Media and the mines: mining for the truth
Media and the mines: mining for the truthBy Prof Fackson Banda
Wednesday February 20, 2008 [03:00]
The announcement by the Minister of Finance to revise the mining tax regime has sparked a controversy of national and nationalistic proportions. National, because it has engulfed the whole country; nationalistic, because it has rekindled feelings of national fellow-feeling among Zambians. This is an opportunity to unite the country behind a common cause, namely the utilisation of our mineral resources for the noble goal of poverty alleviation. The role of the media in this cause is definitely significant.
We know that editorial commentaries have issued forth from our media organisations, including The Post newspaper. Other citizens, including the virtual Zambia Media Forum, have come out in support of the government’s decision. Opposition political parties are also generally in support of the legislative proposal. Aside from the struggle for liberation from colonial imperialism, never has the country been so united as it is on this issue.
But this must raise fundamental questions about the role of the media in the debate. Never in our history has the media been so pervasive as it is now. We have greater numbers of media outlets – community radio stations, commercial radio stations, television stations and newspapers. This debate should resound throughout the country, engaging Zambians in the problems and prospects attending this national saga.
For me, the most important thing is to investigate the claims being made by both parties. There are serious claims on both sides of the debate. The mining owners have alleged that the tax regime is much too high to afford profitably. The implication is that the government’s tax proposal is unreasonable. Implicated in this debate are the shareholders. These are human beings with feelings for poor countries as much as they are predisposed towards profit-maximisation. Who are they?
On the other hand, the government, through a technical committee financed by donors to consider the various tax options, is convinced that the mines are making so much profit that the tax hike shouldn’t be a problem. Where does the truth lie?
The mining agreements, (in) famously called “Development Agreements”, were negotiated during the reign of former president Frederick Chiluba. Some of the protagonists in the negotiation process have come out, alleging that the mining agreements were “unconstitutional”. Were they? Under what conditions were they negotiated? Why were they not subjected to public scrutiny? These questions are worthy of investigation. We can make all sorts of uninformed allegations, implicitly supportive of either side of the debate, but we still need some good old journalistic police-work to illuminate the dark recesses of the debate.
So, where should the media be mining for the truth? Several alleyways of controversy, I believe. Firstly, there are the circumstances under which the agreements were signed. This includes the people who were involved in this process. Talking to such people should help to unearth the conditions of negotiation. Did the negotiators feel any sense of pressure to agree to the terms of the contracts? A casual reading of the Development Agreements reveals glaring instances in which the government seemed to have been pushed into a tight corner, literally strait-jacketed into policy and legislative inaction. There are several instances of this.
For example, on the question of environmental protection, the Agreement between the Chambishi Metals Plc and the government, signed on the 11th of September 1998, prohibits the government to legislate against the mining companies for a period of fifteen years. Section 12.2 of the Agreement states that “subject to compliance by the company with the Environmental Plan…GRZ hereby confirms that for a period of fifteen (15) years from the Effective Date, it will not take any action (and will procure no action is taken by any of its ministries, departments or agencies over which it has operational control on its behalf) under or enforcing, any applicable Environmental Laws with the intent of…”
Then the Agreement goes on to list those things against which the government must forbid such enforcement of legislation. Among them are: (i) no requirement for companies to clean up any pollution they found; (ii) no imposition of penalties or fines for breaching environmental laws in place; (iii) no increasing such fines beyond what was applicable at the effective date of the Development Agreements; and (iv) absorption of the company from any responsibility for harm, damage, claims or losses of any kind whatsoever suffered in the past or in the future arising out of activities undertaken by ZCCM.
The actual wording of the Agreement seems to be much tighter than I have expressed it here. Of course, the Agreement also makes mention of the company negotiating an Environmental Plan with the government. All else – pre-existing environmental policies and laws – pales into insignificance beside this Plan. Despite the Environmental Plan, there does not appear to be much that obliges the company to be environmentally robust in this Agreement. What’s more: The Environmental Council of Zambia (ECZ) becomes a non-factor in this equation. What can the technocrats do in the face of the Development Agreements?
