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Thursday, 10 June 2010

The "double edged" sword of CSR

It is good to see that others are beginning to pick up on the folly of relying on "corporate social responsibility" (CSR). Ultimately we have to win the intellectual debate, even as we pray for better politicians who will look after the interests of our people in this area :

Peter Sinkamba, Executive Director of the Zambian mining watchdog group Citizens for a Better Environment, said it would be far better if mines like Kansanshi abandoned such disputes, paid a fair amount in taxes and let the government provide things like hospitals and classroom blocks....Often, companies will use social spending to try to claim tax exemptions, which results in a “double-edged sword” as the government loses money and stops spending altogether in the mining areas because they assume companies will step into the void, he said, adding that having a private firm provide many of the services that are usually the domain of government sets a dangerous precedent because the mine’s primary loyalty is to its shareholders. Furthermore, the government is allowing mining companies to “rape” the country of its minerals without adequately investing for the needs of future generations, Sinkamba said. “Look at the social investments in those areas. It’s peanuts,” he said.
As reported via The Vancouver Sun.

18 comments:

  1. Is the folly of CSR and the 'rape' by mining companies the companies fault for acting as capitalist companies are meant to (for profit) or is this a deficiency in the ENFORCEMENT of existing laws by the government? Do the laws exist to use CSR as the tool to accomplish projects such as schools and clinics, and is the problem merely actual, legal enforcement of those laws?

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  2. I absolute agree. Mining companies are merely acting in a perfectly rational way.

    This is the fault of the government (and by extension "us" the Zambian people - since its "our" govt). This is why I never blame mining companies, in the first instance. I believe if I was a mine owner I would behave exactly as they are doing.

    I say in the "first instance" because I recognise that there's a "second instance" in which mining companies and western corporations may collude even against a well meaning government. But in the absence of any clear evidence it is fruitless to worry about that.

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  3. I agree with the comments. Mining companies should not be blamed about this matter. The government should do something to resolve these issues. Mining companies are only doing their jobs according to the existing laws promulgated by the government.

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    1. you take us for retards...!!!!

      who buys the zambian administration, MPs and the laws ??

      Who inflates its costs to minimise the profits shown in their books ??

      who uses transfert pricing and embezzlement ?? your cronies sold copper at 25 per cent of official prices at LME !!

      tell your hot air somewhere else !!

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    2. MikeTe,

      That is a post from a live spammer. He is just trying to say something on-topic, but his name links to a commercial website.

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    3. Mining companies like any other business entities aim for maximum ROI while capitalizing on weaknesses in tax and environmental legislation wherever they operate. If they can get away with heft tax exemptions and poor environmental laws which often they do in Africa they will proactively do. Blame the MMD government who sold the mines for peanuts and individuals who made bugs of cash out of the unsound privatization practices between 1991-2011. The asset value assessments done during the previous regimes ' MMD cartels' was so bad that foreign investors dictated the price of whatever assets they could buy from the government outside conventional sound rules of supply and demand. So Mike Te I would lay the blame squarely on the inept shoulders of previous cartels (MMD government) not mining companies. Going forward it is possible to renegotiate but in times of austerity the mining companies despite projected copper boom still have the upper hand. The proverbial ball is in the hands of the mining industry and the government has to delicately play catch-up. The current government seems to be on the right track and hopefully continue to apply sensible pressure and renegotiate some of the mining agreements.

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  4. Mining companies like any other business entities aim for maximum ROI while capitalizing on weaknesses in tax and environmental legislation wherever they operate.

    Nonsense. The mining companies are not 'like any other business'. They are part of a vast cartel that is centuries old. They are monopolists, and have nothing to do with an ordinary corner store.

    So Mike Te I would lay the blame squarely on the inept shoulders of previous cartels (MMD government) not mining companies.

    Nonsense, they were bribed, and it is *illegal* for a US or Canadian citizen to bribe a foreign official. In the US, the Foreign Corrupt Practices Act can even send people to prison.

    Glencore/Mopani were actively caught evading taxes - that is a crime.

    There is no defense for the ruthless exploitation that goes under the names of 'neoliberal economics' or 'free trade'.

    Here is a clue: the bank that financed the colonisation of Southern Africa by financing De Beers and the British South Africa Company of Cecil Rhodes, is the same bank that did the paperwork on the privatisation of the Zambian mining industry by privatising the state owned mining monopoly ZCCM. Their name: NM Rothschild & Sons. Same bank, same people, doing the same thing as they did a century ago. Only then it was called 'colonisation', today it is called 'privatisation'. Privatisation = colonisation.

