COMMENT - A good move towards actually taxing the foreign corporations that are dragging Zambia's copper out of the ground without paying for it.
(LUSAKA TIMES) ActionAid Zambia welcomes Government’s move to cancel the Double Tax Agreement with Mauritius.
June 26, 2020
Economy ActionAid Zambia welcomes Government’s move to cancel the Double Tax Agreement with...
ActionAid Zambia has welcomed the government’s move to cancel the Double Tax Agreement with Mauritius.
Action Aid Zambia Country Director Nalucha Ziba said her Organisation has for a long time been campaigning for cancellation and re-negotiation of problematic DTAs Zambia has with different countries.
She said a Double Tax Agreement or tax treaty is a legally binding agreement between states, which governs the taxation of cross- border activities; namely investments by a resident of one state in the other state, and vice versa.
Mrs Ziba said Zambia has signed DTAs with different countries such as Germany, Ireland, Norway, Sweden, Mauritius (now cancelled) to mention but a few which spell out how companies investing in a country that Zambia has signed a DTA with their country of origin should be taxed.
She has explained that if for instance, if Zambia has a tax treaty with Mauritius, therefore a Multinational Company originating from Mauritius and operating in Zambia will utilize the tax provisions in the DTA between Zambia and Mauritius.
Mrs Ziba however said that in the recent times, Tax Treaties have not only been found to be unbalanced but also a source of tax evasion by most multinational companies, denying the host countries the much-needed revenue.
“For example, some DTAs provides for as low as 0-7 percent tax rate while others have no or weaker anti-abuse provisions”, she added adding that for some time now ActionAid has been calling for revision and/or cancellation of regressive DTAs like the now cancelled Zambia and Mauritius DTA.
She said the DTA between Zambia and Mauritius provided for 0 Percent Withholding Tax on technical fees paid for technical services.
Mrs Ziba said with this provision a Mauritius based Multinational Company, would take advantage of such provisions and not pay any WHT on technical services which is currently capped at 15 percent.
“For example, if this company engaged a sister company from Mauritius to provide technical services at a cost of USD100 million. This company when making this payment (USD100 million) to a sister company will not deduct any WHT. This implies that the entire USD100 million is untaxed. On the Contrarily, if the DTA provided for 15 Percent WHT on technical fees then USD 15 million would be deducted as Withholding Tax and remitted to Zambia Revenue Authority (ZRA)”, Mrs Ziba said.
She said Action Aid conducted a study titled “Sweet Nothings” which showed how Associated British Foods operating in Zambia as Zambia Sugar Company took advantage of the international tax agreement between Zambia and Ireland to avoid large tax payments.
Mrs Ziba said Zambia Sugar Company paid over US$47.6 million equivalent to about K209 billion, for management services and purchases to a fellow subsidiary called “Illovo Sugar Ireland” between 2007 to 2012.
She however said that the international tax agreement between Zambia and Ireland (before negotiation) exempted payment of Withholding Tax (WHT) for management
or consultancy services.
She said by channelling this money (USD 47.6million) through their Irish subsidiary, Zambia Sugar avoided paying an equivalent of US$7.4 million between 2007 to 2012.
“It is against this background that we commend the government for the position taken and we wish to encourage government to take a similar position over other unbalanced DTAs”, she added.
She has urged the government to ensure that an impact assessment/cost benefit analysis is done before they are signed and every five years thereafter.
Mrs Ziba said they should not follow the OECD model treaty but develop their own model adding that the government should negotiate for favorable and/or fair DTA’s Withholding Tax rates (10%-15%) which will not only promote foreign direct investment but also ensure that government collects adequate tax revenue.
Shd said all treaties should be negotiated transparently, and draft versions made available to the public prior to signature.
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Labels: ACTION AID, ACTION AID ZAMBIA, ACTIONAID, NALUCHE ZIBA, TAX EVASION, TAXATION, TRANSFER PRICING
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(LUSAKA TIMES) ZCCM-IH to appeal against the Lusaka High Court judgment delivered in favour of First Quantum Minerals
March 31, 2020
ZCCM Investments Holdings Plc (ZCCM-IH) has said that the company intends to appeal against the Ruling of the Lusaka High Court delivered on 23 March 2020 regarding a matter the firm commenced in
2016, against
First Quantum Minerals Limited (FQM Ltd), FQM Finance Limited, Philip Pascall, Arthur Mathias Pascall, Clive Newall, Martin Rowley, and Kansanshi Mining Plc.
In a statement released to the media, ZCCM-IH said that the defendants’ conduct, allegedly, among others, that
the defendants on several occasions fraudulently engaged in transactions totaling in excess of $2 billion for the benefit of the FQM Group, is detrimental to ZCCM-IH’s interests and those of the nation, and remained committed to protecting the said interests, adding that it will be appealing against the Ruling.
