By Mercy Matonga:
A United States (US) federal judge has halted the Malawi Government’s effort to obtain evidence from Columbia Gem House (CGH), a Washington-based gemstone company, in connection with a tax evasion probe involving Nyala Mines Ltd.
The decision effectively stops Malawi’s attempt to access records that officials said were crucial to an investigation into alleged unpaid taxes and royalties from ruby and sapphire exports from Chimwadzulu Mine in Ntcheu District.
The Malawi Government has been demanding $309 billion (K521 trillion) in unpaid taxes and royalties from CGH for ruby exports.
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Last year, then-Attorney General Thabo Chakaka Nyirenda filed an ex-parte application in a US court seeking an order to compel CGH to release information for use in criminal and civil proceedings in Malawi.
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The request, made under a US law allowing foreign governments to obtain discovery for use in foreign proceedings, aimed to establish the precise quantities and quality of gemstones mined, exported and sold by Nyala Mines between 2004 and 2020.
However, US District Judge David Estudillo last week vacated his earlier order that had permitted Malawi to seek discovery from CGH and its president, Eric Braunwart.
The judge ruled that it was no longer appropriate to allow the discovery, citing new evidence presented by the company.
According to court documents, Columbia Gem House argued that Malawi’s claims were based on a report prepared by rival miner Mgodi Ltd., which allegedly contained erroneous information, including inflated figures for gemstone exports and values.
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The court further noted that Malawi appeared to be circumventing its own court processes by seeking US discovery before filing any charges at home and had failed to disclose earlier investigations and a dismissed case involving the same issues.
Based on these findings, Judge Estudillo ruled that Malawi did not meet two of the four criteria established by the US Supreme Court, namely that the request was unduly burdensome and sought to bypass local judicial mechanisms.
Reacting to the decision, Malawi’s US-based lawyer, Mark Anthony Bonnamo, said he was surprised by the ruling and was considering an appeal.
“We respectfully disagree with the decision. We are conferring with our client now and are considering all options, including filing an appeal,” Bonnamo said.
In contrast, Columbia Gem House’s attorney, Chad Colton of Markowitz Herbold PC, said the ruling vindicated the company.
“Columbia Gem House has been a pioneer of ethical gemstone sourcing for over 50 years and Malawi’s false accusations were antithetical to its core beliefs,” Colton said.
“With this ruling and the recent change of leadership in Malawi, Columbia Gem House and Mr. Braunwart look forward to moving on from this unfounded accusation.”
Malawi’s Ministry of Justice spokesperson, Frank Namangale, said he was seeking a response from the relevant authorities on the matter.
Newly appointed Attorney General Frank Mbeta said he could not comment as he was still settling into office.
