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(STICKY) EITI questions foreign mining firms’ tax figures

EITI questions foreign mining firms’ tax figures
By Chiwoyu Sinyangwe
Wed 11 May 2011, 21:20 CAT

ZAMBIA Extractive Industries Transparency Initiative says trusting the integrity of figures foreign mining firms submit on their production levels and what they pay in taxes is still a challenge.

The first-ever independent reconciliation on Zambia’s implementation of the Extractive Industries Transparency Initiative (EITI) revealed a net discrepancy of K12. 31 billion between what mining companies paid and what the government received in 2008.

EITI, which is a programme that among other activities seeks to reconcile what the extractive industries, chiefly the mining sector in the country, pay to the government compared to what the government receives, based its conclusions on the books of the mining firms which are audited to international standards.

Speaking during the presentation on EITI and on the reconciler report on Tuesday, head of the Zambia EITI Secretariat Siforiano Banda (right) said verifying authenticity of figures from foreign mining firms still remained a challenge.

"Even now when the validator was looking at responses by these companies...we still have some questions," Banda said. "Was this audited to international standards? So, it’s something we have to keep working on to ensure these things are audited to international standards."

Following revelations of glaring irregularities and inconsistency in production and revenue figures that Mopani Copper Mines submits to Zambia Revenue Authority for tax administration after a pilot audit, most of which hinge on its links to its parent company Glencore AG, the mine argued that the report was "flawed" as the firm was annually audited to "international standards".

Banda said international audit firms stood to lose credibility if their audit results are found wanting.

But according to an audit conducted by lead auditors - Grant Thornton Zambia and Econ Pöyry, a Nordic based global consulting and engineering company, there was clear indications from the comparative analyses that there were major problems with both revenues and costs of Mopani Copper mines.

"As Mopani was audited to international standards, but then after, it was discovered they had problems…," Banda said.

"They could have some reasons why such a thing happened but of course auditing firms which audit these companies are international firms with international credibility and I don't think they will risk their names just to give false figures."

Banda also said the Office of the Auditor General had started doing reconciliation to determine the source of the absolute discrepancy of K247 billion and net discrepancy of K12.31 billion between what mining companies paid and what the government received in 2008.

Labels: CORRUPTION, EITI, MINING, TAX EVASION, WINDFALL TAX

posted by MrK @ 4:12 PM