ABX Barrick Gold Corp. (BC) (delisted)

By Alistair MacDonald and Nicholas Bariyo 

LONDON -- The U.K.'s Serious Fraud Office is investigating Acacia Mining, an Africa-focused miner that is majority owned by gold giant Barrick Gold Corp., over allegations of corruption in Tanzania, according to people familiar with the matter.

The interest of British law enforcement in Acacia marks a heightening of scrutiny over the company -- and another headache for Canada's Barrick, the world's largest gold producer by output.

The British investigations into Acacia focus around accusations that employees of the company, which was called African Barrick until 2014, bribed Tanzanian government officials and consultants, according to the people familiar with the matter.

Acacia, listed in London, is also being investigated by Tanzanian officials over allegations of corruption. Authorities there have arrested two employees and one former employee on corruption, among other charges. The company is also negotiating a cash settlement and handover of significant ownership of Acacia's Tanzanian mines to the country to settle a tax dispute that has halted some of the company's exports.

Acacia's trouble in Tanzania is being watched closely by global miners, who see it as one of several key test cases about resource investment in the region. The SFO's probe is also one of a number of high-profile investigations by Western authorities into miners operating in the developing world.

Barrick, meanwhile, has struggled recently to boost gold production, as it focused on selling assets and cutting costs and has experienced operational problems at some of its mines. Executive Chairman John Thornton, who has run the company without a chief executive since 2014, clinched a deal in September to buy Rangold Resources Ltd. in a $6 billion merger. The deal will elevate Rangold's chief executive to run the combined operation.

Acacia didn't respond to requests for comment on Friday and Barrick declined to comment.

Acacia has linked the corruption allegations to its wider disputes with Tanzania. On its website, it refers to local media reports that the arrests are part of the "war that the government is waging in the minerals sector."

Acacia has also said on its website that the allegations date back as far as 2008, when the business was still a wholly owned subsidiary of Barrick. Barrick floated the company in a public offering in 2010, and currently holds around 64%.

The probe comes amid frayed relations between Barrick and Acacia. Acacia has said that it has been effectively locked out of negotiations with Tanzania's government over its tax bill.

It is unclear how advanced the SFO's investigation is. Around two years ago, the SFO reached out to a whistleblower who had information on the alleged payments to officials, a person familiar with the matter said. Several months ago, Acacia handed over documents to the agency, according to another person familiar with the matter. An SFO spokeswoman declined to comment.

In October, Acacia said that two current and one former employee had been arrested and charged by Tanzanian authorities with counts including tax evasion, forgery and money laundering. One of the defendants has pleaded not guilty, according to the company's website. It is unclear the plea of the other two accused and none of the three could be reached for comment.

Harrison Mwakyembe, the country's information minister, said that a government panel, headed by constitutional affairs minister Palamagamba Kabudi, is probing Acacia's local units over corruption.

"The panel has already started investigations and there is good progress, " he said.

Tanzania's President John Magufuli has taken a series of actions he says are aimed at redistributing mining revenue to Tanzanians and talked of an "economic war" against the industry.

In 2017, Tanzania banned some of Acacia's exports and served the company with a $190 billion bill for what the government has said were unpaid taxes, penalties and interest accumulated over the past 17 years.

Barrick has been leading negotiations with Tanzania since last year. Mr. Thornton last fall proposed a resolution to the dispute that called for Tanzania to lift a ban on gold concentrate exports in return for a payment of $300 million plus joint ownership in Acacia's three Tanzania gold mines.

Further negotiations on the proposal were largely stalled until earlier this month, people familiar with the matter said. Senior officials from Barrick and Rangold Resources met in Tanzania with government officials this month to resolve some major stumbling blocks such as the timing for paying the $300 million in installments, people familiar with the matter said. An agreement isn't expected until next year, they said.

Rachel Ensign and

Jacquie McNish

contributed to this article.

Write to Alistair MacDonald at alistair.macdonald@wsj.com and Nicholas Bariyo at nicholas.bariyo@wsj.com

(END) Dow Jones Newswires

December 14, 2018 12:53 ET (17:53 GMT)

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