Africa Barrick Gold Halts Tanzania Scholarship Fund Over Corruption

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London-listed Africa Barrick Gold (ABG.LN) has suspended a Tanzanian
scholarship fund for thousands of local children around its troubled North Mara
Gold Mine, citing corruption among the beneficiaries, a company executive said
Tuesday.


The suspension threatens to worsen the mine's already strained relations with
locals, according to people familiar with the situation. In the past couple of
years, North Mara has suffered various cases of vandalism, thefts and invasions
blamed on locals.


According to Gerhard Hermann, the North Mara acting general manager, the
company has discovered that it had been paying school fees for hundreds of ghost
students, and as a result the money in the fund has been exhausted.


"The money has been mismanaged and corruption cannot be ruled out in the
community and in the mine as well," he said. "Between 2009 and 2010, with the
assistance of village leadership, the number of students was reduced by 1,680."


North Mara invests at least 1% of its royalty fees to the fund to benefit
disadvantaged children around the mine. Activists blame the high levels of
lawlessness in the area to high levels of poverty and unemployment among the
locals.


In 2008, North Mara almost closed down following the withdrawal of its
pollution permit after locals vandalized liners at its waste ponds forcing
acidic water to pollute the Tigithie river, which passes through the mine
property.


According to company officials, locals have been conniving with some company
insiders to register ghost students and ghost institutions in order to benefit
from the scheme.


Hermann told a meeting of local leaders at the mine Monday that management
wouldn't fund the scheme, effective this year. Company officials couldn't reveal
immediately the amount of money invested in the scheme since Barrick took over
the mine in 2006.


Meanwhile, a number of locals who are supposed to be moved to pave the way for
expansions at the mine have refused to go, contesting the valuation of their
compensation packages. Up to 300 locals continue to trespass on the mine's
license areas on a daily basis to carry out illegal mining operations, company
officials say.


Africa Barrick, which operates four gold mines in Tanzania, suspended 40% of
its workforce at the Buzwagi Gold Mine in the third quarter last year following
the discovery of systematic fuel theft.


Africa Barrick Gold produced a combined 716,000 troy ounces of gold at its
Tanzanian mines in 2009.