Barrick Gold Case PDF

Accounting Forum 38 (2014) 91108
Contents lists available at ScienceDirect
Accounting Forum
journal homepage: www.elsevier.com/locate/accfor
Corporate accountability and human rights disclosures:

A case study of Barrick Gold Mine in Tanzania
Sarah Lauwo a, , Olatunde Julius Otusanya b
a
b
Essex Business School, University of Essex, United Kingdom

Department of Accounting, University of Lagos, Nigeria
a r t i c l e
i n f o
Article history:
Received 9 August 2012
Received in revised form 7 June 2013
Accepted 11 June 2013
Available online 26 July 2013
Keywords:
Accounting
Accountability
Social accounting
Human rights
Globalisation
Developing countries
Tanzania
a b s t r a c t
Analysis and debate on the roles of accounting in human rights issues is an emerging topic
of research. This study draws attention to certain human rights dilemmas arising from
investment initiatives of transnational corporations within the Tanzanian socio-political
and economic context. Evidence is provided on how accounting operates in resolving such
dilemmas through an examination of foreign direct investment episodes where the state
has agreed contracts with transnational corporations in the mining sector of Tanzania.
The study nally considers the possibility of corporate governance reforms informed by
accounting ideas in order to promote realisation of human rights alongside other interests.
2013 Elsevier Ltd. All rights reserved.
1. Introduction
In the contemporary global economy, the liberalisation of markets, increasing ow of information technology and the
rapid movement of capital around the globe have increased the size, reach, power and inuence1 of corporations (Klein, 2001;
Monbiot, 2001). Corporations, particularly transnational corporations (TNCs), have arguably become the most powerful
category of entity in the global economy, with the largest ones reaching into virtually every country of the world (Bakan,
2004; Korten, 2001). Global corporations have nancial resources and political reach that rivals or exceeds many nation
states (The Times, 2012). However, there are tensions between the corporate pursuit of business objectives of protability,
as instituted in a corporate governance structure, and the human rights of populations within the host states where such
corporations seek to invest (for example see Cooper, Coulson, & Taylor, 2011; Sikka, 2011; Whelan, Moon, & Orlitzky, 2009).
Yet, conventional theories such as agency theory frequently celebrate the pursuit of private prots or shareholder wealth
maximisation while offering little help in exploring the tensions between corporate power and society.2 At the same time, the
complex forms of nancial and economic transaction (such as structured investment instruments), designed by corporations
operating in global markets to increase capital and prot, can be seen, from other economic or social justice perspectives,
Corresponding author at: Essex Business School, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ, United Kingdom. Tel.: +44 1206874463.
E-mail addresses: slauwo@essex.ac.uk, sarahlauwo@yahoo.com (S. Lauwo).
1
Corporate activity affects practically every aspect of our lives (e.g. the right to food, shelter, safety at work, non-discrimination, clean environment,
education, healthcare) (Mitchell & Sikka, 2005).
2
Under such theories, the corporate commitment is to increase prots and to maximise shareholder wealth (see Friedman, 1970; Jensen, 1989). This
may or may not complement social objectives such as human rights issues, but is still the predominant strategic route for a rm, including a TNC, to follow.
0155-9982/$ see front matter 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.accfor.2013.06.002
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S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108
to pose signicant challenges as to how to make a corporation accountable and responsible for human rights issues (Cerni
c,
2010; Unerman & ODwyer, 2010; Whelan et al., 2009).
As TNCs invest in developing countries through foreign investment contracts, the terms entered upon in the investment
agreements may constrain the host states ability to govern or restrict the activities of large corporations on the ground, and
to promote the realisation of basic human rights for local populations (Sikka, 2011). In the context of globalisation, it appears
that the ability of a developing countrys government to set and enforce regulations that promote corporate accountability
for human rights obligations remains problematic. So even if in contemporary globalised settings, human rights issues are
increasingly highlighted as factors that need to be taken into consideration within the corporate governance system, existing
corporate governance policies continue to be dominated by the notion of maximising shareholder value (for example, see
McSweeney, 2009).
In this context, there is an increasing need for research focusing on the tension between private pursuit of protability
and the enjoyment of human rights by local populations in host states. There is also arguably a more specic need for
such research within accounting, given the roles that accounting and accountability ideas and practices play in constructing
the contracts through which TNCs enact their investment initiatives in host countries. Yet it has been noted (e.g. Cooper
et al., 2011; Sikka, 2011) that little such research has as yet been generated within the accounting literature. Instead human
rights issues in host countries where TNCs have contracts have been mostly discussed in disciplines such as law, sociology,
c, 2010; Muchlinski,
political studies, economics, international relations, management and public administration (see Cerni
2012; Rabet, 2009; Sheldon, 2010; Whelan et al., 2009).
In recent years, however, there have been calls for the accounting scholars to engage with the discourse of human rights,
in particular the human rights obligations of TNCs (see Gallhofer, Haslam, & Walt, 2011; Sikka, 2011). One response has
been to position human rights within broader debates about corporate accountability and responsibility and its impact on
humanitarian, ecological, workplace and social issues affecting society at large (see Cooper et al., 2011; Gallhofer et al.,
2011; Sikka, 2011). For example, a case study Cooper et al. (2011) has examined the right to a safe working environment
where the pursuit of private prot resulted in preventable death and injuries. Sikka (2011) has examined the pursuit of
private interests through foreign direct investment agreements and showed that the stabilisation clauses contained in the
agreement constrained the ability of comparatively poor host countries to protect and promote basic human rights.
Although the present study is in broad agreement with the ndings of the recent literature, its objective is to make a
somewhat different contribution to this emerging literature on accounting and human rights by considering how accounting
ideas and discourses may be used to open up the opportunity for local populations to pursue human rights issues relating
to TNC initiatives. In this way it may become easier to see accounting as a practice that is not only simply located within
a context bounded by corporate or state-level entities, and their internal activities and documents, but also as something
that operates across a certain context that includes local populations, and not least those who work locally within corporate
entities. By extending our implicit sense of context in this way, we may begin to perceive ways in which host state corporate
governance regimes may be able to shape (as well as be shaped by) what accounting does and says within corporate and/or
state activities and documents. The study seeks to suggest how this may be possible through underlining some of the
potentially signicant implications of documents typically incorporated as part of the contracts signed by TNCs in launching
investment initiatives in developing countries, particularly those concerned with social accounting disclosures and so with
accountability aspects of human rights issues. The main argument put forward is that corporate accountability to human
rights obligations continues to be developed within the shadow of the existing systems of corporate governance, even
while these continue to be centred upon a shareholder prot maximisation model. This shareholder primacy model of
corporate governance may in practice repeatedly neglect or downplay social issues, including human rights obligations, but
the contracts signed by modern business corporations commit them to forms of social accounting which are now embedded
aspects of their documentary self-presentation in a range of locations, such as annual reports, CSR reports and other public
relations releases (see Muchlinski, 2012). In this connection the study considers the possibility of corporate governance
reforms informed by accounting ideas in order to promote realisation of human rights alongside other interests.
One distinctive feature of this study is that it offers some insights from a different socio-political and economic context.
As McSweeney (2000) has stressed, context informs understandings built into the questions; the evidence available for
answering the questions; the actual multi-layered operation of the processes within contexts; and the constitution of, and
changes in, those contexts (p. 845). The study examines corporate accountability and human rights obligations in Tanzania,
a developing country in East Africa. As one of the poorest countries in the world Tanzania has in recent years implemented
a number of reforms advocated by the World Bank (WB) and the International Monetary Fund (IMF), in order to attract
foreign investment particularly by transnational corporation operations. However, it has been shown that the investment
contracts, in particular the stabilisation clauses agreed therein, have created dilemmas for the Tanzanian government in that
its capacity to promote corporate accountability and responsibility to human rights issues is being signicantly constrained
(see Bitala, 2008; Kitula, 2006; Lauwo, 2011). In particular, the study focuses on the Tanzanian mining sector where the
human rights practices of large TNCs have been a subject of debate (see Bitala, 2008; Kitula, 2006; The Guardian, 2009b).
A case study was designed to draw attention to the dynamics of human rights practices and the dilemmas faced by the
Tanzanian citizens in realising the rights to have a safe and clean working environment, to non-discrimination and equal pay
at work, and to freedom of association. A case study allows for investigating a contemporary phenomenon in a context where
the boundaries between the phenomenon and the context are blurred and multiple sources of evidence are employed (Yin,
93
2003). The data for the case study was obtained from archival documents, social responsibility reports information from
corporate websites, newspaper clips and any other publicly available social information. The analysis of Barrick Buzwagi
Gold Mines mineral development agreement provides a good case of how the terms contractually agreed for an investment
initiative may constrain the ability of a developing countrys government to develop regulations that protect and promote
the realisation of human rights. The analysis of annual reports and CSR reports demonstrate how mining companies have
responded to the constraints seemingly imposed by the terms agreed in their investment contracts in ways that fail to
safeguard such rights in the manner originally envisaged. Yet the establishment of CSR reports as an integral feature of
corporate self-presentation indicates that past approaches do change, even if not as yet in ways that decisively transform
the human rights prospects of local populations.
This paper is structured as follows. Section 2 provides a theoretical perspective on human rights, with a focus on developing countries. This section considers how the intensication of globalisation and the adoption of neo-liberal policies have
increased the power of corporations, especially TNCs, but have thereby created a governance dilemma which has adversely
affected the promotion and enforcement of fundamental human rights particularly in developing countries. Section 3 provides an analysis of the socio-economic development of Tanzania as a background for understanding human rights dilemmas.
Section 4 looks at the mining sector in Tanzania. Section 5 examines a Mineral Development Agreement (MDA) relating to
Barrick Buzwagi in order to show how the terms agreed on the contract have constrained the Tanzanian governments ability
to protect the environment, and promote health and safety and labour standards, and thus to promote the realisation of
basic human rights. Section 6 examines the CSR statements of the selected mining company for 20032010 in order to draw
attention to the claims made on the commitment to human rights issues both locally (local reports) as well as internationally
(in the parent company reports). Section 7 provides a concluding discussion.
2. Globalisation, corporate accountability and human rights: some theoretical issues
The past few decades have witnessed signicant changes in socio-political and economic forces, which have changed
the nature and size of corporations and led to the business-related human rights debate (see Amnesty International, 2003,
2006; Muchlinski, 2009; Ruggie, 2010). The rapidly growing signicance of information and communication technology in
production, marketisation and nancialisation has acted as a major driving force for economic globalisation (Cox, 1996; Sklair,
