I'm watching this video and I felt like sharing. I came across with the Glencore multinational that steals copper from Zambia.
The numbers are striking. The company buys the copper in Zambia for a symbolic price in relation to the profit they make. From The Guardian:
Glencore denies allegations over copper mine tax
Jamie Doward
First published on Sunday 17 April 2011 00.07 BST
A UK subsidiary of the world's largest commodities broker helped one of its African mining operations avoid paying tens of millions of pounds in tax, according to charities who have analysed a leaked review of its accounts.
The findings of a draft report into internal controls at Zambia's Mopani Copper Mines plc have been categorically rejected by its owner, Glencore, the giant fuel, metals and cereals trader based in the Swiss tax haven of Zug. The report, seen by the Observer, was carried out in 2009 by a Norwegian subsidiary of Grant Thornton, one of the world's largest accountancy firms, at the request of the previous Zambian government.
Its authors alleged the mine's owners "resisted the pilot audit at every stage", a claim denied by a spokesman for Glencore, which owns a 73% stake in Mopani through a company based in the British Virgin Islands, another tax haven.
The report claimed there had been an "unexplainable" increase in Mopani's costs between 2006 and 2008 that allowed it to minimise its stated profits and lower its tax bill. "We suggest the ZRA [Zambian Revenue Authority] does a new tax assessment based on the results of the audit," the report claims.
Glencore, which is preparing a £37bn listing on the London stock market, the capital's biggest ever flotation, said the auditors had failed to factor in rising fuel and labour costs over the period. The audit also suggested Mopani sold copper at artificially low prices to Glencore in Switzerland under a deal struck with the firm's UK subsidiary in 2000. The metal was then sold on, allowing Glencore to take advantage of Switzerland's ultra-low tax regime.
There are claims that the transactions breach international rules ensuring there has to be an arm's-length principle when it comes to sales between related parties. Glencore said all transactions were conducted at an arm's-length basis and at internationally agreed prices.
When asked by the Observer for a response to Glencore's criticisms of the draft report, Grant Thornton International declined on the grounds of client confidentiality.
But charities said the report suggested Glencore had questions to answer. "Based on the Grant Thornton analysis, we estimate that the company's practices potentially cost the Zambian government up to £76m a year in lost corporation tax," said Anna Thomas, head of tax policy at ActionAid. She pointed out the amount was significantly more than the £59m the UK government gives Zambia each year in aid.
The claims have surfaced as Glencore prepares for a listing that will make multimillionaires of the firm's 485 partners. City analysts were astonished to learn the extent to which the company dominates the commodity markets in documents published ahead of the listing. Glencore revealed it controlled 60% of the traded zinc market and 50% of copper. Development charities have contrasted the impending wealth of the company's management with the poverty of Zambians, around two thirds of whom live below the recognised poverty line, according to the United Nations.
The leaking of the report is potentially embarrassing for European governments. Mopani received a €48m development loan from the European Investment Bank (EIB) to help bring prosperity to Zambia. But the report states: "The pilot audit has shown there is a high need for a determined effort at collecting the taxes that are assessed under the laws implemented by the Zambian government." The EIB has informed OLAF (the European anti-fraud office) of the report's allegations and launched an investigation.
Emmanuel Mutati, CEO of Mopani, has described the audit as "flawed and incomplete" saying it did not include a series of third-party transactions that would affect its accounts. "We have also been audited by independent auditors annually," Mutati said. "Every year the independent auditors' report has given Mopani a clean bill of health."
The UK government recently called for new measures to ensure that the poorest people in Africa benefited from mining.
Glencore was founded by Marc Rich, the controversial oil trader who was accused of tax evasion by American authorities but was pardoned by President Clinton on his last day in office. The company, which last year had a turnover of $145bn, is no longer connected to Rich.
The 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."
Zambian copper miners and their family members got sick
because of the contamination in the copper plant and in the water and environment.
