Failure of six mining companies to pay government dividends cost Ghana close to $15 million in 2018

Tracking government revenue

iWatch Africa investigation has revealed that failure of some six mining companies to pay dividends due Ghana deprived the nation of potential revenue amounting to $14,148,373 as at October 2018.

The government of Ghana under Section 43 of the Minerals and Mining Act of 2006, Act 732, has 10% Carried Interest in all mining companies registered under the Companies Act of 1963. These companies are required to submit on annual basis, their returns to the Registrar General’s Department and the Minerals Commission as well as conduct annual self-assessment and submit same to Ghana Revenue Authority for tax purposes.

iWatch Africa’s review of the financial statements of these mining companies: Chirano, Adamus, Gold Fields Abosso, Persus Mining, Ghana Manganese and Ghana Bauxite revealed that although in certain instances declared profits, they failed to transfer dividend attributable to the government.

Further checks by iWatch Africa at the Auditor General’s office also showed that these companies failed to obtain the needed prior approval from the Ministry of Finance for the plough back of the profit.

The Auditor General, Mr. Daniel Yaw Domelevo in his 2018 report revealed the absence of government representation on the boards of these mining companies, despite government ownership of 10 percent carried interest.  According to the Auditor General, this “inhibits oversight functions and possible cause for cost manipulation by the mining companies.”

Another concern noted by iWatch Africa when reviewing the financial statements of these companies was the staggering losses recorded by almost all the companies between 2013 to 2016.

The Auditor General has cited the possibility of “inflation of expenditures through transfer pricing manipulations,” as reasons for these losses, and blamed the Ghana Revenue Authority for their weak oversight responsibilities.

Read Also: Ghana loses $18.9M as economic costs of violence against women

The table below shows the profit/loss after tax (PAT), dividends declared and potential revenue due the state between 2013 and 2016.

(Source: Auditor General’s 2018 report).

(Source: Auditor General’s 2018 report).
(Source: Auditor General’s 2018 report).

Report by Gideon Sarpong | iWatch Africa |

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Gideon Sarpong

Gideon Sarpong is a policy analyst and media practitioner with over eight years of experience in policy, data and investigative journalism. Gideon is currently the Policy and News Director at iWatch Africa. His major role includes developing news strategy for correspondents across Ghana, as well as designing strategic project and policy focus for the organisation. He is an author; a fellow of the Young African Leaders Initiative (YALI), Thomson Reuters Foundation, Commonwealth Youth Program ,Free Press Unlimited and Bloomberg Data for Health Initiative. Gideon holds a degree in economics from the University of Cape Coast, a PgD in Fiscal Policy for financing sustainable development from the African Institute for Economic Development and Planning, in South Africa and a PgD in Policy Journalism and Media Studies from the University of Zambia. He is the founder and country president of SOA Ghana Hub. Gideon is a Policy Leader Fellow at the European University Institute, School of Trans-national Governance in Florence.
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