In 2016, ZCCM-IH started the process of claiming up to $1.4 billion from First Quantum Minerals Ltd accusing the firm of engaging in fraud. The claim included $228 million in interest on $2.3 billion of loans that ZCCM-IH said First Quantum wrongly borrowed from the Kansanshi copper mine, as well as 20 percent of the principal amount, or $570 million, according to an internal company presentation, dated Nov. 4, 2016.
ZCCM-IH is also seeking $260 million as part of a tax liability the Zambia Revenue Authority said Kansanshi owed it, as well as the cost of the mine borrowing money commercially that ZCCM-IH said could have been avoided.
In papers filed in the Lusaka High Court on Oct. 28 2016, ZCCM-IH said that First Quantum used the money as cheap financing for its other operations.
ZCCM-IH is triple listed on 3 stock exchanges: the Lusaka Securities Exchange (Primary listing) and on the London Stock Exchange and the Euronext Access (Paris – Marche Libre) (Secondary Listings).
Government holds directly 17.25% shares and its 60.28% shares is held through the Industrial development Corporation (IDC) in Zambia, with the remaining 22.47% held by institutional and private individual shareholders.
ZCCM-IH currently has an investment portfolio of 22 companies, including Kansanshi Mining Plc (20%), Mopani Copper Mines Plc (10%) and Konkola Copper Mines Plc (20.6). Its shareholdings in these companies range from 10% to 100%, with commodities and services that are diversified in nature, including copper, gold, cobalt, coal and power, limestone, mining consultancy, financial services and gemstones.
Labels: FQM, KANSANSHI MINING PLC, TAX EVASION, ZCCM-IH
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COMMENT - “Why should they tell us they are making losses from the time they came? If they were making losses, they could have gone. They are liars, cheats and take us for fools. I will not allow that. Those that want to work with us will follow our laws. It’s a sovereign state and if we say the way we want to manage our tax regime we decide we will not be blackmailed by investors. Those that don’t want to stay can go. Sales tax is here to stay, VAT is gone. We decide,” said President Lungu."
From 2014: Anil Agarwal brags about the amount of money he dragged out of Zambia. "KONKOLA Copper Mines owner Anil Agarwal has mocked the Zambian government over the paltry amount of money he paid to buy the mine, which is now giving him millions of dollars in profit.".
http://maravi.blogspot.com/2014/05/comment-i-hope-this-is-final-push-in.html
(LUSAKA TIMES) KCM TAKING US FOR FOOLS…if it’s the will of the people to divorce, I will do so – Lungu
By Charles tembo in Ndola
on May 18, 2019
PRESIDENT Edgar Lungu says Konkola Copper Mines are liars, cheats and want to take Zambians as fools. President Lungu said he is on the Copperbelt to end the marriage between his government and Konkola Copper Mines.
He said “enough is enough of exploitation from KCM” despite buying the mine so cheaply.
President Lungu said this upon arrival at the Simon Mwansa Kapwepwe International Airport in Ndola yesterday.
“We had a few matters to do at State House in Lusaka and of course, the Vice-President came back last night and I had to go and see her, she is doing very well. But my coming here is for one reason, one reason, the people of the Copperbelt want a divorce between themselves and copper mines namely KCM and Mopani. I want to hear it from the unions and the reason is simple, people have cried! I saw some women, some of them half naked crying that they feel cheated by the mining company KCM, and Mopani to some extreme,” President Lungu said.
“I have come here that if it’s the will of the people to divorce, I will do so. The message being made is clear. I want to consult the Chamber of Mines. I will be meeting them. The Mineworkers Union and other unions to find out what they think and I also have my position, and my position is that enough is enough. Zambians have been taken for a ride by the mining companies.”
He said KCM was bought so cheaply.
President Lungu said the Attorney General Likando Kalaluka and other lawyers would guide on how to share assets.
“KCM was bought for (US$) 25 million and we paid it all, our copper paid for the mines. They have done nothing since then, just promises, we can’t continue…. I am aware that there is a law in this country which should be followed, the Attorney General is here, the lawyers are here and will guide us on how we proceed with the divorce. So we will talk without any fear,” he said.
“I want to say this frankly because I know the opposition, those detractors who don’t see any good in what we do will be saying he is scaring investors. We are not going to scare any investor. Their investment is safe and those who want to come and invest should do so. I know there are other investors who are willing to come and invest in the mines. Immediately we kick them [KCM and Mopani] out, others will come and invest. There is engagement and disengagement even in marriage if things go bad…I am saying this without fear or favour.”
President Lungu said KCM had made enough profits.
“They have made money and taken money. We will ask the lawyer to tell us how we will share the assets and I know we will get married very soon. These are our mines.”
“Why should they tell us they are making losses from the time they came? If they were making losses, they could have gone. They are liars, cheats and take us for fools. I will not allow that. Those that want to work with us will follow our laws. It’s a sovereign state and if we say the way we want to manage our tax regime we decide we will not be blackmailed by investors. Those that don’t want to stay can go. Sales tax is here to stay, VAT is gone. We decide,” said President Lungu.