1995; Tomlinson, 1999). Capitalism has become a key feature of the contemporary world that shapes the social relations
including human rights agendas (Held and McGrew, 2002).3 In the contemporary capitalism economy, large corporations
have been able to undertake fundamental transformation in order to increase their market reach, share and protability
(Reed, 2011; Sklair, 1995). This has entailed using a variety of nancial and economic transactions, such as nancialisation
and structured investment contracts, which may have serious implications for corporate accountability to social issues such
as human rights (Unerman & ODwyer, 2010). As a result, corporations, particularly TNCs, have become active players in the
global economy (Bakan, 2004; Harvey, 2005; Korten, 2001).4 According to Monbiot (2001), companies now help to provide
social services and offer funding to political parties and our universities as well as shaping economic and social policy (p.
3). However, the burgeoning growth of TNCs in the global economy have been paralleled by concerns over the impacts of
business on social and human rights (see Kinley, Nolan, & Zerial, 2007; Murphy, 2011). Public anxieties about protection and
promotion of human rights are fuelled by the increasing governance gap created by neoliberal policies implemented in the
globalising era.
In the contemporary globalisation era, the idea that corporations should be run with the primary goal of maximising shareholder value has come to dominate the corporate governance regimes of many countries (Ezzamel, Willmott, & Worthington,
2008; McSweeney, 2009; OSullivan, 2007). Within the corporate governance framework the fundamental obligation of a
corporation is towards their shareholders, and company directors enjoy considerable autonomy to appropriate economic
surpluses for shareholders (see Millstein & MacAvoy, 1998).5 Relying on the contestable notion that a corporations sole
responsibility is to its shareholders, Friedman (1970) argued, there is one and only one social responsibility of business and
that is to make as much money for the shareholders as possible. As the agency and other economic theories declared the
shareholders interest to be the general interest, other stakeholders interests, such as human rights, rarely featured within
the existing corporate governance structures (Aglietta & Rebrioux, 2005; Aras & Crowther, 2008). Indeed, the extent to
which companies can be held accountable for human rights obligations within the existing corporate governance system
has remained questionable (Muchlinski, 2012, p. 163). Corporations are creatures of laws, but corporate responsibility to
respect human rights has not been framed as a binding obligation under the existing legal framework (see Muchlinski,
2012; Ruggie, 2010). Within the existing corporate laws, the obligation of a corporation to respect human rights is seen as
a responsibility rather than a duty (see Muchlinski, 2012, p. 147).
Capitalism is considered as the only viable alternative for the survival of the global markets.
The power of TNCs has been linked inter alia to: the size of their economic wealth (Currah, 2000, p. 2); their capacity to shape the policy agendas of
national-states and international bodies (Korten, 2001, p. 60); and their momentous impact (Marsden and Andriof, 1998).
5
The corporate accountability to the shareholders is even legitimised within the existing corporate governance system, for example, Section 172 of the
UK Companies Act 2006 requires directors to promote the long-term success of the company for the good of the shareholders as a whole. Similarly, section
182(1) of the Tanzanian Companies Act 2002 provides that a director of a company when exercising powers or performing duties must act honestly and
in good faith and in what the director believes to be the best interests of the owners.
4
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Concurrently, as an essential component of corporate governance system, corporate reporting continues to be grounded in
the logic of capitalism facilitating wealth accumulation and private property rights (see Dillard, Rigsby, & Goodman, 2004).
This however has further implications on the corporate ability for disclosure on other signicant social issues including
human rights obligations. Although in recent years companies have expanded their scope of reporting by producing voluntary
social responsibility reports as a way of responding to the increasing public pressure, such a response could be linked to
the ability to make prots (see Gallhofer & Haslam, 1997, 2003; Unerman & ODwyer, 2007). Arguably, often corporate
rationality dictates the nature and scope of acceptable CSR disclosure (Banerjee, 2008, p. 61). Inevitably this has led to the
business case for CSR, which is based on the assumption that it makes good business sense as long as it enhances shareholder
value (ibid). In practice, the evidence shows that there is a huge gap between professed corporate commitment to human
rights and corporate action (for example see Amnesty International, 2003, 2006; Sikka, 2011). Corporate commitment to
social welfare, such as human rights, is arguably constrained by the existing corporate legal frameworks, which preclude
corporations from voluntarily embracing social responsibility policies that might conict with shareholder interests (see
Aras & Crowther, 2008; Lobel, 2006). As corporate governance legislation focuses on the rights of the shareholders, arguably
other stakeholder rights including human rights have remained relegated to the areas of voluntary social policies (Horn,
2012). Horn states that:
Rather than merely intervening in the governance of corporations, laws and regulations are actually constitutive to the
modern corporation . . . corporate governance regulation is not a regulatory mechanism to coordinate and increase the
efciency of economic organisation, but rather a fundamentally political expression of underlying capitalist principles
(p. 84).
In this context, within the contemporary global economy, shareholder wealth maximisation remains the central tenet
of the existing corporate governance system (Andersson, Haslam, Lee, Katechos, & Tsitsianis, 2010; Aras & Crowther, 2008).
Inevitably there is a tension between the shareholder wealth maximisation motive and human rights agendas (see HowardHassmann, 2005). Increasingly, there are calls for reinforcement of host government regulations and development of
international binding legal norms that hold corporations accountable to human rights issues (see Global Witness, 2006;
Ruggie, 2010; United Nations Human Rights Council, 2008, 2009). Such calls are based on the views that the state as a key
player has a signicant role to play to promote, secure the fullment of, respect, ensure respect of, and protect human rights
as recognised in international as well as national laws (see Baxi, 2005). The host state in this context has a role in creating
and encouraging the development of a particular form of corporate governance (through laws and regulations) in order to
protect and enhance human rights. However, the state appears to be systematically excluded through voluntary corporate
governance codes (see Strange, 1996). As Suzuki, Ghayur, and Khan (2002) argued that set of regulations and governance
needed to normalise corporate accountability to social and human rights issues and for an efcient interplay of market forces
is arguably absent in the contemporary capitalist economy more so in the developing countries (see Suzuki et al., 2002, p.
359). Thus, rather than merely intervening in the governance of corporations, government laws and regulations seem to be
constitutive to the contemporary capitalism. This has created a governance gap, which has been considered responsible for
further weakening mechanisms for promoting human rights especially in developing countries (Bakan, 2004; Korten, 2001).
As the UN Human Rights Council Report (2008) has reported, the root cause of the business and human rights predicament
today can be linked to the rise in corporate power and the governance gap created by globalisation (p. 3). According to the
report, these governance gaps may provide a permissive environment for wrongful acts by companies of all kinds without
adequate sanctioning, especially in developing countries (p. 3). In fact, TNCs have become adept at exploiting the governance
gap. For example, Bakan (2004) argues, corporations are no longer tethered to their home jurisdiction, but produce goods and
services at substantially lower costs by buying cheap labour from poor developing countries where social, environmental
and human rights regulations are weak, and by selling their products in wealthy countries where people have disposable
income and are willing and able to pay for them. According to Kobrin (1997), TNC production processes have become global,
uid and increasingly divorced from the regulatory control of any individual nation-state.
It has been argued that the social and environmental impact of corporate activities on the enjoyment of human rights
can be considerable due to the pressure exerted by corporations on states to lower national standards, such as those relating
to labour law and environmental law (Gibney, 2002; Jrgers, 2002; Korten, 2001). The UNDP Human Development Report
(2000) stated that global corporations may have a signicant impact on human rights in their employment practices, in
their environmental impact, in their support for corrupt regimes or their advocacy for policy changes (p. 79). Although TNC
operations have the potential to bring real benets and to enhance the lives of people around the world by providing products
and services that provide for human needs, arguably they can as well cause serious harm to the workers, communities and the
environment particularly in developing countries (see the International Institute of Environment and Development Report,
2005, p. 1).
Many developing countries, such as Tanzania, are desperate to attract foreign investment, often from transnational
corporations, in order to stimulate their economy, create employment and reduce poverty (Hoogvelt, 2001). Proponents of
neo-liberalism are of the view that transnational corporations, as drivers of foreign direct investment (FDI), have a signicant
role to play in promoting social and economic development in developing countries (see OECD, 2003). Indeed, FDI has
been viewed (e.g. by Asiedu, 2004) as a mechanism for increasing productivity, exports, employment, government revenue
and stimulating growth. However, foreign investment contracts may have serious implications for the realisation of basic
human rights (see Cotula, 2008; Global Witness, 2006). As foreign investment is driven by the search for prot, the contracts
95
of transnational corporations often adopt certain investment protection strategies in order to minimise the risks of their
investment (see Sikka, 2011, p. 4). As a consequence, developing countries governments are struggling to t in the global
economy, as FDIs are often coming with attached conditions. As Mann (1997) argues, stable government, social order
and education and health systems still seem the minimum of what substantial foreign investment contact requires (p.
487).
Thus, being captured by corporate interests, the ability of developing countries to develop and enforce laws and regulations that protect employees, communities and the environment, and which promote the realisation of human rights, may
be seriously constrained (Bakan, 2004; Korten, 2001; Ratner, 2001). In essence, the strings attached to the foreign investment contracts pose serious questions about the boundary between the state and corporations, particularly in respect of
the governance of business operations (see Ratner, 2001, p. 458). In practice the governments of developing countries nd
it difcult to strengthen domestic, social and environmental laws, including those relating to human rights, due to fears
of losing foreign investment (Frankental, 2011; Sikka, 2011). Moreover, the pressure for developing countries to compete
for foreign investment may require the lowering of taxes and the imposition of less rigorous laws and regulations; and
such strategies may constrain the realisation and enjoyment of human rights (International Institute of Environment and
Development Report, 2005). For instance, stabilisation clauses, which are used by corporate entities to manage political
and commercial risk, can constrain a governments ability to implement regulatory changes to protect and promote human
rights (see Platform, 2010). Thus, as Platform (ibid) points out, stabilisation clauses have the effect of immunising investors
against future changes in both scal terms and legislation:
Stabilisation clauses reduce legislative sovereignty removing the ability of the country to improve its environmental
regulations, laws governing workers rights or health standards. They allow companies to prot from undeveloped
regulation and legislation . . . [S]tabilisation clauses are thus detrimental to the protection of democracy, environment,
human rights and workers rights, and are an obstacle to development (p. 28).
In sum, interventions to protect and promote basic human rights tend to be constrained by the conditions attached in
the investment agreements in developing countries. The following section considers the social and economic environment
of Tanzania and its impact on human rights in order to draw attention to the business-related human rights dilemmas in
the country.
3. Social-economic development and human rights in Tanzania

