Tax Evasion in Zambia: NGOs File Complaint Against Glencore, First Quantum for Violation of OECD Guidelines http://www.miningwatch.ca/en/tax-evasion-zambia-ngos-file-complaint-against-glencore-first-quantum-violation-oecd-guidelines

Lausanne/Zurich/Paris/Lusaka, April 12th 2011. SHERPA (France), the Centre for Trade Policy and Development (Zambia), the Berne Declaration (Switzerland), l’Entraide Missionnaire (Canada) and MiningWatch (Canada) have filed a complaint today against Glencore International AG and First Quantum Minerals Ltd before the Swiss and Canadian National Contact Points (NCP) for violating the OECD Guidelines for Multinational Enterprises.The cause for the complaint lies in the financial and accounting manipulations performed by the two companies’ subsidiary, Mopani Copper Mines Plc (MCM), in order to evade taxation in Zambia.

Those allegations are based on the results of a 2009 audit performed at the request of the Zambian authorities, with support from Norwegian government, by international accountants Grant Thornton and Econ Pöyry. Among the anomalies revealed by the report, an unexplained increase in operating costs in 2007 (+$380 million), stunningly low reported volumes of extracted cobalt when compared to similar mining companies operating in the region, and manipulations of copper selling prices in favor of Glencore which constitute a violation of OECD’s “arm’s length” principle.

The result of those various processes was to lower by several hundreds of millions dollars MCM’s net income for the 2003-2008 period, hereby substantially lightening the company’s tax burden.Those actions are all the more deplorable when one considers that the Mopani consortium operates in an already attractive fiscal environment, one highly favorable to foreign investment, and that Mopani also enjoys the effects of a 2000 development agreement with Zambia that provides massive financial and tax exemptions.According to Global Financial Integrity, multinational corporations’ tax evasion, when averaged per year over the last ten years, amounts to a global net loss of $400 to $440 billion for developing countries.