Labels: CORRUPTION, EDGAR LUNGU, KCM, MINING, PF, TAX EVASION
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COMMENT - This is awesome. What happened?
(LUSAKA TIMES) ZCC IH sues FQM claiming $1.4 billion
November 14, 2016
ZCCM Investments Holdings has started the process of claiming up to $1.4 billion from First Quantum Minerals Ltd accusing the firm of engaging in fraud.
The claim includes
$228 million in interest on
$2.3 billion of loans that ZCCM-IH said
First Quantum wrongly borrowed from the Kansanshi copper mine, as well as
20 percent of the principal amount, or $570 million, according to an internal company presentation, dated Nov. 4, obtained by Bloomberg.
The company is also seeking $260 million as part of a tax liability the Zambia Revenue Authority said Kansanshi owed it, as well as
the cost of the mine borrowing money commercially that ZCCM-IH said could have been avoided.
ZCCM-IH said in papers filed in the Lusaka High Court on Oct. 28 that First Quantum used the money as cheap financing for its other operations.
ZCCM-IH also last month filed a notice of arbitration against Kansanshi in London over the same matter.
No figure was mentioned in the court filings.
ZCCM-IH owns 20 percent of Kansanshi.
But in a statement released Monday evening, FQM President Clive Newall said having carefully studied the claims made in both the Notice of Arbitration and Statement of Claim, First Quantum is firmly of the view that the claims are utterly without merit, or indeed any foundation in facts.
“It is notable that the Kansanshi Mining Plc deposits were fully repaid to KMP and were then used to fund a major investment program in Zambia, including the successful construction and commissioning of the Kansanshi smelter and expansion of the processing plant and mining operations.
“On October 28, 2016, KMP also received a Statement of Claim filed in the High Court for Zambia naming additional defendants, including First Quantum, its subsidiary FQM Finance Ltd., and a number of directors and an executive of the named corporate defendants. This dispute arises out of the rate of interest paid on deposits made by KMP with the Company’s financing entity, FQM Finance Ltd. The funds on deposits were retained for planned investment by KMP in Zambia.”
He said, “FQM Finance paid interest on the deposits to KMP based on an assessment of an arms-length fair market rate, which is supported by independent third party analysis. ZCCM disputes that interest rate paid to KMP on the deposits was sufficient. Unfortunately, ZCCM has taken the extra-ordinary additional step of commencing a further action in the High Court for Zambia, making allegations repeated from the Notice of Claim against certain First Quantum directors and an executive that are inflammatory, vexatious and untrue.”
“In fact, KMP is now indebted to FQM Finance for the funding of further investment in Zambia. The Company is currently engaged in constructive discussions with representatives of the Zambian Government, which holds a 92% direct and indirect majority shareholding in ZCCM, with a view to achieving an amicable resolution. We do not believe it is appropriate to comment further on the arbitration or court proceedings while they run their proper course, but we will provide further information as and when required.”
Meanwhile, Philippe Bibard, a spokesman for a minority shareholder group based in France said FQM is disregarding the rights of minority owners in ZCCM-IH in dealing directly with government.
*With Additional Reporting by Bloomberg
Labels: KANSANSHI MINING PLC, KCM, TAX EVASION, TAXATION, ZCCM-IH
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(SUNDAY MAIL ZW) DRC report says miners owe US$3,7 billion in tax, fines
Sunday, 02 February 2014 00:00
Democratic Republic of Congo is owed an estimated us$3,7 billion in unpaid customs duties and fines by companies operating in its copper-rich Katanga province between 2008 and 2013, according to an unpublished report commissioned by the public prosecutor’s office.
The report, seen by Reuters and dated November 2013, is part of an ongoing government probe into suspected malpractice by customs agents and companies in the vast south-eastern province.
It accused companies there of under-declaring the value of imports and exports, and sometimes avoiding tax altogether, often with the collusion of customs officials.
Some companies named in the report questioned the accuracy of its findings. The head of the customs agency in Katanga also said proper consultations had not been held with the companies and the report’s findings were exaggerated.
Public Prosecutor Flory Kabange Numbi declined to comment directly on the report.
In a letter to local rights group seen by Reuters, he said it was too early to draw conclusions about the outcome of the overall investigation, which is continuing.
Congo’s mining production has been limited by energy and infrastructure problems, and the government is under pressure to maximise revenues from the sector if it is to stand a chance of hauling its 65 million people out of poverty.
Two government ministers backed the broader investigation, saying it must be completed and any cash owed by firms must be paid to the government.
The report, compiled by a team that undertook a 10-day mission to Katanga, led by Congolese Attorney-General Simon Nyandu Shabandu, examined 25 cases of alleged customs infractions.
It found that 11 companies were liable for us$741 million in unpaid taxes and fines, including Mutanda Mining, a copper miner 69 percent-owned by Glencore Xstrata plc.