And the experience on the ground shows how relaxed the mining companies seem to be with regard to environmental protection. This could be explained in terms of the laxity in the Agreements. Here we have a classic example of the need to enact and enforce strong environmental protection laws. There can never be a more telling example than this. Teasing out the relationship between policy-cum-legislative laxity and actual environmental practice becomes an area for active media engagement.
For so long, transnational corporations have been known to exploit poor environmental laws, especially if such laws are not even implemented by state agencies. The Development Agreements actually encourage non-compliance on the part of the companies and inaction on the part of the implementing or enforcement agencies. Is it any wonder that we have been losing lives through the mining operations? Is it any wonder that all the politicians can do is apologise and pontificate about the need for stronger safety measures? The truth is that the mining companies know that they stand on protected ground.
Second, the media can attempt to mine into the (un)-constitutionality of the Development Agreements. We need to establish what the Law of Contract says with regard to the legality of such Agreements. We need to establish precedents in which contracts can be overturned due to prevailing public interest considerations. Such an investigation can, with the help of legal minds, be facilitated by the media.
But more importantly, the Development Agreements raise questions about the (in)-compatibility between the Constitution of the Republic of Zambia and any subsidiary legislation. Which subsidiary legislation, enacted by our Parliament, do the Development Agreements draw upon? When was such legislation enacted? Are the Agreements constitutional, then? Let’s take the issue of so-called “tax stability”. The Agreement between Chambishi Metals Plc and the government clearly stipulates that the government must make no tax laws that could disadvantage the companies in any way for fifteen years. More specifically, the government is required not to raise any corporate income tax or withholding tax rates, or otherwise amend the VAT and corporate tax regime applicable to the companies from those effective on the date of agreement. The Agreement goes on to forbid the government to “impose new taxes or fiscal imposts on the conduct of Normal Operations”.
As some analysts have observed, these provisions raise fundamental questions about both the constitutionality of such provisions and the possible usurpation of Parliamentary oversight role. Parliament enacts laws and oversees the implementation of government policy. If we understand the Agreements logically, then such legislative and oversight law is suspended for a period of fifteen years.
This may well jeopardise the country’s political stability; political stability consists in the ability to enact laws to address the exigencies of the moment. In fact, it may well destabilise the constitutional order of the country. The constitution structures the affairs of government. One such affair is to impose tax. If that ability is suspended for fifteen years, what does that mean for our constitutional order and stability? This, I say, is a legitimate area for media investigation. Again, this is a question that goes beyond lawyers. It must encapsulate all sections of society. For constitutional legitimacy is derived from “the people”. And the people are more than just legal experts.
An important point for media investigation thus becomes the extent to which citizens determine public affairs. It is evident that the Development Agreements were not meant to be in the public domain. It is largely civil-society activism that has enabled the publication of such Agreements on web sites. And, as such, many of us have been able to access the documents and analyse them independently. It can be said that transnational corporations tend to exhibit undemocratic practices. In order to be bullish, corporations must hide certain information. It is evident that if the draft development agreements had been subjected to public scrutiny, they would have raised many questions. Going through them now, one’s blood boils at the extent of the betrayal of public trust.
Public debate on issues of public policy is not a luxury. It is a necessity precisely because of the situation the country finds itself in. It doesn’t matter how legally intricate the issue at hand might be. It can be framed in terms that are easily understandable to all. Insulating discussions within the realm of legalese tends to hide the deep-seated human issues at stake. The issues can be boiled down to the following: poverty alleviation; social sector investment; environmental protection; human development; etc. These are non-negotiable when it comes to such agreements.
A look at the Agreements shows the negotiating teams’ lackadaisical approach to these issues. The mining companies seem to have had a precise idea of what they wanted. They negotiated themselves into a strong position vis-à-vis a number of issues, not least environmental protection. In general, the Development Agreements weigh in favour of profitability and against people. What about the advantages enjoyed by foreign staff? They seem to outweigh those of Zambian nationals. Even the percentage of top management positions reserved for Zambian managers is minimal. As a matter of fact, access to such positions by Zambians is effectively blocked for fifteen years, even if we had the most qualified Zambians to fill those positions.