The previous section highlighted how the protection and promotion of human rights have become caught up in the process
of increasing globalisation and implicated in the existing corporate governance structures. The section drew attention to the
dilemmas faced by governments, especially those of developing countries, in endeavouring to protect and promote basic
human rights while at the same time attempting to attract foreign investment. This section considers the socio-economic
position with regard to Tanzania in order to provide the background for a discussion of business-related human rights issues.
Tanzania is one of the poorest countries in Africa (UNDP, 2010). It has continued to experience considerable socioeconomic challenges over the past decades and these have acted as a thrust for major policy and institutional changes. To
address the pressing socio-economic needs, which severely undermine basic human rights, the Tanzanian government, like
governments in many other developing countries, has had to turn to TNCs and global agencies (such as the World Bank and
the International Monetary Fund) and to enter into bilateral and multilateral treaties and other investment agreements.
Various measures and strategies have been implemented to secure foreign investment, such as privatisation, deregulation,
scal incentives, investment concessions, low taxes, subsidies, stabilisation clauses and investment guarantees (see Mkenda,
2005). This has inevitably increased TNC operations in Tanzania, and, as a result, the inow of FDI rose from US$172 million in
1998 to US$744 million in 2008 (World Bank, 2010). Since the 1990s, TNC operations have become predominant in Tanzania
in respect of the extraction of minerals (which has been responsible for the receipt of two-thirds of total FDI), particularly
gold, which accounts for more than 90% of mineral exports (UNCTAD, 2007, p. 36).
It has been argued that various measures and strategies (such as incentives and stabilisation clauses) adopted to attract FDI
and TNC operations in Tanzania have had adverse implications for the human rights of many Tanzanian citizens (Chachage,
1995; Christian Aid, 2008). In fact, various scal incentives have created opportunities for tax avoidance and tax planning,
which have eroded the tax-base and thereby reduced the government revenues desperately needed for providing social
services and other infrastructure to improve the standard of living of Tanzanian citizens. It has been reported that revenues
have been lost through a combination of tax exemptions, trade mispricing, stabilisation clauses and other strategies that
have allowed companies to avoid or evade paying corporation tax in Tanzania (Policy Forum, 2009). For example, exemptions
given to corporations have deprived Tanzania of an average of US$288 million (Tshs 458.6 billion) a year in the three years
2008/092010/11 (Curtis, NGowi, & Warris, 2012). According to Curtis and Lissu (2008), Tanzania has lost at least US$265.5
million in recent years due to an excessively low royalty rate and government concessions in the mining sector. In essence,
the corporate tax lost could have been used to improve the basic human rights of Tanzanian citizens, most of whom continue
to live in extreme poverty.
As a consequence, inadequate social infrastructures, poor quality of life of local citizens and widespread poverty in
Tanzania remains signicant. Accordingly, Tanzania is extremely poor, with its 45 million people living on average incomes
96
of just US$530 a year.6 With a human development index (HDI), of 0.398, Tanzania was ranked 148 in the list of 169 poorest
countries in the world in 2010 (UNDP, 2010). It has been reported that at least 140 of the approximately 4400 babies born
daily in the country die (The Citizen, 2009b). Furthermore, in 2010, more than 22 million Tanzanians (54%) did not have
access to safe drinking water; and, in 2006, only 31% of the urban population had proper sanitation facilities (UNDP, 2010).
As the share of national expenditure allocated to public services has remained low, the provision of healthcare, education
and other infrastructure has been poor. For example, in 2007, 47.3% of GDP was allocated to public services, but education
and health received only 1.8% and 1.4% of GDP respectively (United Republic of Tanzania, 2007). It has also been argued that
privatisation of the health sector and the introduction of user fees in the 1990s was responsible for reducing access to the
health service for most of the poor living in the rural regions of Tanzania (World Bank, 2006). In fact, healthcare services in
Tanzania have become more inaccessible, leading to a high mortality rate of 116 in 100,000 for every child of the population
aged under 5 in 2007 (UNDP, 2007), and a maternal mortality rate of 950 deaths for every 100,000 live births in 2005 (WHO,
2005).7
In addition to lost tax revenues, which could have been used to promote and protect human rights in Tanzania, foreign
corporations investing in the country have also been accused of perpetuating violations of basic human rights (see Curtis &
Lissu, 2008; The Citizen, 2009c; This Day, 2009b). Specically, transnational companies have been blamed for causing pollution and environmental degradation in Tanzania, which have threatened the rights of many citizens to a safe environment
(Almas, Kweyunga, & Manoko, 2009; Bitala, 2008; Kitula, 2006). For example, mining companies have been accused of lax
health, safety and environmental protection standards, which have posed serious threats to the lives of innocent people (see
The Citizen, 2009a, 2009c; This Day, 2009b).
Moreover, increasing evidence of abuse of workers rights involving foreign companies in Tanzania has attracted considerable criticism from NGOs, trade unions and the media (Tanzania Daily News, 2011; The Citizen, 2010; URT, 2008).
Although international human rights treaties (such as the ILO, which has been ratied by Tanzania) prohibit discrimination and inequality in the workplace, the reality in practice has left much to be desired in Tanzania. For example, mining
companies have been accused of infringing workers rights to freedom of association and speech and to non-discrimination
and equal pay (see Lauwo, 2011; The Guardian, 2011). Lauwo (2011) has stated that, although employees are one of the
most valuable assets for companies, income inequality, employee discrimination and evidence of abuse of workers rights
to freedom of expression have remained pervasive in the Tanzanian mining sector (p. 208).
Furthermore, many local people have been aggrieved by the fact that the foreign companies have taken over their lands
and forced them to leave their homes, often with little or no compensation being paid. For example, in the mining sector,
Wanzala (2007) argues, the majority of those displaced and who have not been able to regain meaningful livelihoods are
bitter and view the discovery of gold and the coming of large-scale investors as a curse rather than a blessing. The bitterness
and anger of those displaced is reected in the ongoing conicts between local communities and the mining companies (see
The Citizen, 2009a).
The above evidence provides a glimpse of the challenges faced by Tanzanian citizens with regard to enjoying human
rights in the country, particularly in the context of the mining sector. The following section also examines the mining sector,
a sector dominated by TNC investment. It considers, in particular, the terms agreed in mineral development agreements
(MDAs), such as stabilisation clauses, which not only add to the complexities of the governance system, but which also have
the effect of restricting and restraining the enjoyment of human rights in Tanzania.
4. The Tanzanian mining sector

