European development funds support tax dodging Swiss mining company
Counter Balance issued the following press release today:
15 February 2011
Publicly funded Swiss company is dodging taxes in Zambia, says Counter Balance
A Swiss mining company, funded with EU development monies, is siphoning its profits out of Zambia without paying taxes. Instead it is putting the money into a tax haven, Switzerland, according to a document leaked to the Counter Balance coalition.
Mopani Copper Mine (MCM), a company domiciled in Zambia, but owned by a Swiss firm, received a EUR 48 million loan from the European Investment Bank (EIB) for the purpose of development.
“Considering the findings of the leaked tax audit, it is hard to see how these development objectives got fulfilled. Paying taxes in poor countries where they operate is one of the most important ways that investors can contribute to development,” says Anne-Sophie Simpère from Friends of the Earth France.
“This mining company is depriving the people of Zambia of their right to social and economic benefits”, says Savior Mwambwa from the Centre for Trade Policy and Development (CTPD), Zambia
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 auditors also found an inexplicable doubling in the costs of the company between 2005-7, which shows that the company has been artificially inflating its costs to minimize the profits shown in their books so they could pay less taxes.
The auditors concluded that “the Mopani cost structure cannot be trusted to represent the true nature of the costs of the Mopani mining operation.”
“In September 2008, French President Nicolas Sarkozy, addressing the European Parliament as President of the EU, stated that companies and banks operating through tax havens should not receive public support. The Mopani case shows without any doubt that still EU public money flows undisturbed through tax havens at the only interest of multinational companies and the EIB does not bother to listen to European governments”, says Antonio Tricarico from Counter Balance.
“The EIB and the EC have completely failed to comply with their responsibilities - the European parliament must conduct an independent investigation into their due diligence processes as a matter of urgency”, says Nuria Molina from Eurodad.
“Multinationals have proven that they can’t be trusted to play fair, so the EU must oblige them to report their profits made and taxes paid in each country where they operate. It’s the only way we can avoid tax avoidance practices that damage local communities in the South and use European taxpayers’ money for dodgy deals.”
Notes:
The leaked tax audit, carried out by tax specialists Grant Thornton and Econ Poyry, covered the activities of the mines from 2006 to 2008, and examined the trial balances since 2003. Despite the fact that the audit was finished in the fall of 2009 it was kept secret until Friends of the Earth France (FoEF), a Counter Balance coalition member, could get hold of it and make it public this week.
In December 2010 Counter Balance published a report about Mopani. Several claims in that report were confirmed by the audit. More information is available here.
15 February 2011
Publicly funded Swiss company is dodging taxes in Zambia, says Counter Balance
A Swiss mining company, funded with EU development monies, is siphoning its profits out of Zambia without paying taxes. Instead it is putting the money into a tax haven, Switzerland, according to a document leaked to the Counter Balance coalition.
Mopani Copper Mine (MCM), a company domiciled in Zambia, but owned by a Swiss firm, received a EUR 48 million loan from the European Investment Bank (EIB) for the purpose of development.
“Considering the findings of the leaked tax audit, it is hard to see how these development objectives got fulfilled. Paying taxes in poor countries where they operate is one of the most important ways that investors can contribute to development,” says Anne-Sophie Simpère from Friends of the Earth France.
“This mining company is depriving the people of Zambia of their right to social and economic benefits”, says Savior Mwambwa from the Centre for Trade Policy and Development (CTPD), Zambia
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 auditors also found an inexplicable doubling in the costs of the company between 2005-7, which shows that the company has been artificially inflating its costs to minimize the profits shown in their books so they could pay less taxes.
The auditors concluded that “the Mopani cost structure cannot be trusted to represent the true nature of the costs of the Mopani mining operation.”
“In September 2008, French President Nicolas Sarkozy, addressing the European Parliament as President of the EU, stated that companies and banks operating through tax havens should not receive public support. The Mopani case shows without any doubt that still EU public money flows undisturbed through tax havens at the only interest of multinational companies and the EIB does not bother to listen to European governments”, says Antonio Tricarico from Counter Balance.
“The EIB and the EC have completely failed to comply with their responsibilities - the European parliament must conduct an independent investigation into their due diligence processes as a matter of urgency”, says Nuria Molina from Eurodad.
“Multinationals have proven that they can’t be trusted to play fair, so the EU must oblige them to report their profits made and taxes paid in each country where they operate. It’s the only way we can avoid tax avoidance practices that damage local communities in the South and use European taxpayers’ money for dodgy deals.”
Notes:
The leaked tax audit, carried out by tax specialists Grant Thornton and Econ Poyry, covered the activities of the mines from 2006 to 2008, and examined the trial balances since 2003. Despite the fact that the audit was finished in the fall of 2009 it was kept secret until Friends of the Earth France (FoEF), a Counter Balance coalition member, could get hold of it and make it public this week.
In December 2010 Counter Balance published a report about Mopani. Several claims in that report were confirmed by the audit. More information is available here.
posted by TJN at 1:07 pm
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