    It is still the transfer of the Zambian people's resources to Europe and America, without compensation.

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    1. Mrk T or Mike T.. Yes some mining companies are century old monopolies. However, despite all malpractices mining companies have been guilt of, they are business entities that operate to maximize ROI and thus are willing to do anything to achieve their objectives. Yes MMD was bribed because they were susceptible to bribery and corruption. Lets face it some MMD officials were willing to take a bung on the expense of the Zambian people. We need to accept that MMD sold the mines for peanuts. The mines were undervalued but MMD was NOT forced to sell the assets. Unfortunately, MMD government officials could not resist the lure of making some money in the process and thus were willing to offload the undervalued mines not to the highest bidder but to an investor willing to pay the biggest bung. In fact alot of Zambians made a fortune out of privatization. I agree with you that mining companies do not often play by the rules but a combination of weak legislation, inept local leadership and Zambian megalomania made Zambia easy pickings. On the banks I agree they supported slave trade, funded colonial efforts and have been behind every activity in favour of rich nations. In modern times it is African leaders that have been suffering colonial hangover by failing to stand up to colonial masters and powerful nations as equals. It is easier to throw a conspiracy and blame everything in modern times on the west but I think our governments need to take a share of the blame. We are discussing national resources and extreme plunder because there was a fundamental flaw in the way the MMD handled the privatization process. Privatization does not equal colonialism.

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    2. Dr. Mukanga,

      Mrk.. Yes some mining companies are century old monopolies. However, despite all malpractices mining companies have been guilt of, they are business entities that operate to maximize ROI and thus are willing to do anything to achieve their objectives.

      Which would, rationally, include assassinations of foreign heads of state (Mossadeq in Iraq (BP), Lumumba in Zaire (SocGen), Muammar Ghadaffi in Libya (name your oil company - Lybia sits on 44 billion barrels of oil in known deposits, which would be $4.4 Trillion at $100/barrel... the list goes on).

      Rationally, it would include genocide (Hitler Germany was run by corporations, like IG Farben, Krupp Stahl, etc. which all used slave labour because it was so cheap; the same corporations were also involved in the genocide of the Namibian people (see: Genocide and the second Reich 6: Genocide Through Privatisation); right now corporations are involved in the genocide in the Congo DRC; colonisation in Southern Africa was carried out by a corporation, the British South Africa Company, which killed scores of Matabele, and was owned by Cecil Rhodes and NM Rothschild. In fact if you look at the actions of Cecil Rhodes (the creation of Botswana, Lesotho and Swaziland as protectorates to separate the Boers from the Germans and Portuguese), it was mainly to secure the diamond fields of Eastern South Africa for De Beers.

      There is a name for rule by corporations, and Benito Musselini, who knew a thing or two about fascism, put it best - "When the state takes over business, it is called Communism. When corporations take over the state, it is called Fascism."

      There is precedent.

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    3. " Yes MMD was bribed because they were susceptible to bribery and corruption. Lets face it some MMD officials were willing to take a bung on the expense of the Zambian people. We need to accept that MMD sold the mines for peanuts. "

      Then you have just admitted that the 'free trade' model failed, and will fail as long as anyone in government 'is susceptible to bribery and corruption'.

      When left to their own devices, corporations will break the law, bribe government officials not to implement the law, in order to 'increase their Return On Investment'. Of course, so does the mob. What you are really arguing is that we shouldn't expect any difference between corporations, organized crime and maybe the nazis either. :)

      How far are you willling to go to justify corruption by corporations?

      The mines were undervalued but MMD was NOT forced to sell the assets.

      Yes they were, as MikeTe has pointed out, because of collusion between the IMF/World Bank, the privatisation bank (NM Rothschild, in Zambia's case), and the corporate beneficiaries of the theft of the Zambian people's resources.

      In fact, the IMF threatened to do the same thing to the Chiluba government if they wouldn't privatise, that they did to the Kaunda government if they wouldn't call for multi-party elections back in 1991. They messed with the budget, as a result there were riots (dubbed by former World Bank chief economist Joseph Stiglitz as "IMF riots".)

      In law, that is called a threat, including loss of life (through the highly predictable "IMF Riots").

