• Loading

Glencore and first quantum are subjects of complaint to OECD

April 12 2011 - Campaigning organisations have filed a complaint with the OECD against commodities giant Glencore and First Quantum Minerals, based on allegations that a mine they own may be evading tax in Zambia in a way which would be inconsistent with OECD guidelines for multinational companies.

One of the five complainants is Christian Aid’s Zambian partner the Centre for Trade Policy and Development (CTPD), which works to help Zambians get a fair deal from mining companies exploiting their country’s natural resources. Another of the complainants is SHERPA, a Paris-based non-profit organisation which uses the law in support of fair and sustainable development.

The complaint - to the OECD’s Swiss and Canadian national contact points - is based on the findings of a leaked audit report by accountants Grant Thornton and Econ Poyry, which identified a series of tax irregularities in a Zambian copper mining subsidiary of Glencore and First Quantum.

The subsidiary is Mopani Copper Mines plc, which is 73 per cent owned by a subsidiary of Swiss-based Glencore.

Christian Aid highlighted its concerns about the leaked report when it first emerged in February this year.

At that time, Glencore strongly contested the content of the report. In a statement, it said: ‘We refute the conclusions of this draft report and we question the reasons for the manner in which it was leaked. This draft report contains factual errors and inaccuracies. It is based on broad and flawed statistical analysis and assumptions.’

In response to the new complaint, David McNair, Economic Adviser at Christian Aid said: “We hope that this complaint to the OECD will highlight the huge difficulties developing countries face in determining whether multinational companies are paying the correct amount of tax – and the urgent need for new accounting rules help deter multinationals from artificially shifting their profits out of those countries.

‘It is currently all too easy for companies to use financial secrecy to book their profits where they pay less tax. This is a massive problem for developing countries, which currently lose more to tax dodging by multinationals than they receive in aid. People living in poverty are the ones who pay the price for such financial sleight-of-hand.’

Christian Aid hopes to use Glencore’s expected flotation on the London Stock Exchange to highlight the need for accounting reforms to help developing countries collect the taxes they are due, added Dr McNair.

‘In the run-up to Glencore’s flotation in London, Christian Aid intends to approach some of the major institutional investors which are expected to buy Glencore shares,’ he said.

‘We would like to hear their perspectives on what is known about Glencore companies’ tax practices – and on the accounting reforms for which Christian Aid is calling.’

Christian Aid is campaigning for the introduction of two key reforms to boost financial transparency around the world and support developing countries in challenging abusive tax arrangements.

The first, country-by-country reporting, would see multinational companies required to reveal key information including the profits they make and the taxes they pay in every country where they operate. This would also help governments to identify cases of suspected tax dodging. The International Accounting Standards Board, which is based in London, could introduce such a reform across much of the world.

The second reform – the introduction of multilateral, automatic exchange of tax-related information between countries – would make it harder for companies and individuals to hide income and assets offshore.

The End Tax Haven Secrecy campaign, of which Christian Aid is a member, is urging the G20 to put ending tax haven secrecy on the agenda of its November summit meeting in Cannes, France.

- Ends -

For more information, 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