The mission’s report said penalties were agreed by “all parties” following talks between the firms and the customs agency.
It noted, however, the experts had not visited Mutanda Mining, pending instructions from authorities.
Glencore strongly denied any wrongdoing and said the report was inaccurate. It said it had not agreed to any penalties.
“Contrary to what is stated in the draft document, no contact was made by the ‘mission’ with Mutanda mining. Mutanda has no outstanding taxes or fines,” said a Glencore spokesman in an emailed statement.
The mission said a further 252 alleged cases remained outstanding and it estimated the total amount owed to the state from these at US$3 billion. Chemaf, a privately owned Congolese company cited by the report as among the 11 owing taxes, also denied its findings.
“We are confirming that Chemaf does not owe US$21,4 million in unpaid taxes,” said Chemaf director Sebastien Ansel.
Representatives for Hyper Psaro, United Petroleum and United Oil & Soap — all named in the report as owing taxes — declined to comment. The companies are all part of privately owned Congolese fuel, commodities and transportation conglomerate Hyper Psaro Group.
Other companies identified as owing money — Comexas, Socimex, Sabot, Marine International, Frontier, Congo Loyal and Trade Service — either did not respond to requests for comment or could not immediately be traced. — Reuters.
Labels: DRC, MINING, TAX EVASION
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Majority mine workers not paying tax - MUZ
By Misheck Wangwe in Chambishi
Mon 13 Jan. 2014, 14:00 CAT
MINEWORKERS Union of Zambia (MUZ) says majority of the lowest paid miners get salaries below K3,000 making it difficult for the government to collect enough revenue through Pay As You Earn (PAYE) from them.
In an interview yesterday, MUZ general secretary, Joseph Chewe, said the union expects investors in the mining sector to seriously readjust the remuneration of miners upwards so that they could begin to look after their families well and also contribute towards the much-needed tax to the government.
Chewe said MUZ and its collaborating partners would this year work extra hard to ensure that every collective agreement signed would have a positive impact on the living standards of miners and their families.
"Our records after research show that 90 per cent of the basic salaries for the lowest bracket of the mine employees are falling below the threshold of K3,000 and as you know the government has raised the threshold of Pay As You Earn to K3,000 in this year's budget. As a union we are very worried because this means that most of our members will not be paying the tax, and government will not be benefiting as expected from unionised miners," Chewe said.
He said the revelations came as a serious matter because employees in the mining sector needed to get enough remuneration so that they could also pay tax to the government.
Chewe said MUZ was mindful that the mining sector was the driving force of the Zambian economy and the industry was also a major employer on permanent basis, hence the need for mining companies to be reminded that majority of their employees were actually not paying tax.
"We need to negotiate for salaries higher than the threshold of K3,000. This should be the guiding principle for all of us who are stakeholders in the mines, that we need to work together and ensure that in the next negotiations, we need to produce positive results," Chewe said.
Chewe said the government must also show direction and ensure that investors in the mines begin to pay considerable salaries this year, so that appropriated taxes could be remitted to the government through PAYE.
Labels: MINING, MUZ, PAYE, TAX EVASION, TAXATION
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(STICKY) Chikwanda wants govt to pay mines $600m in VAT refunds
Edited by Chiwoyu Sinyangwe
COMMENT - So the state borrows $1 billion through a Eurobond, and they don't know what to do with it? And they have the gall to say we need another Eurobond, because 'we need something for agriculture'? If they ran out of ideas, I have few ideas that not only spend the money well, but would create massive returns to the state - a concept that seems to elude the present government. And no, I don't trust the UPND, let alone the MMD who had 20 years to develop the economy. Giving borrowed money to the mines! Outrageous. - MrK
FINANCE minister Alexander Chikwanda wants the government to pay mining companies the disputed US$600 million (about K3.6 billion) in value-added tax repayments over a staggered period.
ZRA has withheld over US$600 million in value-added tax repayments to mining companies that have failed to provide importer documentation required to qualify them for VAT reclaim on the zero-rated copper exports.
“The minister [Chikwanda] says our current fiscal space is severely constrained for us to refund these mining companies of their VAT but that we can only clear the huge backlog by negotiating staggered repayments with the mining companies after we have instituted a more prompt VAT refunds regime,” according to the sources within Ministry of Finance.
The sources said the government currently did not have sufficient funds to offset the VAT refunds being claimed by mining companies.
“The minister says the only way for the government to clear this backlog promptly is to allow Treasury access some funds from the recently-acquired US$1 billion which currently was ‘sitting’ at the Bank of Zambia. Of that US$1billion Eurobond, only US$300 million has been disbursed so far and remaining the US$700 million is still with the Central Bank.”
The sources also said that Chikwanda contended that VAT General Administration Rule Number 18, which required ZRA to obtain information from importers outside Zambia’s jurisdiction had proved impractical and was blamed for delayed processing of VAT refunds for the mines.