Tanzania is endowed with abundant valuable mineral resources,8 which have the potential to provide for socio-economic
development, improve the standard of living and reduce poverty in the country. Following the liberalisation of the economy in
the 1990s, a number of multilateral and bilateral agreements were entered into in the mining sector (Society for International
Development (SID), 2009). This led to an increase in the inux of foreign investors, particularly transnational corporations
(World Gold Council, 2009). The Africa Strategy for Mining Technical Paper, which was developed by the WB and the IMF in
1992, played a signicant role in transforming the mining sector and in facilitating the expansion of capital in Tanzania (World
Bank, 1992).9 The WB established a ve-year Mineral Sector Technical Assistance Project in Tanzania amounting to US$14.5
million in order to create an attractive investment environment for foreign investors. The project included assistance in
World Bank country page for Tanzania, www.worldbank.org.

In comparison, the USA had 11 maternal deaths for every 100,000 live births in 2005.
8
These include gold, coal, copper, silver, tin, mica, gypsum, sand, lime, nickel and gemstones such as diamonds, tanzanite, rubies, sapphires and emeralds
(MEM, 2009).
9
The World Banks African Mining Strategy document recommended that Tanzanias mining companies should be privatised, and that the Tanzanian
government should no longer be involved in mineral extraction and marketing functions (World Bank, 1992, pp. 5256). In addition, it also recommended
the enactment of new mining codes in order to remove bureaucracy and to provide investment incentives, protections and guarantees and stabilisation
clauses (ibid). The view of the World Bank was that mining in Africa, and in Tanzania in particular, suffered from inefciency, stagnation and loss of markets
caused by low levels of private investment, state ownership, restrictions and controls on mining, cumbersome regulatory procedures, unattractive taxation
arrangements and unstable macro-economic policies.
7
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enacting new national legislation (e.g. the Investment Act 1997 and the Mining Act 1998) to harmonise Tanzanias legislation
with the requirements of the new global political economy (Butler, 2004, p. 68). The WB emphasised that:
. . . there was a lack of an attractive enabling environment in developing countries (and Tanzania in particular) for
private sector mining investment, a paucity of accurate up-to-date geological information and the system to manage
the information, inadequate or non-existent environment regulation and standards, and insufcient human skills and
capacity to effectively administer the sector.10
As a result of the reforms, the Tanzanian mining sector has attracted a signicant proportion of FDI in the last decade
or so. For example, in the period 1998-2009, the mining sector attracted over US$2.5 billion (two-thirds of total FDI in
Tanzania) (SID, 2009). Yet, mining activities in Tanzania continue to be dominated by the giant three global companies
(Barrick Gold, AngloGold and Resolute Mining Ltd.). Critics have argued, however, that, despite the liberalisation of the
economy and the increasing role of transnational corporations in the mining sector, the socio-economic contribution of
mining for the development of Tanzania and for the promotion of human rights is yet to be realised (Christian Aid Report,
2008, 2009; Curtis & Lissu, 2008). For example, as mining is highly capital-intensive, the contribution of the mining industry to employment in Tanzania has remained relatively low.11 Thus, only 29,000 people were employed in the sector in
2007, accounting for only 0.2% of the working population (UNCTAD, 2007). It has also been argued that the Tanzanian
government has not been able to realise the substantial revenues from mining activities, which could be used to invest in
education, healthcare, infrastructures, and also to address the endemic poverty levels (Christian Aid, 2008; Curtis & Lissu,
2008). For instance, out of the US$2.8 billion generated from mineral exports from 1999 to 2005, only US$252 million
(9% of export revenues) was raised by the government in the form of tax payments and royalties (UNCTAD, 2007). The
contribution of mining to GDP has therefore remained relatively low, despite the 10% target laid down in Tanzanias Mineral Policy of 1997 and its Development Vision 2025, accounting (in 2006) for only 3.8% of GDP and 3.6% of tax revenues
(International Council on Mineral and Metal (ICMM), 2009). Although mining activities have the potential to stimulate the
Tanzanian economy and help eradicate the poverty, they nevertheless have the potential to cause social dislocation and
unrest in local communities, as well as pollution and environmental degradation. Korten (2001) argues that poor communities in developing countries are becoming the favoured area for waste dumps and polluting chimneys. According to
Korten:
The wealthy governments have economic power and political power to make sure that pollutants and wastes are
dumped somewhere other than in their locality and ensure that their neighbourhoods remain pleasant, polluting
factories and waste disposal sites are consistently located in poor and minority communities (p. 39).
Transnational companies have also been alleged to be undermining fundamental human rights issues through terms
agreed in mineral development agreements (MDAs) (Christian Aid, 2008, 2009; Curtis & Lissu, 2008; Lange, 2006). It has
been argued that the investment terms and conditions given to foreign mining companies in the 1990s, in order to encourage
them to invest in Tanzania, were too generous (Chachage, 1995; Christian Aid, 2008, 2009). For example, MDAs made under
section 10 of the Mining Act 1998 offered scal stabilisation regimes and tax concessions. These MDAs allowed 100% foreign
ownership, and provided guarantees against nationalisation and expropriation. They also offered unrestricted repatriation
of prots and capital. Stabilisation clauses in MDAs required the Tanzanian government to guarantee the scal stability of
long-term mining projects and to prevent the government from conducting future reviews of the terms agreed upon (SID,
2009). The stabilisation clauses also served to ensure that the wishes of the mining companies embodied in MDAs continued
to prevail (UNCTAD, 2007). In particular, freezing clauses were permitted, which required the Tanzanian government
to ensure that the legal-scal regime existing at the time of signing the contract would remain unchanged in the future
(SID, 2009). The government also permitted the use of economic equilibrium clauses, which required the government to
compensate the investor should the government enact any legislation that increased the costs of the project (SID, 2009). Thus,
the clauses prevented new legal and scal regimes applying to a mining project, and also forced the Tanzanian government
to compensate mining companies should they be adversely affected by any changes to the law, for instance when any legal
change eroded the returns promised to investors (see Cotula, 2008).
The terms agreed in the mining investment contracts have been criticised for widening the governance gap and for
undermining the states role in protecting and promoting human rights in the mining sector (Chachage, 1995; Curtis & Lissu,
2008; Harrison, 1999). Although MDAs tend to be condential, in recent years some have attracted the attention of the
media, academics and NGOs in Tanzania. The next section examines a MDA in order to provide an example of the sorts of
tax concessions, incentives and stabilisation clauses, which can form part of the terms of such agreements.
10
World Bank Group and International Finance Corporation (IFC), Mining Regional Strategies: Africa, 2003, http://www.worldbank.org/ogmc/mining africa.
htm.
11
The minimum wage in the mining sector has, however, remained higher than in other sectors (e.g. in 2008, it was Tshs.350,000 compared to Tshs.65,000
in other sectors (ILO, 2010).
98
5. Barrick Buzwagis mineral development agreement: tax incentives and concessions and stabilisation clauses
Barrick Gold Corporation is a global gold mining company with headquarters in Toronto, Canada, and a portfolio of mining
and exploration projects in the United States, Canada, Australia, Peru, Chile, Argentina and Tanzania. The company is listed
on the Toronto, New York and London Stock Exchanges12 with a market capitalisation of about US$37 billion (about Tsh.48.1
trillion). In February 2010, Barrick Gold Corporation sold out its shares in Africa to African Barrick Gold (ABG), a new company
listed on the London Stock Exchange with headquarters in London. ABG, the new company and a subsidiary of Barrick Gold
Corporation, took over control of the four gold mines in Tanzania: Bulyanhulu Gold Mine; North Mara Gold Mine; Tulawaka
Gold Mine and Buzwagi Gold Mine (Policy Forum, 2008). This section focuses on Buzwagi Gold Mine (BGM), the second largest
mining operation and the largest single open pit mine in the country, opened in May 2009 in the Kahama district of Shinyanga
region of Tanzania. The BGMs gold reserves are estimated at 2.4 million ounces, and annual production is expected to yield
225,000 ounces of gold (SID, 2009). As at 31 December 2010, a total of 1992 individuals were employed at Buzwagi, consisting
of 802 ABG Group employees and 1190 contracted local employees.13 BGM provides a good case study to problematise the
challenges posed by terms contractually agreed for an investment initiative on the governance of large corporate entities.
Gold mining in Tanzania is shrouded in secrecy. The contents of BGM mineral development agreements (MDAs) made with
the Tanzanian government and signed in 2007, like other mining agreements, have never been made public or discussed in
the Tanzanian Parliament. In August 2007, an opposition MP attempted to get parliament to investigate the motive behind
the decision by the Minister of Energy and Minerals, Nazir Karamagi, to sign the Buzwagi [MDA with Barrick] at a time
when the government had declared it would not sign any new agreements while a government review was underway.
With this pressure, BGM MDA was made available to the NGOs for scrutiny (see Curtis & Lissu, 2008; The Guardian, 2011).
An examination of the terms of the MDA by the researcher reveals that Barrick regarded stabilisation of the tax and scal
laws in Tanzania as a fundamental requirement for its investment in Tanzania (preamble 5). The agreement committed the
government to maintaining, throughout the life of the mining project, the regulations and tax levels in force at the time of
signing the agreement. Thus, the agreement stated that:
The duration of the Special Mining Licence shall be for a period of twenty ve (25) years with an option for the
company to renew the same upon the same terms and conditions for a further period of twenty ve (25) years (article
3.2.1).
An examination of the MDA also reveals that the Tanzanian government had guaranteed that the company would be
required to pay a reduced rate of tax. With regard to local government taxes, the MDA stated that:
[the tax] shall not be based on prots, sales, output from mining operation or value of the land used for the mine..
provided that the aggregate of such local government rates and taxes shall not exceed US$200,00014 in any calendar
year (articles 4.3.2 and 4.3.2).
The government of Tanzania also exempted the company from paying VAT and allowed it to repatriate all prots made
from mining activities in the country (article 5.1). The tax concessions and incentives offered under the terms of the MDA
also guaranteed that the company would be required to pay a low royalty rate. Thus, it was stated that:
The company shall pay to the government a low royalty at the rate of 3% on the Net Back15 Value of all mineral
produced from the Contract Area, other than Diamond, in respect of which the royalty shall equal 5% of the Net Back
Value (article 4.1.1).
To offer tax concessions, article 4.7 of the agreement stated that:
The company shall be allowed to deduct 80% of capital expenditure incurred in the year, thereafter 50% per annum
on declining balance method, provided that the government shall have made legislative changes to ensure that this
provision is applicable under the laws of Tanzania.16
The government of Tanzania also guarantee that it shall not undertake any nationalisation or expropriation of assets;
article 10 of the agreement stated:
The government shall not nationalise or compulsorily acquire the whole or any part of the companys interest in
the Special Mining License nor compulsorily acquire or nationalise any right, title or interest of the company or its
12
http://www.miningwatch.ca/sites/miningwatch.ca/les/Canadian Cos in Africa 2001.pdf.

