Report faults Paladin incentives

International civil society group, ActionAid, has released a report that accuses Australian mining firm Paladin (Africa) Limited ripping Malawi off $43 million (around K19 billion) through ‘harmful’ tax incentives and tax dealings.

But Paladin country director Gregg Walker yesterday dismissed the report as a misrepresentation of facts and another attack from the civil society, saying the company has a clear conscience on its tax adherence and royalty agreement.

In its report released yesterday across the globe, ActionAid blamed the situation on the Malawi Government’s decision making and loopholes in the international tax system for facilitating the loss of the Malawian revenue.

The report, titled An Extractive Affair: How One Australian Mining Company’s Tax Dealings are Costing the World’s Poorest Country Millions, was launched simultaneously by ActionAid in Australia and Malawi yesterday.

The report condemns tax breaks agreed between Malawi and Paladin, saying the decision cost the country $15.635 million (nearly K7 billion).

Paladin is also accused of lowering its tax obligations to Malawi by exploiting a treaty Malawi had with The Netherlands until 2014 to skip payment of 15 percent of withholding tax, according to the report.

ActionAid Malawi country director Martha Khonje said the report was not a condemnation of Paladin and that whatever the company did was within the framework of the contractual agreement with Malawi Government.

Ministry of Natural Resources, Energy and Mining acting director of mining Peter Chilumanga said government welcomed the findings as an opportunity to learn from the past, but said there will be a need to scrutinise its contents in full before a full response.

Walker said allegations that Paladin was given tax breaks in bad faith were misplaced as failure to allow the company breathing space during the start of the investment could have ended the proposed venture.

Paladin—whoseKayelekera Uranium Mine in Karonga is currently under safe and maintenance pending improvements in global uranium price—started its operations in 2008.