Maravi

Foreign mine owners have corrupted Rupiah’s regime - Magande

Foreign mine owners have corrupted Rupiah’s regime - Magande
By Chiwoyu Sinyangwe
Mon 14 Feb. 2011, 04:01 CAT

FORMER finance minister Ng’andu Magande says it is obvious President Rupiah Banda’s regime has been corrupted by foreign mining firms operating in the country. And Magande says Zambia risks being ceded to foreigners without regard to its natives if the current government is not halted from its reckless disregard for the country’s sovereignty.

Magande’s comments come in the wake of a pilot audit on Mopani Copper Mines which revealed glaring inconsistencies in production and revenue figures the mine submits to the Zambia Revenue Authority (ZRA) for tax administration, the numbers the report said might not be “trustworthy.”

According to the audit, which covered activities of the mine from 2006 to 2008 including trial balances from 2003, conducted by tax specialists Grant Thornton and Econ Pöyry of Nordic region, irregularities at Mopani hinge on its relationship with its parent company, Glecore AG, of Switzerland and cover practices such as alleged transfer pricing, inflated operation costs, outright under-pricing of copper for exports and irregular hedging.

In an interview, Magande said the complaints by the audit team that management at Mopani were very uncooperative while some audit queries were unanswered to the audit commissioned by the government with the help of donors, confirmed fears foreign investors had become too powerful for the current regime.

“It is very clear that it can’t be an ordinary investor who comes in and starts issuing instructions to somebody unless obviously he has been corrupted,” the former finance minister said.

[I suggest minister Magande checks out Marc Rich, and his connections, because this may be a lot more than merely bribing. Marc Rich's connections go all the way to the largest shareholders of Anglo-American De Beers. - MrK]

“That is the only thing some of us started suspecting that people in government have been corrupted and that is why now every time, they want to go to tell the other people foreign mine owners about what we, the people, their masters are saying. They are told ‘you remember I paid you some US $20 million, why are you talking to me like this?'”

Magande, the country’s longest-serving finance minister, said late president Levy Mwanawasa’s government worked hard to shield the country from corporate fraud by foreign investors who wanted to get undue concessions by corrupting few key government officials.

“This is what we tried to avoid because I was able to tell these people that ‘if you don’t want this, go back. You go back where you came from and I want to know whether you will find the same good copper you find at Konkola Deep,” Magande said.

“Where will they find it on earth about 60 per cent copper in every ore?”

Magande said President Banda’s regime was capable of selling Zambia to foreign investors.

Magande said uncooperative conduct of management at Mopani towards the audit which was done within Zambian laws was a serious indication that the country’s sovereignty was under threat from weakening governance control over foreign investors.He advised the government not be arrogant to demands, saying the Zambian people owned copper and other minerals in the country.

Magande said the abolishment of the windfall tax on abnormal gains by mining firms from unexpected high metal prices had opened the country to deception by foreign mining firms as confirmed by the pilot audit on Mopani.

He also denounced the announcement last year by finance minister Dr Situmbeko Musokotwane that the country had signed a ten-year tax stabilisation agreement as condition for the foreign mining firms operating in the country to pay their tax obligations from the 2008 mining fiscal regime.

“The newspaper report spoilt my lunch. It was horrifying, and it confirms what we feared some of us. The tax system they wanted to use of taxing the mines using their profit-loss account variable profit tax, we will not be getting benefits,” said Magande.

“We said that we are going to remove windfall tax while we work out strengthening of ZRA so that we have a unit which will understand how these people mining firms prepare their books of accounts. It’s not that we didn’t know we could use the other tax method variable profit tax. Now, even the tax by the mines is being staggered over years when they have already made their money. This is not fair to the Zambian people.”

Mopani which operates mining units in Kitwe and Mufulira is 73.1 per cent owned by the Swiss commodity trader, Glencore AG, and the firm received a 48 euros million loan from the European Investment Bank.

Labels: CORRUPTION, MOPANI, NG'ANDU MAGANDE, SITUMBEKO MUSOKOTWANE, TAX EVASION, WINDFALL TAX, ZRA

posted by MrK @ 7:50 AM