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Glencore-Xstrata merger is chance to boost financial transparency

February 09 2012- Mining giants Glencore and Xstrata should use their planned merger as a chance to introduce greater transparency into their finances, says Christian Aid.

‘The proposed merger will create a huge company with a massive impact on people and the environment, for better or for worse,’ said Christian Aid’s Principal Economic Justice Adviser, Dr David McNair.

‘Assuming the merger proceeds, then one hugely important part of the new company’s impact will be its tax payments in the countries where it operates.

‘Tax is needed to fund public services such as hospitals and schools for millions of people across the world.

‘But financial secrecy makes it difficult to tell whether multinational companies such as Glencore are paying the right amount of tax.

‘Christian Aid estimates that poor countries lose around $160 billion a year to tax dodging by multinational corporations – more than they receive in aid.

‘Indeed, there have been suggestions that Glencore may not have paid the right amount of tax in Zambia – allegations which the company denies,’ added Dr McNair.

‘At present it is impossible to know where the truth lies, because financial secrecy obscures Glencore’s finances – along with those of many other multinational companies around the world.

‘Given the colossal size of a merged Glencore-Xstrata, there is likely to be ongoing interest in its tax contributions to the countries from whose natural resources it is profiting.

‘Christian Aid urges the newly merged company to adopt new, highly transparent financial reporting practices, to help reassure governments, citizens and public interest groups the world over that it is paying the right amount of tax, in the right place and at the right time.

‘In practice, this is likely to mean country-by-country reporting, which requires companies to publish financial data such as the profits they make and the taxes they pay separately for each country in which they operate. Having such data makes it much easier for tax authorities and others to spot suspicious cases which warrant further investigation.

‘Adopting such transparent financial reporting practices would help to make the merged company a leader on this aspect of corporate social responsibility. It would also leave the company well prepared for regulators’ increasing demands for greater financial disclosure from companies.’

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For further information and to interview David McNair, please contact Rachel Baird on 0207 523 2446 or rbaird@christian-aid.org

Notes to Editors:

1. Christian Aid works in some of the world's poorest communities in nearly 50 countries. We act where the need is greatest, regardless of religion, helping people build the lives they deserve.

2. Christian Aid has a vision, an end to global poverty, and we believe that vision can become a reality. Our report, Poverty Over, explains what we believe needs to be done – and can be done – to end poverty.  Details at http://www.christianaid.org.uk/Images/poverty-over-report.pdf

3. Christian Aid is a member of the ACT Alliance, a global coalition of 100 churches and church-related organisations that work together inhumanitarian assistance and development.  Further details at http://www.actalliance.org

4. Follow Christian Aid's newswire on Twitter: http://twitter.com/caid_newswire

5. For more information about the work of Christian Aid visit www.christianaid.org.uk