Explain tax avoidance reports, ActionAid tells Glencore

Date of publication: 
7 September 2011

ACTIONAID Zambia has challenged Glencore to “clear the air” on tax avoidance allegations in Zambia before embracing the Extractive Industries Transparency Initiative (EITI).

Country representative Pamela Chisanga said Glencore, the owners of Mopani Copper Mine, should not sidetrack from clearing its name on the tax avoidance issues her institution raised last year.

Last week, there were assertions that commodities trader, Glencore, would own up support for a global standard on transparency in natural resources by declaring its support to the Extractive Industries Transparency Initiative (EITI), an initiative which promotes principles of ethical behaviour at natural resources companies.

Glencore has been notable by its absence from a list of EITI backers that reads like a Who’s Who of natural resource giants. The list includes Anglo American, BHP Billiton, BP, Shell and fellow commodities trader Noble Energy.

“Much as we appreciate Glencore’s position to support various initiatives, like EITI, we would still want Glencore not to use this to sidetrack from the real issues that we have been calling on in terms of how they should be paying their fair share of tax to Zambia,” Chisanga said. “We are a little bit concerned that these measures are being used to cover up the wrongdoing of Glencore.”

Chisanga said the time Glencore has decided to raise its support is wrong considering the issues surrounding the institution. The Swiss-based company’s transformation into a public company has been littered with embarrassing accusations over corporate governance including allegations – denied by the company – that it avoided tax in Zambia.

The controversy emerged after the leaking of a report into internal controls at Mopani, which was carried out in 2009 by accountants Grant Thornton at the request of the government.

The dossier stated 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 are yet to see how events unfold but we will not relent from calling upon Glencore to pay its fair share of taxes,” Chisanga said.

She said time had come for heightened transparency levels in the extractive industry.

Chisanga said multinational companies need to be more transparent if the country is to benefit from its resources.

“And to achieve this, we have always called upon the multinational corporations, the private sector to collaborate and work with civil society even in terms of providing information regularly for us to get an understanding of what is happening within these industries,” Chisanga said.

And during the ongoing Comprehensive Africa Agriculture Development Plan (CAADP) consultative meeting for non-state actors (civil society and others) in Lusaka yesterday, Chisanga said there was need to use agriculture as an avenue to attain economic development.

She said Zambia should urgently implement practical and inclusive policies that will result in the maize bumper harvest to significantly reduce hunger and food insecurity.

“We need partnerships that will bring the missing voices to influence the agriculture policies, for instance, Zambia has recorded a number of milestones in the last two farming seasons and yet the sector has had huge challenges in ensuring food security and reducing hunger so how do we ensure that agriculture is managed to bring desired results?” Chisanga asked. “Women are underrepresented yet they produce most of the foods that we eat. What are we doing to ensure that their voices are heard and we have a bumper harvest but what policies do we have to ensure that hunger is reduced and what measures are we putting in place to make agriculture as a base for sustainable development and economic growth?”

Chisanga, however, said the challenges of the agriculture sector cannot be left to government and cooperating partners alone.

“This calls for a significant shift in broadening the space to accommodate the voices of non state actors in all important decisions because CAADP is government led but not government owned or controlled. As such, it provides a nexus through which to structure and coordinate non state actor participation,” said Chisanga.