inform the Minister [of Mining] who is supposed to make a decision on whether to sell or simply relinquish if you give convincing reasons because a mine is a government property; hence, an investor cannot make unilateral decision on the sale or relinquishing of the license.

He said for the 25 years Faizal was operating, his license has been facing a number of challenges, including cancellation of the license. When the license is cancelled, he would go to the ministry to seek amicable solution to the government would give him more chances not knowing he was bent on exploiting the country.

“But even after failing to honour his royalty obligation to the government, he went ahead to sell the license, and after selling it, he didn’t go to Malawi Revenue Authority to pay taxes in form of Capital Gains Tax in line with the Taxation Act. And yet he was pressuring officials at the Ministry of Mining to renew his license against protests by locals in Chitipa. Chiefs in Chitipa had become tired of Faizal and his false CSR promises. And this news got to the former President Peter Mutharika,” said Chiwambo.

He added that former president Peter Mutharika directed the then Minister of Mining, Bintony Kutsaira, to investigate and get to the root cause of the disgruntlement among communities surrounding the mine.

He said the former President was of the view that it was unfair for the investor to exploit our resources and deny communities improved livelihoods through corporate social responsibility by the company.

“Above all, Mutharika was afraid that the issue would cost him votes in the Fresh Presidential Election because Faizal had become negligent on the project. He would submit a one-page report to the government on his operations and this prompted the government to decide to find another investor to run the mine. But the challenge now was that Faizal had secretly sold the license to a Chinese national,” he explained.

It was at this point that Kutsaira consulted Chiwambo, who was also advising the ministry on legal issues.

But without the knowledge of the former minister, the investor visited Chiwambo in his office between September and October 2019 and lied that Kutsaira had directed that his license should be renewed immediately and that he [the investor] would pay US$300, 000 million as a token of appreciation.

“Sensing some dishonesty, I went into the toilet where I rang Kutsaira to verify if he indeed he approved the renewal of the license before the outstanding issues were resolved. I did this because according to the Law, a decision for granting or refusing any application is recommended by the Mineral Licensing Committee, which then submits their recommendation to the Minister. Thereafter, the Minister can either sign or refuse the grant of such a license if he feels that there are some issues which would need further attention by the investor. In this case, former Minister Hon. Kuntsaira decided to ensure that the investor shouldn’t be renewed his licence until he sorts out himself with the Ilomba community citizens and Malawians as large,” he said.

In a separate interview, the Acting Director of Mines in the Ministry of Mining, Burnett Msika, disclosed that the Ministry of Mining has received numerous concerns of that nature and that it will do thorough investigations on every officer to ensure that the mess in this new Ministry is cleaned for the benefit of Malawians.

Minister of Mining Rashid Gaffer said he has noted of the clips on social media and that government will follow the matter.

Meanwhile, the Natural Resource Justice Network through its Chairperson Kossam Munthali has called for thorough probe into the matter, saying the audio clips vindicate reports that award of mining licences in the country is marred by corruption.

Anti-Corruption Bureau Director General Reyneck Matemba said  they have taken up the matter.

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