www.africanbarrickgold.com/page.html?pageID=26&pageChosen=Operations&categoryChosen=Buzwagi.
14
The Local Government Finances Act (1982) requires all mining companies to pay to the local council tax of 0.3% of the turnover. However, Buzwagi MDAs
have set a ceiling of US$200,000 per annum. This amount is relatively small compared to the mining turnover, yet remains the only direct contribution that
the company is required to make to the local communities where it operates.
15
This is dened as the market value of the minerals minus the cost of transport and the cost of smelting or rening in-country.
16
This rate is lower than the current 100% capital deduction allowed to mining companies under the Income Tax Act, 2004. However, the application
of the lower rate is based upon the government of Tanzania changing the current law, which cannot be changed due to scal stability guaranteed by the
stabilisation clauses. Thus, Barrick will continue to enjoy the 100% capital expenditure write-off (see Curtis and Lissu, 2008).
13
99
contractors or subcontractors in any property used for the purpose of mining operations on or in relation to the Special
Mining License, provided that, if it does take any such action to acquire those assets, it will pay a compensation in US
dollars to an account outside Tanzania specied by the Company in an amount and manner that is prompt, adequate
and effective.
The MDA also gave the company power in relation to exploration, extraction, transportation and occupation of land. It
committed the Tanzanian government to allow the company to acquire land, and also to be able to relocate members of the
local community who had previously owned the mining rights:
If the company nds it necessary, for the purpose of building the project and relevant infrastructures, to make use
of the land which is lawfully owned, occupied or under care and charge of other person, the government shall, upon
the request of the company, assist the company in its effort to agree with such persons in obtaining the permission
or renting or purchasing such land, and if the company is unable to come to an agreement with such persons, the
government shall assist the company subject to the provision of the Act or any amendments or re-enactment thereof
in order to enable the company to make use of such land (article 9.2).
This however has raised serious questions about the local communities right to land and right for compensation.
Examination of the MDA also shows that no limits were placed on the number of expatriate staff that could be employed
in the mine in Tanzania; and that expatriate staff were given particular and special treatment compared to local employees.
Thus, article 8.2 of the agreement stated that the government will expeditiously grant applications of the company and its
contractors and sub-contractors for work permits. Article 8.4 provided that the company, its contractors and subcontractors
will be entitled to import their personal and household effects, including one automobile, free of import duty and other taxes.
They were also entitled to export freely from Tanzania all of their salary (article 8.5).
Article 11.1 provided that the government shall ensure that during the term of the agreement, legal provisions governing
the company or its shareholders benets, rights and duties in the following matters shall not be changed.17 Furthermore,
article 11.2 stated that:
In the event of fundamental changes concerning the Company or its shareholders benets, rights and duties under
sub-article 11.1, which would place the company in a worse off situation than it was on the effective date, the Government shall in consultation with the Company take necessary steps to ensure that the Companys right or interest
are not eroded or otherwise materially diminished.
Article 13 prescribed the dispute settlement procedure with arbitration being administered in the UK by the London
Court of International Arbitration (LCIA) in accordance with the United Nations Commission on International Trade Law
(UNCITRAIL) arbitration rules in force of the scal stabilisation date (article 13.2).
Therefore, Buzwagis MDA provides an example of the nature of MDAs and other investment agreements in Tanzania.
The implications of stabilisation clauses and other incentives for the realisation of human rights in Tanzania are discussed
next.
5.1. The implication of tax concessions, incentives and stabilisation clauses for human rights
The previous section showed that the Tanzanian government has chosen to adopt various strategies and policies (such
as tax concessions and stabilisation clauses in MDAs) in order to attract foreign investment in the mining sector. The above
analysis of Buzwagis MDA provides an example of the sorts of tax concessions, incentives and stabilisation clauses, which
are inserted in mining investment agreements. The use of such strategies and the adoption of such policies raise fundamental
questions about the ability of the Tanzanian government to enact and enforce laws and regulations that promote and protect
human rights. This section considers the constraints created by the terms agreed in MDAs on the promotion and enforcement
of such human rights.
As was shown above, in order to guarantee secrecy, the terms laid down in MDAs are often decided upon by only a
small group of government ofcials and are rarely discussed in Parliament or disclosed to the general public (The Citizen,
2008). For example, Buzwagis MDA between the Tanzanian government and Barrick Company was signed by the former
Minister of Energy and Minerals (MEM), Nazir Karamagi, in a hotel in London, a fact that has been criticised by the media,
NGOs and members of the public (Curtis & Lissu, 2008; The Guardian, 2011). The secrecy surrounding such MDAs and
the guarantee of strict condentiality has kept the public in the dark. In other words, public scrutiny and discussion of
the terms of MDAs is virtually impossible, which makes it difcult to hold the government to account for the fact that
17
This includes agreements such as: the duration of the Special Mining License or the use of land over the Contract Area including the use of any land
located beyond the Contract Area for its infrastructure or storage or transport of its products (s. 11.1.1); bringing into Tanzania expatriate personnel,
machinery, equipments, tools, structures, transport vehicles, accessories, spare parts and other materials which are necessary for the building of the mine
or the conduct of the mining operations (s. 11.1.2); exemption from taxes, duties, levies and imports of any nature (s. 11.1.3); guarantees of transfer of
capital, prots and dividends and guarantee against expropriation (s. 11.1.4); pricing or export of gold (s. 11.1.5); retaining and remitting abroad money in
foreign currency (s. 11.1.6); liability to royalty, income tax and the method of computation thereof (s. 11.1.7); and any other matter which is fundamental
to the economic position of the company (s. 11.1.8).
100
such agreements fail to make any provision with regard to the promotion and protection of human rights in the mining
industry. Although MDAs offer investment concessions, guarantees and protections, they make no specic requirements for
companies to address fundamental human rights issues (such as right to a clean environment, to health and safety, and to
non-discrimination and freedom of association in the work place). The use of MDAs, in particular the use of stabilisation
clauses, guarantees the stability of favourable terms and conditions over the long-term life of the investment project, but
this has adverse implications for the realisation of human rights. In particular, freezing clauses, which guarantee the longterm scal stability of a mining project, have been criticised for their potential to override any subsequent changes in the law
and the need to uphold responsible business practices (Cotula, 2008; Shivji, 2007). For example, in the Buzwagi MDA, the
stabilisation clauses are binding for a period of 2550 years. As a result, any future changes in the law (e.g. those contained
in the new Mining Act 2010) only affect new mining companies, not the Buzwagi project and existing mining companies.
This is because such clauses are stated to last for the duration of the project. In this context, stabilisation clauses constrain
the ability of the Tanzanian government to pursue human rights goals, as such clauses prevent the government from making
new laws and regulations to improve labour standards (e.g. with regard to equal pay, and non-discrimination in the work
place) and also environmental standards.18
Although MDAs give concessions to mining companies to possess and acquire land in the mining areas, this has threatened
the human rights of local residents, leading to serious conicts between local communities and the mining companies.
Local residents have been concerned about the ongoing social unrest and unresolved conicts resulting from the forceful
eviction of local people from the mining area and about the unfair or non-existent amounts of compensation awarded for
their displacement (see Lauwo, 2011; The Guardian, 2011). According to Lauwo (ibid), local residents have complained of
being unlawfully and forcefully displaced, of not being compensated and of being mistreated (p. 225). It has been reported
that 400,000 artisanal miners were evicted from their land in 1996 to make room for foreign mining companies (Curtis &
Lissu, 2008; Kitula, 2006). Although the UN Commission on Human Rights recognises forced eviction as a gross violation of
human rights, the government of Tanzania is on the horns of dilemma (see Curtis & Lissu, 2008; Lauwo, 2011). In other
words, if the government imposes too many restrictions on companies to ensure that they respect, protect and enforce
human rights, this may have a negative effect in that companies may decide not to invest in Tanzania, which will in turn
have a considerable detrimental impact on its socio-economic development. Although article 6 of the International Labour
Organisations Indigenous and Tribal Peoples Convention of 1989 requires states to consult local residents and obtain their
