In its report on monitoring revenues from the mining sector, the Court of Auditors reports the results of its investigations. Work carried out in a sector which constitutes a priority sector in axis 1 “structural transformation of the economy and growth” of the Emerging Senegal Plan (PSE), implemented by the old regime. In this sector means the court of accounts, it was established, by decree n°2015-1136 of July 29, 2015, that the State authorized the company Sabodala Gold Operations (SGO), to carry out the merger of the Sabodala mining concessions and Golouma and the inclusion of the Gora perimeter in the new mining concession called Sabodala.
In the transactional agreement, the sum of 4,200,000 dollars or nearly 3 billion CFA francs is paid by SGO in return for the irrevocable waiver by the State of its right enshrined in the Mining Code to participate, for consideration, to the share capital of Sabadola Mining Compagny in the Gora project. At the same time, in return for the waiver of the additional 25% participation in the share capital of the Société des Mines de Golouma (SOMIGOL), “SGO undertakes to invest the entire initial payment of 10 million dollars, i.e. more of 6 billion CFA francs for the financing of projects, infrastructure, programs, or any other activity in the regions of Kédougou and Tambacounda or in any other region” shows the report.
Irregularities noted by the court…
Indeed, the waiver by the State of its right to negotiate additional shares for consideration, for itself but also for the private sector in the capital of the SGO and its satellite entities, “is not in accordance with the orientations of the PSE which are to promote better sharing of wealth through the involvement of the national private sector in the operation and the establishment of contracts and a regulatory framework preserving the interests of the State” notes the report. Also, the management of the funds of 10,000,000 USD paid by SGO in return for the State’s waiver of its additional 25% participation in the share capital of the Société des Mines de Golouma (SOMIGOL) is not in compliance with the provisions of the organic law relating to finance laws. According to the Court of Auditors, “these funds being public resources, their allocation and management methods cannot be determined in a mining agreement because, by virtue of the provisions of article 3 of the LOLF, they are the finance laws which determine the nature, amount and allocation of State resources and expenses. Moreover, according to the provisions of article 4 of the LOLF “no revenue can be liquidated or collected, no expense can be incurred or paid if it has not been previously authorized by a finance law” indicates the Court of Audit.
The Minister of Mines and Geology and the Minister of Finance do not speak the same language
In his explanations, the Minister of Mines and Geology, “the State renounced the additional participation in the capital of the SGO, after having noted that the conventional deadlines were not sufficient to cover the financing of the possible participation of the State or the private sector.
Regarding the allocation and management of the fund of 10,000,000 USD paid by SGO to the State, these are, according to the then minister, “additional resources considered as direct support resources for the sector mining”. These funds are allocated and managed according to the mechanisms defined by the agreement signed between the State and SGO. For his part, the Minister of Finance and Budget maintains that “this waiver decision follows correspondence n°0031/MIM/DMG/CAB of December 9, 2013 from the Minister of Industry and Mines by which the State indicated that it had waived its right to subscribe to an additional 25% stake in the capital of SOMIGOL in recognition of SGO’s proposals to acquire the Goulouma mining concession as a satellite deposit.
Based on these considerations, the Court of Auditors notes two different opinions from the ministers questioned on the State’s waiver of the additional participation in the capital of the SGO. This is why it recommended to the Minister of Finance and Budget and the Minister of Mines and Geology to ensure, when signing mining conventions, “compliance with the organic law relating to finance laws with regard to the nature, amount and allocation of State resources and charges”.
An irregular renunciation by the State of participations in the capital of SOCOCIM
In the agreement signed with SOCOCIM, particularly in its article 7, the State also expressly renounced any participation, free of charge or for payment, in the capital of the company, thus contravening the provisions of article 30 of the mining code of 2003, according to which, “the State automatically has 10% of free shares in the share capital of any operating company holding a mining concession”. The court considers that the minister is not authorized to renounce by agreement the free participations of 10% of the State enshrined by law.
The two ministers considered that the waiver by the State of the free participation of 10% in the share capital of SOCOCIM, “is made in return for the company’s commitments as listed in article 13 of the agreement including the modernization of the Rufisque factory to make it compliant with European environmental standards, preference for the workforce and for local companies, the development of Senegalese staff.
Furthermore, will report the Court of Auditors which reports the remarks of the two ministers, “SOCOCIM is also committed to paying annually local taxes (patents, land contributions for built and unbuilt properties) for a lump sum amount of 1,308,000 000 FCFA, while the provisions of article 63 of the 2003 mining code guaranteed total tax exemption. “The waiver of the 10% free participation in the share capital of SOCOCIM, in disregard of the provisions of article 30 of the mining code, in addition to the mining regime from which it benefits, is a favor granted to this company but which does not preserve the interests of the State,” notes the report.
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