      Anglo-American De Beers, which received Konkola Deep Mine, is owned substantially by... the Rothschild family, which through NM Rothschild also did the privatisation of ZCCM, which made the 'sale' of Konkola Deep Mine possible.

      Like I said, we are not dealing with people owning a corner store or a market stall. You are dealing with people who have a family fortune hundreds of times Zambia's yearly GDP.

      Delete
  5. Hi Mr K
    I did not see he is a spammer, it's amazing, they are everywhere ! :(

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  6. @ M.Mukanga

    Of course former govts were bought and paid for by foreign mining companies but corruptors have to be more accountable than corrupt puppets !

    "The mines were undervalued but MMD was NOT forced to sell the assets."

    Former finance minister Edith Nawakwi has said : ‘We were told by advisers, who included the International Monetary Fund and the World Bank that, for the next 20 years, Zambian copper would not make a profit. [Conversely, if we privatised] we would be able to access debt relief, and this was a huge carrot in front of us – like waving medicine in front of a dying woman. We had no option.’

    few years after privatization, copper price has raised, the COLONIALIST IMF and World Bank, henchmen of copper trusts, are accountable with the complicity of corrupt leaders



    "The current government seems to be on the right track and hopefully continue to apply sensible pressure and renegotiate some of the mining agreements."

    I thought so but last news are very surprising. Simuusa was indeed removed from Ministry of Mines. It ‘s incomprehensible !!

    -----------

    The minister has also called for increased supervision in the export of base metals in the mining industry to enable the country realise full benefits from the global market.

    Mr Simuusa said in Chingola that, the gemstone industry only declared $2 million as revenue last year, when the world market had declared about $700 million as the value of the gemstones from Zambia.

    He said if well harnessed and reorganised, the gemstones industry could double the country’s revenue and make it one of the richest in the world.

    Government has always been issuing export permits but there was no monitoring system to check what was being exported.

    Mr Simuusa, who was addressing Mine Suppliers and Contractors Association of Zambia (MSCAZ) and the Zambia Building and General Contractors Association (ZBGCA) members at Nchanga Mine Club on Monday evening, said Zambia was losing alot of revenue through the lack of a proper monitoring system.

    He said there was need to account for the minerals which were being exported if the country is to maximise the benefits, adding that everyone in the industry would begin to see the value to the nation if the system was closely monitored.

    --------

    Zambia intends to audit all its mining companies to retrieve unpaid taxes: “What we have been told by the World Bank and others is that we did not collect adequate tax. (...) So we are now actively pursuing this. We intend to audit all the mining houses, but we’ll audit the big ones first,” Mines Minister Wylbur Simuusa told Reuters. One audit is apparently imminent, but Simuusa refused to reveal further details. The government believes it is owed between USD 500 million and USD 1 billion. According to UK charity Christian Aid, half of Zambia’s copper exports were earmarked for Switzerland in 2008, but Swiss import data claims it never arrived – and Simuusa said this trend has continued: “Once it leaves, where does it go? We don’t have a clue”. Christian Aid has pointed out that Switzerland (chiefly through Glencore International) exports almost identical copper products to the ones it imports (on paper)

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    1. Mike T or Mrk T...good points raised. But I do agree with with the president on this point. The minister of Mines did make some calls that exposed him as perhaps not fit for that particular role. In my opinion I may not agree with everything the government might do but it is wrong to call the will of the people electoral scam.

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    2. At first, I am not MrK , I'm MikeTe

      which calls ? could you specify this point

      Simuusa wants Zed to benefit from its natural wealth by increasing zambian stakes in our mining industry, auditing all mines which are always eager to cheat, hunting tax fraud, supervising the mining sector

      That is exactly HONEST and SERIOUS mines minister‘s prerogatives , isn’t it ?
      Unless It is traditional in the Zambian govt for mines minister to be foreign mining companies’ puppet... in that case Sata has betrayed Zambian people

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  7. continued

    ----------
    Govt says there is need to intensify exploration to develop new mines and diversify mineral-based exports to maximise long-term economic benefits.
    Minister for Mines and Natural Resources Wylbur Simuusa said there is need to diversify and explore other minerals away from copper despite the country having sufficient copper resources for production to continue for at least 50 years.
    Mr Simuusa said Zambia has vast resources of manganese, iron ore and silica for which investors are sought to set up smelting facilities to enhance the value of these minerals.
    He said Government is diversifying from copper by exploring for other minerals such as oil and gas with the potential to change the future of Zambia.
    “With abundant occurrences of industrial minerals, there is a major gap investment in this sector...There are few, if any, mining equipment manufacturing plants that produce drill rods, bits, jack hammers, pipes and hosepipes,” he said.

