Transparency & Accountability • 09 Oct 2014
ActionAid Asks EIB to Publish Report on Mopani Tax Evasion
The following joint press release was circulated by non-governmental organisations ActionAid Zambia, Christian Aid, and Counter Balance, including the full text of their letter appealing to the European Investment Bank (EIB) to publish their findings on possible tax evasion activity at the Mopani Copper Mine, which is owned and operated by Glencore.Back to overview
On the eve of presentation of the national budget to the Parliament of Zambia, ActionAid Zambia, Christian Aid and Counter Balance have today sent a letter to the President of the European Investment Bank calling on the bank to publish the report and conclusions of its investigations into allegations that Mopani Copper Mines evaded tax in Zambia.
The EIB Complaints Mechanism recommended that the report be disclosed in redacted form, but the Bank has thus far refused to do so.
At the time of the allegations, Mopani Copper Mines had a loan from EIB, hence the investigation undertaken by the Bank.
Re: European Investment Bank Report on Mopani Copper Mines plc Tax Avoidance Allegations.
Dear President Hoyer,
We are writing to you in advance of the presentation of the upcoming national budget to the Parliament of Zambia by the Minister of Finance. There is currently a heated debate in Zambia around the obligation for mining companies to produce documentation from countries where the minerals are exported, in order for them to qualify for VAT refunds. Such documentation proves that the minerals were effectively received in the importing country, and it confirms the price and quantity of the exports.
Glencore, operating the Mopani mining complex in Zambia, recently decided to halt its zinc operations and cut 169 jobs in Zambia, citing the government’s withholding of VAT refunds. In June the Zambian Minister of Mines stated that the VAT refunds will only be paid when the mining companies produce import certificates from destination countries This move puts pressure on the government of Zambia to relax the above-mentioned tax rule. This in turn is likely to lead to further loss in tax revenues for the government, which would affect its capacity to deliver on economic and social rights and public services.
The current debate in Zambia around documenting copper exports for VAT refunds illustrates the urgent need for increased transparency around Mopani to inform imminent budget decisions.
Against that background, we reiterate our call for the European Investment Bank (EIB) to publish the report and conclusions of its investigation into allegations that Mopani Copper Mines plc (MCM) evaded tax in Zambia, including through under-pricing its copper exports. The EIB Complaints Mechanism recommended that the report be disclosed in redacted form, but the Bank refused to do so in July this year.
The fact that the EIB – the European Union’s Bank – is not leading by example in this case is hindering the ability of the Zambian government to make informed policy decisions. Such lack of transparency, also harms the reputation of the European Union, and contradicts the EU’s foreign policy and development objectives, which are grounded in human rights, democracy, the rule of law and the eradication of poverty.
Therefore we call upon you to make publicly available the Mopani investigation report immediately. Its contents would assist the Zambian government in its efforts to ensure that
mining companies, such as Mopani that have benefited from EIB support, pay their fair share of tax.
Pamela Chisanga, Country Director, ActionAid Zambia
Toby Quantrill, Principal Economic Justice Adviser, Christian Aid
Xavier Sol, Director, Counter Balance