Zambian Government Called On To Investigate Copper Unfairness

First appeared on Ctrl.Alt.Shift on March 1 2011

A leaked report has surfaced which accuses a mining company working in Zambia of shady business dealings and cheating the country out of tax money. Amy Hall reports…

Tax dodging is big at Ctrl.Alt.Shift. Developing countries could be losing out on US$billions because of it, while some dodgy multinationals are making US$billions.

Zambia is one of these countries; as one of the poorest countries in the world it has a life expectancy of just 47. Mopani Copper Mines Plc, a subsidiary company of Glencore International, has been accused of shifting its profits out of Zambia so it has to pay less tax there.

A draft of a report into Mopani, which mines copper and cobalt, has been leaked and accuses them not only of ‘tax irregularities’ but also of not following the ‘arms length principle’ meant to stop tax dodging when selling to different parts of the same company. Doing this makes it easier for companies to offload tax bills and shift profits around.

Copper is big business in Zambia, accounting for three quarters of the value of its exports. It is one of the eight largest copper producers in the world but there are dramatic differencesbetween the prices Zambia gets for its copper and the prices received by Switzerland for identical products. If Zambia was able to receive the prices it would have almost doubled the country’s GDP.

Auditors, from Grant Thornton and Econ Poyry, said they didn’t think that Mopani’s records of how much money was coming in and out of the company were trustworthy, leaving US$50 billion unexplained. They are now calling on Zambia’s tax authority to reassess their tax bill.

The Centre for Trade Policy and Development, a partner organisation of Christian Aid, has also joined calls for the government to investigate. Their director Savior Mwambwa said: “The auditors’ report appears to confirm the claims of Zambian civil society that mining companies are depriving the people of Zambia of social and economic benefits that are rightly theirs.”

Glencore International have been quick to defend Mopani. A spokesperson for the company said: “This draft report contains factual errors and inaccuracies. It is based on broad and flawed statistical analysis and assumptions.”

Mopani has received a €48 million loan from the European Investment Bank owned by EU member states. David McNair, Senior Economic Justice Adviser at Christian Aid says that the Bank should investigate the accusations against the company and possibly review who they lend to, “Given that tax abuse runs counter to European development policy.”

Meanwhile campaigners are concerned that countries like Zambia all over the world are missing out on money that could contribute to the welfare of their people, thanks to dodgy multinationals, a shady world finance system and lack of political will.

Call on the G20 to End Tax Secrecy here.

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