free consent before they take over their land, the stabilisation clauses in MDAs constrain the capacity of the Tanzanian
government to enforce such rules. Thus, while the state is expected to protect the human rights of its citizens, the scal
stability guaranteed by the stabilisation clauses has constrained the Tanzanian governments ability to meet its human rights
obligations. This is because the stabilisation clauses legally bind the government to maintain the same taxes and scal laws
applicable to the mining companies for the entire duration of the mine (see This Day, 2009a). In other words, the Tanzanian
government therefore lacks the capacity to apply its existing laws or to create new social and environmental standards in
order to promote the full realisation of human rights in Tanzania.
With regard to environmental issues, local communities residing near the mining sites in Tanzania have raised concerns
about the pollution and environmental degradation which have occurred in local neighbourhoods, and the fact that they
are denied the right to a safe and clean environment (see The Citizen, 2009c; The Guardian, 2009a, 2011). As the mines are
located close to local neighbourhoods, there is a high risk of environmental degradation and the impact of this is felt most of
all by members of the local communities. According to the 1972 UN Conference on the Human Environment in Stockholm
and the 1992 UN Conference on Environment and Development in Rio, each individual has the fundamental right to freedom,
equality and adequate conditions of life, in an environment of a quality that permits a life of dignity and well-being, and he
bears a solemn responsibility to protect and improve the environment for present and future generations. This however
has become questionable in the mining areas in Tanzania. Mining companies have been blamed for causing pollution in
the mining regions, in particular by spillages of cyanide and other heavy metals. The amount of cyanide and heavy metals
leaking from waste rock piles and the tailing dams of the big mining companies is much higher than that recommended as
safe by the World Health Organisation (WHO) and by the USA and Tanzanian regulatory bodies (see Almas et al., 2009).19
There is evidence to show that the high levels of poisonous heavy metals and cyanide in the environment around the
mines have caused serious health problems in the local communities residing nearby (see Almas et al., 2009). Local people
living in mining areas face a serious risk of suffering and dying from health-related problems caused by the effects of pollution
from heavy metals and cyanide (Almas et al., 2009; The Citizen, 2009c; This Day, 2009c; The Guardian, 2009b). A study by
Bitala, Kweyunga, and Manoko (2009) found that the consumption of food and water polluted by heavy metals had caused
health problems, which had endangered the lives of persons residing near the mining areas (p. 12). In fact it was reported
that at least 43 villagers had died as a result of drinking the poisoned water which leaked from the mining tailing dam
into the nearby Tigithe River (The Guardian, 2009b). Thus the concentrations of heavy metals and hazardous chemicals in
18
Stabilisation clauses provide immunity to the existing mining companies from any new laws which might affect their mining activities, including any
obligation on their part to promote and guarantee human rights.
19
E.g. sample water taken from one river in North Mara Gold Mine (a mining site with alleged spills in 2009), contained an arsenic level of 1142 g/l,
drastically above the WHO recommended level of 10 g/l for drinking water (Almas et al., 2009). High levels of arsenic can cause serious skin problems.
101
neighbourhoods close to the mines have deprived residents not only of their right to a safe and clean environment but also
of their right to a clean and safe water supply (see The Guardian, 2009b).
Local residents have indicated concern about the role played by government regulations in mitigating the environmental
consequences of mining activities in the local communities, and the consequent failure to promote and protect their basic
human rights. Yet, despite these concerns on social and environmental consequences and the associated health issues, the
Tanzanian government has done very little to investigate local citizens concerns (The Citizen, 2009c). This is due in part to
the fact that the government of Tanzanias capacity to change existing social and environmental standards in the mining
sector in order to promote the social welfare of its citizens and to meet its UDHR obligations is constrained by the terms of
the MDAs, which the government has entered into with the mining companies. In other words, investment incentives have
taken priority over the promotion of human rights in the mining sector in Tanzania.
Tanzania has ratied the ILO convention aimed at ensuring workers human rights, such as the right to freedom of
association, the right to organise and bargain collectively and the right not to suffer discrimination in the work place.
However, the governments ability to enforce laws which protect such labour rights in the mining sector, as with other human
rights, is highly problematic. In fact, the evidence of increasing employee grievances relating to poor working conditions,
unfair treatment and discriminatory practices in the workplace (see Curtis & Lissu, 2008; Lauwo, 2011) raises questions
about the realisation of workers rights in Tanzania. Mining companies have been alleged to have discouraged employees
from joining a union, for instance, by threatening to re them if they do so.20 Despite the enactment of the Employment and
Labour Relations Act 2004, which aimed to democratise workers rights and enhance collective bargaining, the enjoyment
of labour rights in Tanzania remains a ction (see Lauwo, 2011; Shivji, 2004). While it remains difcult for workers in the
private sector to strike, workers in some occupations in the public sector (such as those working in the water, electricity,
air trafc control, telecommunication and civil aviation industries) are completely barred from exercising this right. With
regard to the mining industry, in 2007, more than 1000 workers, including trade union leaders, were reported to have been
dismissed from a mining company after participating in a workers strike in order to dispute the disparity in wages between
foreigners and local staff (Daily News, 2007). Although the mining companies have claimed that they respect and promote
labour rights (see Section 6 below), including the right to freedom of association, the evidence of employee grievances raises
questions about the realisation of such rights in Tanzania. In fact, the investment protections offered by the government to
attract foreign investors have constrained the governments ability to call giant TNCs to account for the alleged breaches of
labour rights and to promote the progressive realisation of human rights in the area of labour law.
Therefore, the realisation of basic human rights (as stipulated in Article 25 of UDHR) in Tanzania has remained a dream.
The allegation of abuse of human rights involving foreign companies in the mining sector of Tanzania has attracted trenchant
criticism from NGOs, academics and the media. As with other TNCs, the mining companies in Tanzania have responded to this
criticism and public pressure by expanding the scope of their corporate social responsibility reports. However, whether such
reports can improve corporate accountability and promote the enjoyment of human rights in Tanzania remains questionable
as the following section shows.
6. The scope of corporate social accounting and human rights reporting in Tanzania
In recent years, major corporations have been increasingly claiming to be socially responsible, and they have supported
their claims by publishing lengthy environmental, economic and social reports (Banerjee, 2007; Cooper, 2004; Cooper &
Owen, 2007; Deegan & Gordon, 1996; Demirag, 2005; Detomasi, 2008; Vogel, 2005). The increasing pressure from NGOs,
academics, trade unions and the media has problematised corporate power and the declining role of the state, and, as a
result, corporations have responded by embracing corporate social responsibility (CSR) reporting (see Belal & Owen, 2007;
Islam & Deegan, 2010). Corporations also include human rights as one of their acclaimed preoccupations in their CSR reports
(see Rabet, 2009). Similarly, in response to local and global pressures, the mining companies in Tanzania have produced
statements containing pledges to act in a socially responsible manner and stating their commitment to respecting and
promoting human rights. This section examines the CSR statements of Barrick Gold Corporation (parent company) as well
as that of Buzwagi Gold Mine, the subsidiary company in Tanzania for 2003-2010 in order to draw attention to the claims
made on accountability for human rights issues in the country. In 2003, Barrick Gold Corporation (parent company) stated:
Barrick has a Code of Business Conduct and Ethics that sets out high ethical standards with regard to such issues as
disclosure, insider trading and doing business abroad, but which also requires adherence to our environmental, safety
and human rights related policies, such as those prohibiting discrimination and harassment (Barrick Responsibility
Report, 2003 pp. 23).21
In its 2010 Responsibility Report, Barrick referred to its commitment to human rights. Thus, it stated that, as a mining
company with many operations in developing countries, we have a signicant responsibility for respecting and upholding
human rights (p. 65). The Report stated that the company was committed to addressing human rights issues:
20
21
http://www.icftu.org/www/pdf/corelabourstandards2006tanzania.pdf.
http://www.barrick.com/Theme/Barrick/les/docs ehss/EHSS 2003 en.pdf.
102
Table 1
Overview of the categories subcategories of CSR disclosures.
Categories
Subcategories
Community
Partnership with NGOs, international agencies for resource development

