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EU bank ordered to reveal what it knows about Glencore tax allegations

10 December 2014 - The EU’s own bank has been ordered to reveal what it knows about alleged tax evasion by a mining company controlled by commodities giant Glencore.

Ireand, the UK and other EU member states own the bank at the centre of the controversy, the European Investment Bank (EIB), which last year lent 71.7 billion Euros.

The Bank has refused to reveal the findings of its investigation into allegations of systematic tax evasion by Glencore’s Mopani subsidiary in Zambia – allegations which Glencore has always denied.

But now an EU watchdog, the European Ombudsman, has told the Bank to rethink its secretive stance.

In a new ruling, Ombudsman Emily O’Reilly has told the Bank that it should publish the report without details that identify individuals or companies or – if that is impossible – to at least provide ‘a meaningful summary of the main findings of the investigation report’.

Ms O’Reilly’s ‘recommendation’ to the Bank comes in response to a complaint by Christian Aid.

Sorley McCaughey, Head of Policy and Advocacy at Christian Aid, said today: “The Ombudsman’s decision is welcome and important. If Mopani-Glencore has systematically evaded tax, then the citizens and tax collectors of Zambia and in Europe need to know about it. If the company is innocent, then we also need to hear that.

“It is a scandal that the EIB, which is owned by EU member states, has hidden this information for so long.”

Christian Aid campaigns against tax avoidance and evasion because they drain funding from vital services that everyone needs, from roads and defence to health and education. They also shift the tax burden on to individuals and companies too poor, small or honest to evade it. Tax dodging is especially harmful in very poor countries such as Zambia, where public services are particularly weak or non-existent.

Xavier Sol, Director of Counter Balance, an organisation which focuses on public investment banks, said: “A public bank should operate in the most transparent way possible. The management’s refusal to make the investigation public shows the EIB is not ready to act accordingly without external pressure.

“Recently the bank was ranked one of the most opaque multilateral lenders in the world and the ongoing revision of its transparency policy is seen as a further slide towards secrecy. We hope the Ombudsman’s ruling sends out a clear message that this is not the way to go.”

The allegations against Mopani-Glencore first surfaced in early 2011, in the form of a leaked draft of an auditors’ report by Grant Thornton and Econ Poyry. The leak triggered an investigation by the EIB, which had lent $50 million to Mopani – and which publicly announced its investigation.

Christian Aid made a formal complaint to the Bank about its refusal to publish its findings and, when that got nowhere, it complained to the European Ombudsman. The Ombudsman has given the Bank until 31 March to respond to her recommendation.

Ends

For further information, or to arrange an interview with Sorley McCaughey, Florence Mutesasira on Tel: +(353) 086 160 9405, 01 775 8085 or email fmutesasira@christian-aid.org

Notes to editors:

1. Christian Aid works in some of the world's poorest communities in around 40 countries at any one time. We act where there is great need, regardless of religion, helping people to live a full life, free from poverty. We provide urgent, practical and effective assistance in tackling the root causes of poverty as well as its effects.

2. Christian Aid’s core belief is that the world can and must be changed so that poverty is ended: this is what we stand for. Everything we do is about ending poverty and injustice: swiftly, effectively, and sustainably. Our strategy document ‘From Inspiration to Impact’ outlines how we set about this task.

3. Christian Aid is a member of the ACT Alliance, a global coalition of more than 130 churches and church-related organisations that work together in humanitarian assistance, advocacy and development. Further details at http://actalliance.org

4. Follow Christian Aid Ireland on Twitter: www.twitter.com/christianaidirl

5. For more information about the work of Christian Aid, visit www.christianaid.ie

 

 

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