VAT Rule 18 was aimed at assisting the government collect more accurate trade statistics.
In line with VAT general administration Rule Number 18, for any exporter to qualify for VAT zero rating of its exported goods, they must satisfy requirement which included copies of export documents for the goods bearing a certificate of shipment provided by ZRA, copies of import documents for the goods bearing a certificate of importation into the country of destination provided by the customs authority of that country.
Rule Number 18 also required exporters to provide proof of payments by the customer for the goods, tax invoices for the goods exported, documentary evidence, proving that payment for the goods has been made by the customer into the exporter’s bank account in Zambia [as introduced in January 2013], and such other documentary evidence that might reasonably be required by the authority.
But according to sources, Chikwanda had proposed that ZRA should amend Rule Number 18 to limit it to regulation and verification of exports and bank certification of receipt export proceed in order to clear the uncertainty and restore the confidence in the economy that was undermined by adjustment to Rule 18.
Last year, the government streamlined administration of the VAT refunds for the mining sector which included introducing rules requiring provision of documents from importers of copper to authenticate the final destination of copper being exported out of Zambia and the export revenue needed to be paid directly to a Zambian bank although some mining companies were paid through foreign accounts.
Konkola Copper Mines (KCM) has taken ZRA to the Lusaka High Court over a K3.2 billion tax bill relating to a retrospective 16 per cent VAT charge on exports from January 2011 to March 2013.
Some companies, including those in the mining sector, found to be complying with Rule Number 18 include KCM, Mopani Copper Mines and Zambezi Portland.
“The problem is that some mining companies and even other exporting companies allude that ‘they sell their products mostly to international traders who take ownership of the product either at the mine/factory gate or as soon as they are put in a ship at Dar es Salaam, Dubai or Durban,” the sources within ZRA said. “For purposes of VAT, a sale at the mine/factory gate is a local sale and should therefore be standard rated sale at 16 per cent of the sale and not zero-rated.”
Labels: ALEXANDER CHIKWANDA, CORRUPTION, EURBONDS, MINING, TAX EVASION, TAXATION, ZRA
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(STICKY) KCM owner mocks zambians and govt
By Chiwoyu Sinyangwe and Gift Chanda
Thu 15 May 2014, 18:20 CAT
COMMENT - I hope this is the final push in showing the people and politicians where Zambia's copper wealth is disappearing to. How can anyone justify paying one cent in 'donor aid', when the money lost through the IMF/World Bank's privatisation dwarfs donor aid inflows. Zambia and Africa don't need donor aid - they need to get paid. Africa is not supported by the West, Africa is and has been supporting the West for 400 years. Time to stop. We want development, paid for by our own natural resources.
Let's also remember who was for the Windfall Tax before they entered office in 2011, and who is against it now:
(STICKY) Chikwanda describes advocates of windfall tax as lunatics
Also check out: ZAMBIAN-ECONOMIST - Copper Colonialism: Vedanta In Zambia
More on Vedanta's hiding profits here.
(ZAMBIAN ECONOMIST) Zambia is Mocked by Vedanta
Saturday, 17 May 2014
(LUSAKA TIMES/THE POST) Flashback: IMF, World Bank pressured govt to privatise mines – Nawakwi
By Chiwoyu Sinyangwe and Chibaula Silwamba
Friday November 02, 2007
(LUSAKATIMES) Video of Anil Agarwal, bragging about the billions of dollars he has dragged out of KCM, Zambia and Africa's largest copper mine. On YOUTUBE.
KONKOLA Copper Mines owner Anil Agarwal has mocked the Zambian government over the paltry amount of money he paid to buy the mine, which is now giving him millions of dollars in profit.
And ActionAid Zambia economic justice project officer Patrick Nshindano says Agarwal's mockery is very disheartening.
In a video released by activists from Foil Vedanta, Agarwal, who is Vedanta boss, boasted of raking in US500 million per year when he only bought the mine for US$25 million.
KCM is currently reported to be battling with operational challenges.
Agarwal mocked the Zambian government for giving him VVIP treatment when he came to acquire the asset and eventually becoming majority owner of KCM at the current 69 per cent.
Speaking to the Jain International Trade Organisation in Bangalore, India between March 22 - 23 this year, Agarwal told the cheering crowd how he bought KCM for a song, rather than the US$400 million asking price.
In the 3:58-minute video, a bragging Agarwal describes his surprise at receiving a VIP welcome to the Zambian Parliament, and ridicules the then Zambian president Levy Mwanawasa for claiming that Vedanta would improve the lives of Zambians, especially those in Chingola and Chililabombwe.
Agarwal reveals how he duped late president Mwanawasa on their first meeting that 30 members of his delegation missed the connecting flight out of Johannesburg into Lusaka, when in fact he had only travelled with one engineer from his firm.
Agarwal boasted that KCM was giving him US$500 million every year in profit, plus an extra US$1 billion.