    ------

    Speaking when he toured Maamba Collieries mine on Monday, Simuusa said most governments globally were currently considering raising their stake in mining companies to about 35 per cent and the Zambian government would want to take that step too.

    Simuusa noted that, through the state mining-investment company, Zambia Consolidated Copper Mines -Investment Holdings (ZCCM-IH), Zambia currently owns less shares in mining companies thereby limiting proper supervision of the mining companies.

    Currently, ZCCM-IH holds between 10 and 20 per cent of major mine projects across the country and Zambia has been exerting ore control on mineral exports.

    "In the previous regime, it was very clear that the mining sector was not being properly supervised and I know that is one thing that undid the previous regime," Simuusa said.

    "In this new government we want the mining sector to be properly supervised …in fact, we know that the key to turning this nation around is in our mineral resources. One of the measures we want to take as PF government is to increase Zambian participation in our mining industry…we are not going to nationalise the mines but we would want to increase our participation."

    Government recently said it was considering buying a stake in the financially troubled Munali Nickel Mine were it currently owns 0.97 per cent.

    "It is sad that Zambia being so richly endowed in mineral resources, we have got copper and high grade coal yet we are ranked among the 20 poorest countries in the world. That is quiet unfortunate and as the PF government, we want to turn this around," Simuusa said.

    -------

    “Zambia plans to double the contribution of the mining sector to its gross domestic product to 20 percent to enable the country get more benefits from its main natural resource, mines minister Wylbur Simuusa said on Tuesday.”

    "In terms of taxation, mining is contributing only 3 percent against exports of 60-70 percent, and we are saying that should be changed," Simuusa said.

    The review of the law would be done in consultation with investors to ensure a "win-win situation" for the benefit of the industry, he said.

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  8. So why the foolish Sata sacked Simuusa ??

    he did and would have done a good job !

    to me, only one reason : sata capitulates in favour of foreign mining companies...

    it's a real electoral scam...

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  9. A mining company which provides job opportunities to a lot of people, mine workers that tirelessly works every single day in mini loader and, a Government which focuses only on how to make taxes increase almost every year. Now, the question is, does the Government deserves to implement a tax increase every year?

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  10. LOL Vince
    As mining looters tirelessly plunder Zed, the govt should implement a tax increase every week ! ;-)

    or a best way ... nationalizing looters' mines :-) so the majority of mining companies

    ---

    According to NGOs in its 2010 pilot audit by Grant Thornton, Zambia and Econ Poyry, Zambia lost an estimated income of USD 175 million in tax revenue between 2003 and 2008 from tax avoidance practices’ by Glencore AG International owned Mopani Copper Mines.

    copper from Mopani is sold under a contract with copper in one instance being sold at 25 per cent of official prices at LME. In other words, they are not paying taxes over 75% of the copper sold to Glencore.

    "The auditors found that MCM resisted the pilot audit at every stage. The company's book-keeping was incomplete, several legally required documents were lacking and the general ledger analysis showed several loopholes and couldn't be matched with the trial balance," the organisations stated. "The auditors also found an inexplicable doubling in the costs of the company between 2005 to 2007, which shows that the company has been artificially inflating its costs to minimise the profits shown in their books so that they could pay less taxes. Despite the fact that the audit was finished in the fall of 2009, it was kept secret."

    The former Zambian government has declined to investigate Mopani's tax affairs despite calls from development charities. "We are disappointed with the government's lukewarm reaction," said Savior Mwambwa, executive director of the Centre for Trade Policy and Development, Zambia. "They need to take action and change the whole taxation system."

    "Zambia continues to lose on dividends from Mopani Copper Mines as the Glencore owned mine never declare any dividends to Zambia Consolidated Copper Mines InvestmentHoldings. During the period under review, Action Aid estimates that the Zambians government lost an estimated USD 50 million per year in undeclared dividends to ZCCM IH by Mopani.Copper Mines, according to Action Aid was avoiding declaring anydividends by ZCCM IH through transfer pricing and over statement of the costs."


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