Mali government escalates tax dispute with FTSE 100 gold miner

Jersey-headquartered Randgold Resources has criticised the government of Mali after the latest phase in a $280m (£227m) tax dispute saw the gold mining company’s offices in the capital of the West African country shut down

Randgold Resources, which is listed on the London stock exchange, said in a statement is was ‘disappointed that the Malian government had escalated their long-running tax dispute to the extent of closing the group’s offices in the country’s capital Bamako.’

The closure does not affect the operations of Randgold’s three mines in Mali, while the company also has mining sites in the Democratic Republic of Congo and Côte d’Ivoire. Last year the company posted net profits of $189m on sales of $1.4bn.

In its statement Randgold said it has been professionally advised that a large proportion of the tax claims received from the state of Mali in respect of its operations in that country are without merit or foundation. Following the appropriate legal process, it is strongly defending its position in relation to these claims.

The company pointed out that the three Malian operations, in Morila, Loulo and Gounkoto, each have legally binding establishment conventions which guarantee fiscal stability, govern the taxes applicable to the companies and allow for international arbitration in the event a dispute cannot be amicably resolved.

It noted that the International Center for Settlement of Investment Disputes had recently awarded $29.2m plus costs to Loulo for taxes found by the tribunal to have been wrongfully collected by the Malian government.

Mark Bristow, Randgold Resources chief executive, said: ‘We have continued to engage with the Malian authorities at the highest level to resolve the remaining issues and we trust that the parties will return to the negotiating table in the spirit of constructive partnership that had previously characterised our dealings in order to find a mutually acceptable solution.’

The tax dispute began in 2013 and relates to revenue dating back to 2011. The company’s auditors since 2007 have been BDO. The 2015 company annual report references the tax claims as a risk, stating: ‘the group is subject to a range of tax claims and related legal action in the jurisdictions in which it operates that have arisen in the ordinary course of business.

‘The material claims being from the Malian tax authorities totalling $280m, including the Loulo tax claim. Certain of the claims from the Malian tax authorities are currently under arbitration with the World Bank Group’s International Centre for Settlement of Investment Disputes. No new tax claims were made by the State of Mali in the year.

The audit committee reported it had received management’s report on the position of current tax claims and a review of the arbitration status and the legal foundation for the dispute of tax claims, and had also asked BDO to consider the issues.

The report states: ‘The audit committee is satisfied that the evidence produced, both from internal assessment and from external legal and tax advice, supports the view that the material claims are wholly without merit or foundation in the context of the tax laws of the countries in which it operates. Accordingly, losses associated with the material claims are considered to be remote under IFRS.’

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