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Sunday, 2 December 2012

Zambia Plundered!



The much talked about new documentary of the plunder of Zambia copper by multinationals is available on You Tube. Two things struck me. First, how pivotal the death of Mwanawasa was for the mining companies. If Levy had not died, the windfall tax would never have been reversed and Zambia would be a better country for it. Rupiah Banda was a perfect present for the mining companies. Secondly, I was struck by how we still do not have a public inquiry into the mining privatisation process. Surely that is the mother of all inquiries we need! Everything else pales in comparison!

Please share he video around.

6 comments:

  1. Hi Chola,

    I agree with both your points, its is quite concerning how politicised economic decision making in Zambia still is, I would have thought there was much to learn from the heyday of parastatals.

    This is the second film I’ve seen in a week that plays on international sympathy for Zambia’s poor as a tool in its attack on Glencore – the other being ‘Good copper, bad copper’. While I’m sure Glencore has much to answer for, I have trouble accepting the direct link between the two. Without wanting to defend Glencore, the company – like many others – operates in Zambia under a set of laws decided upon by the Zambian people through its elected government, and implemented by its many arms of civil service. If Glencore is operating outside acceptable norms in Zambia then it is either the government’s law-making capacity or the civil services’ implementation of law that is really letting Zambians down. It was quite telling that the ‘Stealing Africa’ film was unable to present any Zambian legal pollution limits and how the argument in both films relied on ‘international norms’ and ‘WHO guidelines’ rather than enforceable Zambian legal limits. We really should be asking why.

    The film also falls down in really demonstrating any evidence of transfer pricing. Instead of actually exposing any direct evidence – indeed the only evidence presented is by the local head of Mopani and is actually to the contrary - the journalist relies first on our emotional reaction to graphic representations of living conditions in Zambia and Switzerland, and second on the global profits of Glencore reported in Switzerland. While the graphic representations make for good TV and may encourage us to know more about Zambia’s longer economic history, Glencore’s massive profits have far more to do with its massive capital investments it makes all over the world. With total assets of almost $90Bn, even the most conservative investor would expect a return of $2.5Bn on 30YUS government treasuries bonds, and probably need to employ no more than 20 people.

    The comparison of Zambia’s copper exports valued at $6Bn and local taxes of $50m is also misleading and confuses the gross figures of export value with net figures of profit – like any airtime vendors in Lusaka well knows, profit after expenses is a tiny fraction of daily turnover. It is again up to government to negotiate this delicate balance between mining profits and government revenue, and up to the civil service to efficiently implement these policies and laws. I found it disappointing that neither film pressed government officials on why this has been done so badly for 50 years. While Glencore is no angel it is probably more valuable to focus the debate on making the government more accountable in a first step towards doing what the people have elected them to do.

    Stuart

    ReplyDelete
  2. You Stuart Barton take us really for retards !!!!

    You come here with your kind mask to minimize facts and to improve the looters’ image
    We have understood you are only a Glencores henchman

    All bloggers on the Zambian Economist know Cho was forced to pull out the full Mopani report from this blog because he received threats from people connected to the former govt, which was bought, paid for and rotten to the core...

    end of impunity is coming, those looters are going to be accountable for bad practises...

    pressure of media is implacable :-)

    here is some information in the event that bloggers are not aware of looting :

    NGOs report mining giants Glencore and Quantum alleging fiscal crime in Zambia

    http://owni.eu/2011/04/12/exclusive-ngos-report-mining-giants-glencore-and-quantum-alleging-fiscal-crime-in-zambia/


    Mopani report / Transfer pricing

    http://www.scribd.com/doc/48560813/Mopani-Pilot-Audit-Report

    http://www.scribd.com/doc/48560609/Mopani-is-Dodging-Taxes-joint-CSO-Press-Release-in-Zambia

    http://www.postzambia.com/post-read_article.php?articleId=18078

    http://www.scribd.com/doc/48560423/CTPD-Fools-Paradise-Zambia-Mining-Tax-Regime-Briefing-Paper-final


    Mopani should be punished for tax evasion - Mukanga
    http://www.postzambia.com/post-read_article.php?articleId=18305

    http://www.steelguru.com/sfTCPDF/getPDF/MjAyNjk1/Zambia_lost_an_estimated_income_of_USD_175_million_in_tax_revenue_between_2003_and_2008.html


    http://globalvoicesonline.org/2011/02/13/zambia-mines-audit-reveals-massive-tax-evasion/

    ReplyDelete
  3. Pandawe Muchinso Wa Nqona5 December 2012 at 06:17

    Stuart,
    Yours is a classic 'she asked for it' defence of a child rapist. No matter how you dress it up,Glencore are taking advantage(raping)a poor defenceless country with porous laws. The film makes it quite clear that the Zambian government was negotiating with a weak hand under pressure from the IMF,it is also clear that the Zambian side was NO MATCH against expensive tax experts and lawyers employed by Glencore. They film shows that it took tax expert/lawyers engaged by a Norwegian NGO to expose the true extent of the UNFAIRNESS of the deal.

    We can perhaps have talk about our law -making and implementation in another debate....but when rich countries like the UK are struggling to get billion dollar multi-nations like Starbucks or Amazon to pay a FAIR TAX ,what chance does a poor, defenceless county like ours have?

    ReplyDelete
  4. Just read the audit..
    http://www.scribd.com/doc/48560813/Mopani-Pilot-Audit-Report

    some significant extracts...

    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."

    -----------

    Rupiah and his govt were corrupt but why PF govt closes its eyes ?? the govt is so lenient... why ?

    in 2011 Congolese state has revoked FQM licence, but zambian govt cannot be able to do the same with Glencore... Why ??

    enough fine words, the PF fight against corruption is hogwash... Winter and Trafigura, the fat Godfrey,...

    The PF victory is an electoral scam !












    ReplyDelete
  5. Stuart has a point. The only way for Zambia to really benefit from Zambia's assets is to make government accountable to the people. We can blame Glencore as much as we like but we should also blame ourselves for allowing it to happen. Perhaps we should be marching in the streets for all mining agreements (or other asset developments) to be public. Maybe we should be demanding freedom of information laws allowing public access to all government data. Maybe we should have impeached the government that allowed the theft to happen. We have to accept that companies exist to make money and will exploit countries with weak laws or weak enforcement.

    ReplyDelete
  6. What these western companies should be reminded is that we will burn those companies and remind them that events happening in North Africa is coming down to our part of Africa,currently in South Africa levels of poverty are there to see....Glencore,Mopani and all other companies reaping huge profits will pay and dearly,that is not a threat but a promise...and we Africans keep promises..

    ReplyDelete

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