Kenya – The new Kenya Mining Code is currently being debated by the upper house of parliament, but the legislation is likely to face delays as a corruption inquiry has been widened to include Ministry of Mines cabinet secretary Najib Balala.
According to Africa’s largest law firm, ENSafrica, the Director of Public Prosecutions announced at the end of April that an investigation by the Ethics and Anti-Corruption Commission (EACC) into Balala would be reopened, citing “gaps and deficiencies” in the original inquiry report.
Balala was investigated by the EACC, without charge, after allegedly trying to extort KES80 million (USD$880 000) from Cortec Mining Kenya, a local subsidiary of Canadian Pacific Wildcat Resources, which filed a lawsuit against him in 2013 after their exploration rights were cancelled. Balala has denied all charges.
A Senate committee alleged on 28 April that a number of mining firms had failed to declare their earnings and were taking advantage of tax refunds under Balala’s watch. The EACC suggested an unnamed titanium mining company had claimed $27 500 in value-added tax refunds while paying the government only $2.2 million in revenue.
The committee has since responded by proposing to increase the Council of Governors’ oversight of the Ministry of Mines.
Balala stated on 20 March that mining firms needed to appreciate they would be entering “a new era” when the final Mining Code is passed. A draft version was approved by President Kenyatta’s cabinet in consultation with local county governments in January 2014.
This move reduced the risk of double taxation, after Kwale, Lamu, and Taita Taveta county governments attempted to impose new taxes on foreign investors in October 2014, but were successfully blocked by parliament.
Despite approval of the draft code by parliament following several amendments in October 2014, Kenyatta vetoed its passing in November 2014 after the lower house issued an ultimatum to secure its review.
Although the draft stipulates creation of a Mineral Rights Board, the sticking point for senators is Balala’s retention of key decision-making powers. These include the authority to act on behalf of the government when awarding licences and determining the ‘designated areas’ to which competitive tendering rounds should apply.