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Malawi Demands $309bn from US Gem Firm Over Unpaid Royalties

MALAWI’S government is pursuing a staggering $309bn in unpaid taxes and royalties from US-based gemstone company Columbia Gem House for ruby exports over the past decade, according to Attorney General Thabo Chakaka Nyirenda.

Speaking to the BBC, Nyirenda alleged that Columbia Gem House under-reported the value of rubies exported from the country. ‘Some evidence we’ll use comes from the company’s own declarations in the US and data previously published on their website, now deleted,’ Nyirenda stated.

The claim, which includes interest, has been met with strong resistance. Columbia Gem House dismissed the demand as ‘baseless and defamatory,’ adding, ‘The $309bn figure implies Malawi has exported trillions of dollars’ worth of gemstones, which is simply untrue.’

The firm further clarified it does not operate in Malawi directly but sources gemstones from Nyala Mines, a Malawian company in which the government holds a 10 percent stake. Nyirenda countered, claiming the company’s ownership structure had been disguised.

Additional claims against multinationals

Malawi’s government is also demanding $4bn from French energy giant TotalEnergies for alleged unpaid revenue tied to a 2001 oil storage deal. Attorney General Nyirenda claimed the firm breached the agreement by ceasing payments in 2006, prompting legal action in Malawian courts.

Meanwhile, Turkish tobacco company Star Agritech faces a $9.5 million claim for allegedly failing to pay for three million tonnes of tobacco purchased through subsidiaries in 2013. Star Agritech disputes the amount, asserting it bought only $5 million worth of tobacco and alleging the shipment was substandard.

Economic context

The total claims against the multinationals amount to nearly 300 times Malawi’s national debt of $1.2bn and 22 times its GDP of $14bn. The government has faced severe financial strain, leading to a $174 million IMF bailout in 2023.

Economist Wisdom Mgomezulu suggested Malawi’s economic challenges are driving its aggressive pursuit of revenues. ‘They’re exploring all potential sources of income, but the scale of these claims is disproportionate to the size of the economy,’ he said.

Broader implications

Malawi’s actions echo a broader trend in Africa, where countries are challenging multinational corporations over alleged tax evasion and unpaid royalties. In Mali, the military junta has issued an arrest warrant for Barrick Gold’s CEO, alleging a $500 million tax debt.

These disputes highlight growing tensions between African governments and multinational corporations over resource exploitation and revenue sharing, as countries seek to secure financial stability amid global economic pressures.

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