Community development programmes
Charitable donations
Environmental
Environmental stewardship
Environmental management programmes
Compliance with environmental policies
Employee
Generating rewarding and productive employment

Nondiscrimination policy
Respect employee human rights
Reward and fair compensation
Health and safety
Provide protective equipment to our employees

Provide a safe working environment
Training
Security and human rights
Compliance to applicable laws and regulations

Respect human rights of all individuals impacted by our operations
Source: Buzwagi responsibility Report (2010) and http://www.africanbarrickgold.com/corporate-responsibility/corporate-social-responsibility-charter.

aspx.
Barricks corporate human rights compliance structure is also being enhanced, aligned with the Ruggie Framework, to
better detect and address potential human rights abuses. It will include formal human rights policies and procedures,
training and other elements (p. 11).22
In the following two extracts from its 2005 and 2010 reports, respectively, Barrick claimed to respect fundamental human
rights:
Barricks Corporate Social Responsibility Charter afrms our commitment to observe the fundamental tenets of human
rights. This commitment is imbedded in our corporate culture and is aligned with the principles in the Declaration
(Barrick Responsibility Report 2005, p. 20).23
We make an active and positive contribution to human rights through programs that provide access to education,
clean water and health services for the communities neighbouring our mines (Barrick Responsibility Report (2010,
p. 65).
Barrick also claimed in its 2010 report that it is committed to protecting workers human rights in the work place:
We believe that all our employees are to be treated with respect and dignity. We are committed to providing equal
opportunity for all of our employees and contractors and to preventing human rights infringements upon our workforce, including all forms of forced and compulsory labour and child labour and racial and gender discrimination
(Barrick Responsibility Report, 2010, pp. 2526).
Thus, Barrick Gold Corporation, the parent company, provides more general statements about overall group commitments
to various social issues including human rights. On the other hand, the social responsibility reports of the Buzwagi Gold Mine
(a subsidiary of Barrick Gold)24 ought to show local information, but unlike other mining companies in Tanzania which
publish separate social responsibility reports the company only shows its commitment to social responsibility as a caption
on the Africa Barrick Gold website. Table 1 below provides an overview of the categories and sub-categories of CSR disclosures
in the Buzwagis social responsibility reports and on Africa Barrick Golds website.
Table 1 shows that the social responsibility disclosures by Africa Barrick Gold were mainly in a narrative form, which can
be categorised under environment, health and safety, community relations and security and human rights. For example, it
was stated that:
Operating in some areas of Tanzania requires ABG, as well as the Tanzanian government and the local communities,
to deal with law and order issues . . . These challenges vary depending on the location of the operation and other
circumstances. ABG has implemented, and continues to identify, alternatives to manage security issues in a manner
that places at its heart the safety and security of people, property and assets.25
22
http://barrickresponsibility.com/2010/en/pdf/Barrick CSR 2010.pdf.