Opening up such negotiation processes to public debate and scrutiny makes governing much easier. We all understand the burden that those appointed to constitute the GRZ negotiation team must have carried; but there is no need to carry such a burden alone. There are over eleven million Zambians who can help lighten the burden. Governing needs to become much more about participation than about technocracy. And the media’s investigative nose is critical to this process.
So help us God in this our hour of need!
f.banda@ru.ac.za.
Labels: MINING CONTRACTS, WINDFALL TAX
posted by MrK @ 6:09 AM
4 Comments:
According the constitution of 1991, I think the tax exemption in the Development Agreements is unconstitutional:
Article 100 [Imposition of taxation]
(1) Subject to the provisions of this Article, no taxation shall be imposed or altered except by or under an Act of Parliament.
(2) Except as provided by clauses (3) and (4), Parliament shall not confer upon any other person or authority power to impose or to alter, otherwise than by reduction, any taxation.
(3) Parliament may make provision under which the President or the Vice-President or a Minister may by order provide that, on or after the publication of a bill being a bill approved by the President that it is proposed to introduce into the National Assembly and providing for the imposition or alteration of taxation, such provisions of the bill as may be specified in the order shall, have the force of law for such and subject to such conditions as may be prescribed by Parliament: Provided that any such order shall, unless sooner revoked, case to have effect --
(i) if the bill to which it relates is not passed within such period from the date of its first reading in the National Assembly as may be prescribed by Parliament;
(ii) if, after the introduction of the bill to which it relates, Parliament is prorogued or the National Assembly is dissolved;
(iii) if, after the passage of the bill to which it relates the President refuses his assent thereto; or
(iv) at the expiration of a period of four months from the date on which it came into operation or such longer period from the date as may be specified in any resolution passed by the National Assembly after the bill to which it relates has been introduced.
(4) Parliament may confer upon any authority established by law for the purposes of local government power to impose taxation within the area for which that authority is established and to alter taxation so imposed.
(5) Where the Appropriation Act in respect of a financial year has not come into force at the expiration of six months from the commencement of that financial year, the operation of any law relating to the collection or recovery of any tax upon any income or profits or any duty or customs or excise shall be suspended until that Act comes into force: Provided that --
(i) in any financial year in which the National Assembly stands dissolved at the commencement of that year the period of six months shall begin from the day upon which the National Assembly first sits following that dissolution instead of from the commencement of the financial year;
(ii) the provisions of this clause shall not apply in any financial year in which the National Assembly is dissolved after the laying of estimates in accordance with Article 103 and before the Appropriation bill relating to those estimates is passed by Parliament.
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Considering that the National Assembly was completely bypassed, in fact that these developoment agreements are considered to be 'secret', I would say just the tax part alone would be unconstitutional.
In short, the development agreements were never put up for examination by parliament, and Article 100 of the constitution (1991) is very clear on that.
- MrK
What a brilliant article, and an interesting comment from Mr K. I have posted further thoughts on it at the www.minewatchzambia.com blog
Oops, I meant to add, one interesting thing about the quote Fackson pulls out of the Chambishi Agreement. It says 'subject to compliance by the company with the Environmental Plan'. As discussed in the 'For Whom the Windfalls' report, also available on the minewatchzambia website, the company failed to comply with this condition, simply by failing to produce an Environmental Plan, for many years after the Development Agreement came into action. This is just one of many examples of why the companies have not complied with the terms of the agreements.
Hi Alastair,
I hope people with a lot more constitutional experience than myself pick up on this.
Considering the more fleeting nature of my blog, I'm adding an additional link to this article on the MinewatchZambia blog.
If this holds up, there should be nothing stopping the government from imposing it's new taxes.
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