In recent years, KCM has touted to dismiss close to 2,000 workers from its mining units to cut down on labour costs and improve its profitability.
Vedanta had continued to claim that they were making losses or a minimal profit at KCM.
The mining unit claims declining ore grades at its mining units and high operational costs on the backdrop of high labour and energy costs was hurting the country's second-largest copper producer.
Below is the excerpt Agarwal gave in Hindi:
"Seven to eight years back, hunger remains to do big work. Pondering what to do...how can we let life go in vain? I saw it in the paper FT Financial Times. (Agarwal drinks bottled mineral water). There was largest copper mine in Africa. That copper mine was up for sale. That government was privatising it. I got quite interested in it. I asked few people; they replied, 'Aren't you ashamed?' 'What ridiculousness you are talking off?' I told them 'Where is the problem in talking?'
'Speak to them let us see...' Then he saw it, it was a big deal. I have a friend in McKensey - Ranjit Pandit. I went to him, asked him to make papers. 'Make the papers beautiful, professional.' Papers were prepared. We kept it at US$400 million. In pocket we do not have US$4 million!... bid for US$400 million! US$25 million ... US$25 million that we had, ha ha ha... Take chance in life definitely! All people sitting there... Take chance! If you won't take chance, nothing will happen (Clapping, Whistling...)
Why we are different - different because we take chances. I told you we have to take chance. Then we said 'US$25 million we will give you cash and US$375 million we have to invest in making the machines running'. We forgot the matter, and suddenly in about a month or so, we received calls; they invited us. We called up and inquired. They confirmed: 'This company is yours'... 'Really?' I took one of our engineers and went to Johannesburg and further changing flight there to Lusaka.
When we arrived there, we were surprised to receive VVIP treatment there, red carpet, entire government machinery has arrived at airport to receive us. Surprised seeing such arrangement, we asked someone. 'It's all for you sir'. 'How many people you have in the delegation team?' Ministers, VVIP vehicles, cavalcade...'
We were told 'You will be going to the Parliament today; and
President's place as well... Where are your people? It's necessary to meet the President.' Repeatedly, we were asked 'Where is your delegation?' I asked 'What delegation? We are the delegation only'.
We were taken to the President. The President... 'Your Excellency, we are 30 people in our delegation. But they missed the flight at Johannesburg.' (Audience laughs). 'Can you wait till tomorrow? They all will come'. 'No no no. The Parliament is tomorrow, we have to decide today. Key is ready. Are you ready?' 'I am ready, I am always ready. I will handle it'. (Laughing).
And they came, what a Parliament House! First time I saw... I had held a bead necklace (in the name of God RAM) and kept chanting, moving ahead. With my smiling face. When I sat there with my man, the President came and sat by our side. He told the entire Parliament that what great people we are, and our empire and that 'they (KCM) will make our lives gorgeous. And they will make schools, make hospitals and blah-blah... We just kept watching, chanting God's name there. All you make, what we make! Ah ha ha ha ha ha ha.
We took over the company. It's been 9 years, and since then, every year it is giving us a minimum of US$500 million plus US$1 billion every year… it has been continuously giving back. It's a matter of taking a chance. I will keep telling you stories. We had oil company. They told us no one else can buy oil company..."
Agarwal's 'motivational talk' has angered Foil Vedanta, which had previously released figures from Vedanta's annual reports showing that the company made US$362 million in 2013.
Vedanta chief executive officer Tom Albanese disputed this during his visits to Zambia last February, repeating the previous claim that KCM was making a very low profit or a loss due to high operational costs and higher taxes.
But Nshindano, from ActionAid Zambia, said the statement from Agarwal was disheartening.
"It is saddening even that an investor can brag that he was given red-carpet treatment without taking into consideration what kind of importance that project has for the people of Zambia," he said.
Nshindano urged the government to move in to ensure Vedanta accounts for its operations.
"Definitely, the government needs to move in and ensure that the right corrective measures are taken to see to it that Zambians benefit from the mine," he said.
He also said the Zambian officials that negotiated the sale of KCM owed Zambians an explanation on why a company worth billions was sold to Vedanta Resources for peanuts.
"We sold this asset in a hurry but we now needed to ensure that it benefits us," Nshindano added.
The London Stock Exchange-listed Vedanta made a profit of US$26 million from KCM for the three-month period October to December 2004, effectively recovering the purchase price in just three months.
A few weeks ago, a protest at the Zambian High Commission in London called on Vedanta and the Zambian government to release KCM's annual reports, containing the official figures on profits and tax payment, which are currently kept secret.
They also suggested that Vedanta should be forced to pay the fine of US$2 million served by Zambian courts in 2011 as compensation to 2,000 claimants poisoned by major pollution of the Kafue River in 2006, and stop ongoing spills affecting Chingola residents.
In addition, they joined the calls of KCM employees and former employees in Zambia, who are demanding that retrenched workers be properly compensated.
