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Tulawaka mine in northwest Tanzania is owned by Barrick Gold, a Canadian mining company with a 16-per-cent stake in Acacia Mining which has been accused of tax evasion by the Tanzanian government.Brookes

Tanzanian authorities have arrested a senior executive and filed dozens of criminal charges at the beleaguered African subsidiary of Barrick Gold Corp., intensifying a corruption investigation that has cast a shadow over Barrick’s planned merger with African-focused Randgold Resources Ltd.

The latest arrest is part of an investigation in which 39 charges have been filed against company subsidiaries, employees and former employees for tax evasion, corruption, forgery, conspiracy and money-laundering, according to a statement on Wednesday by Barrick subsidiary Acacia Mining PLC.

The charges date back as far as 2008 and “appear to relate to the historical structuring and financing” of the mines that eventually formed part of Acacia, the company said.

In the latest action in a wave of detentions, Tanzania’s anti-corruption bureau has arrested Alex Lugendo, chief adviser on government relations at Acacia, along with Acacia’s former vice-president of corporate affairs, Deo Mwanyika, according to reports in the Tanzanian media on Wednesday.

The two men remain in detention because the money-laundering charges do not permit bail for detainees under Tanzanian law, Acacia said.

Last week, Acacia’s commercial manager, Maarten van der Walt, was arrested and charged with a corruption offence, according to an internal memorandum by Acacia’s chief executive officer, Peter Geleta. A number of other company officials have been detained and subjected to lengthy interviews during the investigation, while computers and mobile phones have been seized from the company, he said in a memo to employees.

The arrests last week were believed to be linked to the process of land compensation for property owners near Acacia’s North Mara gold mine, dating back as far as 2012, according to Acacia.

Acacia, the biggest gold miner in Tanzania, has already been struggling with that country’s demands for a gargantuan US$190-billion in taxes. As part of a dispute over alleged unpaid taxes, the government has banned Acacia from exporting gold concentrate. The government has been locked in the dispute with the company for 19 months and the dispute still “remains unresolved,” Acacia said in its statement on Wednesday.

The Citizen, a leading Tanzanian newspaper, said the government relations adviser and former vice-president of Acacia were arrested on Monday and spent the night at a police station. It said they were likely to be charged with causing losses to the government.

“We arrested them over the ongoing investigation into natural resources exploitation,” the deputy director-general of the Tanzanian Prevention and Combating of Corruption Bureau, Brigadier-General John Mbungo, was quoted as saying.

“Everyone knows the war that the government is waging in the minerals sector,” Brig.-Gen. Mbungo reportedly said.

Last month, Barrick announced that it plans to acquire Randgold for about US$6-billion in an all-stock deal, creating the world’s biggest gold company. Randgold’s founder, Mark Bristow, would become Barrick’s CEO under the agreement.

The arrests and criminal charges in Tanzania “do not have any impact” on the merger agreement between the two companies, Barrick spokesman Andy Lloyd told The Globe and Mail in response to queries on Wednesday.

Randgold operates mining projects in western and central Africa, and some analysts have suggested that Mr. Bristow’s long experience in Africa could help Barrick to resolve the Tanzania dispute. But the latest corruption charges suggest the dispute will be complex and difficult to solve.

Acacia has said that it will take the dispute to an international arbitration court if there is no negotiated settlement.

Last year, Barrick outlined a plan to resolve the dispute, including a US$300-million “gesture of good faith” payment to the government and a plan to let the government take a 16-per-cent stake in Acacia’s three Tanzanian mines, along with a 50-per-cent share of their economic benefits. But the issue remains unsolved.

Barrick’s executive chairman, John Thornton, has said publicly that Tanzania deserves a larger share of mining revenue in the country. Acacia has emphasized, however, that the company and its predecessor entities have paid US$1-billion in taxes and royalties to the Tanzanian government over the past 15 years.

Mr. Geleta, the Acacia CEO, told his employees to “remain calm” in the face of the corruption investigation. In his internal memo, he said he understands the “anxiety” that the detentions have caused to Acacia’s employees and their families. He said the company is taking the issues “extremely seriously.”

Follow Geoffrey York on Twitter: @geoffreyyorkOpens in a new window

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