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Auditor General’s report reveals irregularities in the mining sector

Auditor General, John Muwanga

Auditor General, John Muwanga

The Auditor General, John Muwanga, has revealed several anomalies and possible corruption in the mining sector in his annual report to parliament for the financial year ending June 30, 2015.

The Audit covers all government departments, ministries, public corporations and bodies.

The 796 page report reveals that in the financial year 2014/2015, the Ministry of Energy and Mineral Development purchased geophysical equipment worth 1.5 billion shillings ($430,000) but the equipment has since ‘gone missing’ from the ministry. According to the report, the equipment was procured from Phoenix Geophysics Limited in Canada and was dully delivered to the Directorate of Geological Survey and Mines (DGSM) in the Ministry of Energy and Mineral Development.

“During the stores inspection, I [Auditor General] noted that some of the equipment had been hired out to a private individual soon after it was delivered. There was however, no hire register maintained to record details and terms of the hire, no evidence of payment of fees for hiring  and no date of return,” the report reads in part.

The report adds, “Particulars of the person to whom equipment was hired were scanty. I further noted that equipment had left the stores before being engraved. There is risk of loss of revenue from hiring, loss of equipment and or high maintenance costs transferred to government after private use of the equipment.”

According to the report, officials at DGSM explained that the equipment was let out to Gids Consult Limited, a private company for geophysical exploration surveys in Buranga, Bundibugyo district, in order to understand how it works. The Auditor General however notes that the equipment was never returned after the exercise. “Although management stated that all the equipment was returned to DGSM stores in sound condition on completion of the geophysical surveys, there was no evidence to prove this,” his report reads.

The report also reveals that in 2012, the DGSM acquired an X-ray Fluorescence (XRF) machine and an Atomic Absorption Spectrophotometer (AAS) at a combined cost of approximately 465 million shillings ($ 133,000) but the equipment was found non-operational less than three years later. The Auditor General blames the damage to the absence of a maintenance policy although “Management attributed the breakdown of the machines to power fluctuations and lack of sufficient funds for the maintenance of the equipment.”

Failure to collect taxes

The Auditor General further reveals that in the last one year alone, DGSM lost 500 million shillings in uncollected mineral taxes and fees. According to the report, out of the 8.9 billion shillings the ministry had assessed as mineral taxes or fees for the year, only 8.4 billion was collected.

The report adds, “Additionally, during field inspections, I noticed that a mining company (African Panther) had not declared to the ministry 3.5 metric tonnes of Cassiterite (Tin) which it had mined contrary to the Mining Act. Such undeclared production denies the government its much needed revenue.”

Other anomalies that were discovered include lack of protective wear for the workers in mines exposing them to health risks and injury, absence of mining records on mining sites resulting into inaccurate information and assessments, inadequate safety measures and no environmental performance bonds. “Such non-compliance leads to health risks, environmental damage and inadequate information for the ministry,” concludes the report.

Report by Edward Ssekika