Written by 15 h 56 min Strategic litigation, Tax evasion

The Mopani Affair: Tax Evasion in the Copper Mines of Zambia

The Facts…

Mopani Copper Mines is the largest copper and cobalt mining company in Zambia. In 2009, the Zambian government conducted an audit of the mine, the results of which revealed several anomalies, including an unexplained increase of 380 million dollars in production costs in 2007, as well as shockingly poor official production volumes in comparison with other operations in the region. These behaviours enabled the Mopani company to announce derisory sums in receipts and to reduce considerably the amount it had to pay in tax.

 

The Litigation…

In April 2011, Sherpa and four partner associations — the Declaration of Berne in Switzerland, Mining Watch Canada, l’Entraide missionnaire (International Missionary Society) in Canada and the Centre for Trade Policy and Development in Zambia — submitted a complaint to Swiss and Canadian national contact points (NCPs) against the companies Glencore International PLC and First Quantum Minerals. The complainants believe that the latter have infringed Chapters II and XI of the OECD Guidelines for Multinational Enterprises which require, inter alia, that enterprises contribute towards the economic progress of the countries in which they operate and pay the taxes for which they are liable promptly.

A complaint regarding tax evasion

The Swiss NCP, in charge of the case, concluded that the complaint was receivable in its initial assessment of 5 October 2011. At the same time, the Zambian government announced that it would demand a reimbursement of its outstanding payments to Glencore International PLC. At this point, the Swiss multinational refused both to take part in the process before the NCP and to engage in discussions with the NGOs.

Mopani Copper Mines sign – Zambia

Only in May 2012, following a letter from the Swiss NCP, did Glencore International PLC agree to take part in the roundtable negotiations, after having undertaken a communications campaign on the subject of its participation in the process.

On 11 July 2012, a meeting was finally held in Berne, in the presence of a mediator, between representatives of Glencore International PLC and the NGOs. A confidential agreement was adopted between the parties, and on 28 November 2012 the Swiss NCP published a final communication encouraging the parties to continue their dialogue on the subject. During the summer of 2013, Christian Aid sent a formal complaint to the European Investment Bank (EIB) in order that it should publish a report in which it mentioned the facts of tax evasion and falsification of results by Glencore.

Procedures and Milestones…

Tags: , , , , , , , Last modified: 17 December 2019
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