The government came under heavy attack from prominent citizens, the mining area's chamber of commerce and the Zambia Congress of Trade Unions (ZCTU) for allowing the mine to be sold for peanuts.
Stakeholders questioned the deal and the competence of the negotiating team.
On its part, Vedanta Resources has been awarded an eight-year tax relief.
Labels: IMF, KCM, MINING, SUNIL AGARWAL, TAX EVASION, VEDANTA, World Bank
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Chikwanda proposes single account for non-tax revenue
By Kabanda Chulu
Fri 06 Dec. 2013, 14:00 CAT
FINANCE minister Alexander Chikwanda has proposed that non-tax revenue collected by quasi-government institutions such as PACRA should be put in a consolidated account at Bank of Zambia to ensure transparency and accountability.
But there have been concerns that affected institutions would face operational challenges and might even fail to retain qualified staff if funding is delayed from the government.
Moving the motion to amend the Competition and Consumer Protection, the Environmental Management, the Fees and Fines, the Patents and Companies Registration Agency and the Weights and Measures Bills, Chikwanda said fees and any other revenue collected by these institutions should become part of the national treasury.
However, Committee on Legal Affairs, Gender and Child Matters chairperson Jack Mwiimbu said witnesses interviewed at the Competition and Consumer Protection Commission and the Zambia Environmental Management Agency said operations of the entities would be affected.
"Mr.chairman, your committee was told that their budget flows will be affected and operations will be stifled if the national treasury suffers budget deficit. For instance, ZEMA requires timely funding to carry out its work and previously, they faced problems when they relied on direct funding from government," said Mwiimbu.
"We are aware that these measures are aimed at enhancing revenue collection and will ensure greater sharing but there are concerns that delayed or reduced funding might result in withdrawal of certain incentives thereby forcing qualified personnel to leave."
But Chikwanda assured that funds would be placed in a dedicated account at BoZ that would be ring fenced and ready for use whenever an emergency arose in the concerned institution.
"Their operations will neither be affected nor compromised and before money is deposited into control-99, funds necessary for operation including emergency activities will be availed," he said.
And Committee on Delegated Legislation chairperson Moono Lubezhi said witnesses interviewed at Patents and Companies Registration Agency and Weights and Measures Agency, also said provision of efficient services would be affected due to delayed funding.
"They said that funding should be timely and adequate to ensure smooth operations," she said.
In response, Chikwanda said all funds would be put to good use.
"Operational costs of these institutions will not be affected, all we want is to ensure these funds become part of general revenue and should be accounted for," said Chikwanda.
Labels: ALEXANDER CHIKWANDA, PACRA, TAX EVASION, TAXATION
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Kumar was very arrogant - Shamenda
By Allan Mulenga
Sun 01 Dec. 2013, 14:01 CAT
LABOUR minister Fackson Shamenda says he will not support deported Konkola Copper Mines chief executive officer Kishore Kumar's return to Zambia because of his arrogance to him and President Michael Sata.
Commenting on Vice-President Guy Scott's statement that Kumar has appealed against the deportation and the government was considering the move, Shamenda said Kumar not only exhibited arrogance towards him, but also to President Sata.
"I don't like his Kumar approach to industrial relations and I will not support his coming back anyway. From my point of view, I don't like arrogant employers. Even they have an attitude like the apartheid or neglecting the workers, we are trying to harmonise industrial relations," he said.
"...not that employers should be arrogant; we want to have a situation where there is harmonious industrial relations for higher levels of productivity. The employer will get his part, the government will get the resources from the taxes and then the employees will have a comfortable life. That's all what we want in life and that is the approach of the Patriotic Front government."
Shamenda said he would not tolerate arrogant employers in the country.
"I have reported his behaviour which is highly unwarranted. As for whether he was going to come back or something, my working relationship with him will be very difficult," he said.
Shamenda said unlike his predecessor, Kumar was not reasonable when dealing with labour matters.
"I don't care whether there is Kumar or no Kumar, but as far as I am concerned Kumar was very arrogant. He was arrogant to me; he was arrogant to the President. So for me I have no time for such characters. So far I am working very well with other persons, like his predecessor; he was a gentleman. I highly regret that he left. You could differ in principle, but still more he was a very humble fellow. He was a polite guy," he said.
Shamenda said Kumar should shoulder the blame for his deportation.
"...for Kumar when the President said, 'you should go and tell Kumar he should not dismiss people', he said, 'me industrial relations are not my priority, I am going for a technical meeting'. I said, 'my friend, the President is saying I should discuss this issue with you'. He says, 'policy statements are rhetoric.' That is how the whole thing started and then he went for that technical meeting at Intercontinental Hotel. That is when the Minister of Home Affairs wanted to confirm from him, then he started running away. That is how he was declared a PI prohibited immigrant," said Shamenda.
On Friday, Vice-President Scott told Parliament that Kumar had appealed against his deportation, and the government was considering the move.
