Glencore: tax dodging in Zambia

27 September 2011

Glencore

"Through tax evasion and avoidance, mining companies are depriving us of social and economic benefits which are rightly ours."

- Savior Mwambwa of ActionAid partner organisation Centre for Trade Policy and Development (CTPD)

Almost two thirds of Zambia’s people live below the poverty line. At the same time, mining companies are making huge profits in the country while not paying their fair share in taxes.

Widespread tax avoidance is leaving Zambia short of the money it needs to invest in a decent education for its children. The average class size – 61 – is one of the highest in Africa, while only £15 is available to educate each child per year. Taxes from mining could help the government fund education.

Mining giant Glencore, which is listed on the London stock exchange, registered in Jersey, with its HQ in Switzerland stands accused of tax dodging on a massive scale.

A leaked Grant Thornton audit report on Glencore's Mopani mine in Zambia, commissioned by Zambia’s tax authority, accuses the company of selling copper to Switzerland at below market prices. The auditors also found the operational costs of the company increased exponentially, with little justification from 2005-7.  The artificial inflation of costs, combined with undervaluing of the copper exports enabled the company to report overall losses, and therefore pay little or no corporation taxes in Zambia.

ActionAid estimates that this tax dodge could have cost Zambia up to £76 million in one year alone – more than Zambia receives in UK aid each year.

Savior Mwambwa of ActionAid partner organisation Centre for Trade Policy and Development is campaigning to crack down on tax dodging by mining companies alongside ActionAid Zambia. Following their campaigning, the Zambian government committed to reclaiming US$200 million of outstanding tax from the mining companies.

Good education requires more than a decent school building, desks and books – it needs good teachers. Only tax revenue can make this long-term investment in children’s futures.

Tax justice is a global issue, so we must campaign together around the world. Your actions in the UK can really help amplify our calls for change in Zambia.

- Savior Mwambwa of ActionAid partner organisation Centre for Trade Policy and Development (CTPD)