Malawi Attorney General Thabo Chakaka Nyirenda says enough is enough. Malawi is claiming over US$300 billion from United States company Columbia
Gem House for unpaid taxes on minerals extracted from the country and exported to the
The Columbia Gem House has been trading and doing mining activities at Chimwadzulo in Ntcheu in Malawi under the Nyala Mines Limited.
According to a letter dated July 26, 2022 to Columbia Gem House Malawi Attorney General Thabo Chakaka Nyirenda accuses the firm of evading duty on sales of rubies and sapphires mined from 2008.
Reads the letter: “Going by Nyala Mines Limited’s own declared minimum price of untreated ruby of US$20,000 per carat, this yields the sum of US$9,000,000,000.00 (Nine Billion US Dollars) worth of sales revenue per year from ruby alone, and another US$15.00,000,000.00 (Fifeen Billion US Dollars) worth of sales revenue per year from sapphire.
“The total net tax revenue that had been evaded by Nyala Mines Limited amounts to US$309,600,000,000.00 (Three Hundred and Nine Billion SixHundred Million US Dollars)”
Chakaka Nyirenda says in the letter that between 25th August, 2008 and 30th July. 2013, Nyala Mines Limited only paid taxes amounting to MK604,413.13 yet according to the USA Department of Interior, Nyala Mines Limited exported 150 kg of ruby and rare Padparadscha and 300 kg of sapphire every year.
This means that Nyala Mines Limited which is the Columbia Gem House subsidiary,
paid taxes of just $600 against projected $24 billion revenues from their Malawian operation.
The AG further noted that Columbia Gem House declared its record prices for the Malawi ruby and sapphire as having been set at US$425,000 per carat and sapphire at
US$48.871 per carat.
On the other hand, he says natural untreated ruby from Malawi is sold between US$20,000 and US$25,000 per carat while top grade untreated ruby from Malawi is sold at US$50,000 per carat.
Chakaka Nyirenda further notes that according to a 2014 article, titled Constructing Ethical Mineral Supply Chains in Sub Saharan Africa The Case of Malawian Fair Trade Rubies
by Gavin llilson, the first collection of ruby from Chimwadzulu Mine was made available for US retailers in February, 2004.
According to the AG, llilson in the article observes that ‘these stones are of extremely high quality and therefore have considerable market potential.
The AG says even llilson bemoaned the unfair trading that was being practiced by the mine owners.
The AG, acting on behalf of the Malawi Government has since demanded that the company pay $309,600,000,000 in unpaid taxes.
“Nyala Mines Limited and Columbia Gem
House breached (the law) when they failed to
disclose all income realised from the investment and when they engaged in trade
mispricing and improper transfer pricing techniques,” the letter reads.
Nyirenda has warned that Malawi could seek to prosecute Nyala Mines Limited and Columbia Gem House and ther officers, along with anyone implicated in tax evasion or export fraud schemes.
“It is Malawi’s position that you dishonestly changed the name of the mining company to Nyala Mines Limited to disguise the origin of the company, that is, so that the new name of
the company sounded local to avoid suspicion
and detection,” Nyirenda writes.
“I, therefore, demand from you the payment of
the said sum of US$309,600,000,000 plus
interest at the commercial lending rate from
the date the said taxes and royalties fell due to
the date of payment within 30 days,” the letter