http://www.barrick.com/Theme/Barrick/les/docs ehss/EHSS 2005 en rev.pdf.
24
Buzwagi Gold Mine began extraction of mineral in May 2009 and the rst responsibility report was published in 2010 (http://www.barrick.com/
Theme/Barrick/les/responsibility-reports/2010/Buzwagi.pdf).
25
http://www.africanbarrickgold.com/corporate-responsibility/security-and-human-rights.aspx.
23
103
To emphasise its commitment to the environment, the company also stated that:
Voluntary Principles on Security and Human Rights are central to our security management system. These are a set of
guidelines by which companies in the extractive sector can maintain the safety and security of their operations within
an operating framework that ensures respect for human rights and fundamental freedoms. Our majority shareholder,
Barrick Gold Corporation, is a signatory participant. Our security management system is aligned to this commitment
and to respecting human rights and the fundamental freedom of individuals overall.26
In essence, Buzwagis disclosures emphasise the companys economic role towards various stakeholders. Thus, although
Barrick Gold Corporation, the parent company, like other TNCs in the Tanzanian mining sector, has shown a commitment to
advancing the various aspects of human rights by publishing social and environmental reports, as yet there is no information
about how the terms agreed on the MDAs, such as stabilisation clauses, have constrained the realisation of human rights of
the local citizens. Indeed, the systemic pressure to increase prots for shareholders enshrined in the corporate governance
structure leaves open to question the claims made by companies to be acting in a socially responsible way and to be promoting
human rights. In line with the MDAs, there is no information in any of the CSR reports about the amount of pollution,
environmental degradation, as well as the related health problems and other risks, associated with mining activities. Thus,
despite an acclaimed commitment to human rights, the CSR reports remain silent about employee grievances, environmental
pollution, and the mass dislocations and displacements which have occurred in local communities.
As a result, the poor working conditions, the discrimination in the workplace, and the pollution and environmental
degradation which prevail, and which deprive Tanzanian citizens of their fundamental human rights, have remained invisible
in CSR reports. Instead, the social reporting of the mining companies consists merely of vague and general statements about
corporate commitments to employees, local communities, human rights and the environment. The reports provide no
specic proposals about how these commitments may be achieved in practice and no evidence about the negative social
and environmental consequences of mining activities in Tanzania, which deprive citizens of their human rights. This nding
is consistent with previous studies that have challenged social accounting to demonstrate its potential to bring about a just,
equitable and fair society, and promote human rights (Gallhofer & Haslam, 1997; Gray, Owen, & Adams, 1996; Spence, 2007,
2009). However, the analysis just undertaken indicates that one way forward to transform the effect of CSR documents is to
seek ways to have them incorporate data that they currently omit. If the data is being generated, as we have shown, then
analysis may need to focus on how to require the insertion of such data into documents, which with a CSR remit, are clearly a
proper home for them. This may require work to redraft contracts before the signing stage under principles of transparency
and equity, which TNCs accept in other documentary areas (e.g. in Annual Reports and CSR reports).
There have been calls for alternative forms of accounting in order to challenge the dominant forms of economic organisation and expose abuses of human rights (Dey, 2007; Dey, Russell, & Thomson, 2008; Gallhofer, Haslam, Roberts, & Monk,
2006; Gibson, Gray, Laing, & Dey, 2001). It has been argued that such alternative reporting should be undertaken by civil
society organisations in order to expose the narrowness of current CSR reporting (Dey, 2007; Gibson et al., 2001). As Spence
(2009) has argued, social reporting by civil society organisations represents a much more substantive attempt to expose
the contradictions that permeate current modes of economic organisation (p. 206). In fact, a number of NGOs have been
involved in this practice. For instance, Tax Justice Network, Christian Aid and Friends of the Earth have been at the forefront
in problematising corporate power, particularly in developing countries.27 It has been argued that alternative forms of CSR
reporting (such as shadow accounts) have the potential to reveal contradictions between what companies choose to report
and what they suppress (Dey, 2007; Gibson et al., 2001). Such accounts can be used to highlight and problematise corporate
activities and can provide new insights into the social and environmental impact of corporate activities on human rights.
This must be the case. But at the same time this particular tactic does not mean that, as a parallel way of generating a more
substantial commitment to human rights, efforts should not continue to incorporate well-founded data (perhaps including
that generated by such external bodies) into corporate documentation itself, including such regularly issued documents as
CSRs and annual reports.
7. Discussion and conclusion
The aim of this paper has been to contribute to the emerging research on corporate accountability and human rights
obligations from a developing country context. In the era of contemporary globalisation, many developing countries, such
as Tanzania, have entered into bilateral and multilateral investment agreements with transnational corporations in order to
promote foreign investment in their countries. It has been argued that the terms entered in the investment contracts have
been shaping CSR and accountability practices of the large TNCs activity in these countries.
26
http://www.africanbarrickgold.com/corporate-responsibility/security-and-human-rights.aspx.
Christian Aid and Friends of the Earth have produced alternative accounts of organisations such as Shell and Exxon. Friends of the Earth has, since 2002,
been producing an annual Other Shell Report, which documents Shells social and environmental impact in various contexts. Friends of the Earth Reports
(2002, 2004, 2005, 2006) engage the voices of communities affected by Shell around the world, in order to highlight the companys poor CSR practices.
They outline where Shell has been failing to comply with guidelines and international human rights laws. Friends of the Earth produces shadow accounts
about other organisations, including Anglo Gold America, Barclays and BP. These reports tell a somewhat different story from that portrayed in CSR reports
(see also Christian-Aid, 2004).
27
104
The paper has examined Barrick Buzwagis mineral development agreement (MDA) in Tanzania (which exemplies a
typical investment agreement in Tanzania) to underline some of the ways in which the terms of the agreements have acted
as constraints on the realisation of human rights (see also Amnesty International, 2003, 2006; Platform, 2010; Sikka, 2011).
It has been shown that even though tax concessions and investment incentives may have increased the inow of FDI and
increased TNC investment particularly in the Tanzanian mining sector, they have also arguably constrained the realisation
of basic human rights in the country. In particular, as stabilisation clauses prioritise foreign investment protection over
concerns about social justice, this in turn constrains the Tanzanian governments ability to enact and enforce laws and
regulations to protect and promote human rights. Thus, despite Tanzanias international obligations to respect and protect
human rights (e.g. under the Universal Declaration of Human Rights and other international conventions, such as the ILO
convention),28 business-related human rights abuses have continued to be deeply entrenched in the country and this has
left much to be desired by Tanzanian citizens.
The paper has shown that in response to recent and world-wide demands for corporate accountability, mining companies
in Tanzania have produced voluntary codes of conduct and social responsibility reports containing promises to conduct
their business activities in a socially responsible way. Yet, corporate social disclosures of the selected mining company in
Tanzania do not provide any information about the presence of stabilisation clauses or other investment incentives, and
how these may have impacted the local populations. Generally, any disclosures that are made tend to consist of vague and
generalised statements with no specic proposals about how human rights issues might actually be tackled (see Sikka, 2011).
Consequently, in relation to the mining industry in Tanzania, poor working conditions, discrimination in the workplace,
pollution and environmental degradation and abuses of human rights prevail, but have remained invisible in CSR reports.
Thus, rather than serving community or public interest as claimed in the corporate governance system and accounting
profession on behalf of the state, CSR reporting has tended to be constrained by the systemic pressures and broader power
structures that prioritise shareholder wealth accumulation over the rights and needs of a wide variety of social constituents
(see Puxty, 1991).
The paper has suggested that a prioritisation of private prots appears to have been accompanied by marginalisation
of human rights. Although nancial and CSR reports could be used to give visibility to social consequences, the possibilities to date remain muted as corporations are under immense pressure from markets to prioritise short-term prots. The
entrenchment of private interests in accounting, and in neoliberal systems of corporate governance, continues to constrain
the development of forms of accounting and accountability that could address broader social concerns arising from corporate
practices (for example, Baxi, 2005; Muchlinski, 2012).
Thus, looking forward to address the challenges of corporate accountability and responsibility to human rights issues,
there is a need for changing the neo-liberal governance mechanisms and other institutions that have repeatedly reproduced
social and environmental injustices and human rights abuses (for example, Muchlinski, 2012; Scherer & Palazzo, 2011). To
increase accountability of companies, there is a need to expand the composition of Boards of Directors to include other
signicant social constituencies, for instance representatives of environmental interests, employees interests, or the interests of local community members. Stakeholder involvement in corporate governance might create a space that include a
wide array of stakeholders concerns and needs in strategic business decisions, which in turn could facilitate a shift from
the traditional focus on short-term prots and shareholder wealth maximisation. At the same time corporate reporting,
as expressed in conventional accounting-based documents such as annual reports and CSR reports, should articulate the
commitment to social, environmental and human rights. Although mere disclosure of human rights information may not
expose the ideological interests embedded within the corporate governance system (see Puxty, 1991; Sikka, 2011), it might
nevertheless open up a space for discussion of human rights agendas and so create awareness, which could be a driver for
social change. Sen (2004) suggested that in addition to inspiring legislation and NGO activism, disclosure of human rights
issues can also provoke public discussion, appraisal and advocacy (p. 320). However, within a Tanzanian context, there is
a specic need to empower local NGOs, as arguably they do not yet have the power to mobilise pressure with respect to
such issues as enhanced corporate disclosure, public accountability and human rights issues in the country.29 Thus, the
UN through its human rights framework can play a role in enabling and empowering local NGOs and other civil society
organisations within a developing country context, and in Tanzania in particular.
Moreover, it should also be made obligatory for MDAs and other investment agreements made with the Tanzanian
government to contain terms laying down obligations with respect to the protection and promotion of human rights. It
would also be in the public interest if investment contracts were discussed in parliament and made available for open
public scrutiny as part of the accountability debate. This would enable people to build alternative forms of accounting and
accountability (e.g. shadow accounts), which could create greater visibility of the human rights predicaments in Tanzania.
As discussed earlier (on page 27) accounting academics can, through working closely with NGOs, play a pivotal role in
critical interventions, by challenging neoliberal systems of corporate governance and examining the social consequences of
28
The ILO Declaration on Fundamental Principles and Rights at Work (1998) provides the core labour standards that aim to: (1) eliminate all forms of
forced or compulsory labour; (2) effectively abolish child labour; (3) eliminate discrimination in respect of employment and occupation; and (4) ensure
the freedom of association and the right to collective bargaining (www.ilo.org).
29
Due to the level and scale of poverty in Tanzania, a signicant number of NGOs have chosen to focus more on social service delivery and poverty
reduction (Shivji, 2004).
105
increasing corporate power, while also developing alternative forms of accounting and accountability. Accounting scholars in
particular may engage with the debate of corporate accountability and human rights, which could help to push human rights
agendas forward and also advocate for interventions such as the reform of corporate laws and regulations (see Gallhofer &
Haslam, 2003).
There is no reason why human rights obligations cannot be part of the binding legal requirements for corporations rather
than just a duty of care. In this respect there is a need to toughen up local regulations in Tanzania in order that more
pressure is placed on the mining companies and other TNCs to discharge their human rights obligations to local citizens.
As part of such a process, the government of Tanzania would need to review the Company Act 2002 to impose a duty on
companies to be accountable for human rights issues. The major challenge is to develop an appropriate mix of stronger
and more visible regulatory control, as well as effective enforcement mechanisms, for making transnational corporations
accountable for human rights in developing countries such as Tanzania. It is apparent that the Tanzanian government is
constrained by stabilisation clauses and other investment guarantees; it needs foreign investments to provide the revenues for socio-economic development, and understands that to curtail investments completely might have a disastrous
effect. Whereas strong regulations and strict enforcement and sanction mechanisms may have the potential to promote
and protect human rights in developed countries, the prospect of such measures being introduced in a developing country such as Tanzania, as the evidence to date as well as that presented in this paper shows, is unlikely.30 In this respect
the government of Tanzania like that of many other developing countries is on the horns of a dilemma that differs from
that of developed-economy states. As said above, the need to attract foreign investment to stimulate the economy and
alleviate poverty rarely goes easily hand in hand with the need to protect the socio-economic rights and entitlements of
citizens.
Therefore, this study encourages further interdisciplinary research to be conducted on micro-elements of corporate
accountability and human rights obligations. It also urges accounting research to link with other forms of academic work,
which seek to understand and critique the interactions between corporate power and human rights, to offer a reection
on the possibility of reforming the nature of a corporation. Insofar as it does so, future research may make contributions to
and advocate for reforms of neo-liberal corporate governance structures including laws and regulations, which would not
only be important for the futures of Tanzanian citizens, but for much wider groups of people in the world who suffer similar
human rights abuse.
Acknowledgements
We are grateful to Prem Sikka, Keith Hoskin, participants of the accounting group seminar at Essex Business School,
anonymous reviewers and the editors for their support, encouragement and illuminating comments, which have been
instrumental in the development of this paper.
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Accounting Forum 38 (2014) 91108

Contents lists available at ScienceDirect

Corporate accountability and human rights disclosures:

Essex Business School, University of Essex, United Kingdom

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

3. Social-economic development and human rights in Tanzania

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

4. The Tanzanian mining sector

World Bank country page for Tanzania, www.worldbank.org.

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

http://www.miningwatch.ca/sites/miningwatch.ca/les/Canadian Cos in Africa 2001.pdf.

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

Partnership with NGOs, international agencies for resource development

Generating rewarding and productive employment

Health and safety

Provide protective equipment to our employees

Security and human rights

Compliance to applicable laws and regulations

Source: Buzwagi responsibility Report (2010) and http://www.africanbarrickgold.com/corporate-responsibility/corporate-social-responsibility-charter.

http://barrickresponsibility.com/2010/en/pdf/Barrick CSR 2010.pdf.

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

S. Lauwo, O.J. Otusanya / Accounting Forum 38 (2014) 91108

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