Labels: FACKSON SHAMENDA, GUY SCOTT, KCM, KISHORE KUMAR, TAX EVASION
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KCM boss contests his deportation
By Abel Mboozi
Sat 30 Nov. 2013, 14:01 CAT
DEPORTED Konkola Copper Mines chief executive officer Kishore Kumar has appealed against the action, and the government is considering the move, Vice-President Dr Guy Scott told Parliament yesterday.
And Vice-President Scott told the House that there was nothing sinister for UPND vice-president Dr Canisius Banda or any other Zambian to visit State House to exchange notes with the head of state on national issues.
Meanwhile, Kabompo West UPND member of parliament Ambrose Lufuma has questioned why the permanent secretary at the Ministry of Mines should sit on the board of First Quantum Minerals Limited.
Responding to Chimbamilonga PF member of parliament Hastings Chansa, who asked what the position of the government was on the proposed loss of jobs at KCM and on Kumar, who fled the country, Vice-President Scott said he had information that the chief executive had appealed.
This was during the 30-minutes question time session for the Vice-President in the House.
Kumar was early this month deported for defying President Michael Sata's directive for KCM not to lay off any worker, after the mining giant went ahead to prune 76 workers.
Kumar had announced that KCM would lay off over 1,500 workers as the mining company was seeking to mechanise its operations.
This announcement prompted President Sata to warn the mining giant not to lay off a single worker or risk having its mining licence revoked.
In response to the question Vice-President Scott said: "The chief executive, Mr Kumar was deported but he has appealed, thus his return matter is being considered by the ministry (home affairs) and by the government. It's very routine, the law says if you are deported, you leave, and you appeal if you want to appeal 'chapwa' 'kwamana' (it's finished)," Vice-President Scott said, sending the House into laughter.
On the pending job losses, Vice-President Scott said there was a committee of 12 people and very highly powered people who were engaged over the matter.
"I am told the ultimate beneficial owner of KCM has been in the country and he has assured us that there will be no job losses, so we are on to this one very hard," he said.
Monze Central UPND member of parliament Jack Mwiimbu asked Vice-President Scott to reconcile this position with home affairs minister Edgar Lungu's statement to the nation that Kumar was never deported but that he left Zambia on his own volition and that the government had no intentions of deporting him unless under compelling circumstances.
Vice-President Scott in response said: "To clarify the situation, Kumar left, he ran, he bolted and he was followed closely behind by the prohibited immigrant status."
And Vice-President Scott told the House that State House was open to any citizen of Zambia.
He was responding to a question by Bwacha PF member of parliament Sydney Mushanga, who wondered why the UPND was making an issue out of Dr Banda's visit to State House to confer with President Sata over national issues.
Mushanga said Dr Banda was under pressure to disclose what he had discussed with the head of state.
Vice-President Scott said: "Certainly as far as any Zambian citizen visiting State House is concerned, if the President invites them or they invite themselves, it's certainly normal to speak to the head of state."
Meanwhile, Lufuma wondered whether it was not a breach of the law for the permanent secretary at the Ministry of Mines to sit on the board of FQML, to which Vice-President Scott responded that the trend was common but the government was reviewing it.
"This trend of wearing two hats is quite common; it's not just the Ministry of Mines. It has become a bit traditional in Zambia that boards contain PSs but this is currently under review," he said.
Lubasenshi Independent member of parliament Patrick Mucheleka wondered what the government was doing to deal with mining companies that were engaging in tax avoidance, and Vice-President Scott assured that measures were being taken to correct the anomaly.
Mafinga MMD member of parliament Catherine Namugala asked if the Malawian government had paid for the fuel that Zambia gave to that country last year, and Vice-President Scott said no payment had been made yet.
Labels: KCM, KISHORE KUMAR, TAX EVASION
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KCM refunds wrongly deducted PAYE
By Misheck Wangwe in Kitwe
Fri 29 Nov. 2013, 14:00 CAT
KONKOLA Copper Mines has refunded all affected employees PAYE deductions that were wrongly effected in the month of October.
Recently, the KCM payroll system was marred with irregularities and salary discrepancies of its mineworkers, with stakeholders and the government blaming the new Systems Application Products-Human Capital Management (SAP-HCM) technology that was introduced by management.
Mineworkers from different Integrated Business Units (IBUs) of KCM complained that they were getting little money as salary, sometimes just half of their usual salaries due to irregularities in the payroll system.
In a memo addressed to all KCM employees, acting vice-president for Human Capital Management, Eve Banda, said the refund was with effect from November 2013 and the balance of Pay As you Earn (PAYE) would no longer be deducted.
"This is to advise that the PAYE deducted under the Code 526D from employees in the month of October 2013 had been refunded to all affected employees...This will be displayed on the deduction side of the statement under the payroll Code 526D-PAYE recovery which would show a negative deduction and negative balance amount signifying total reversal," the memo read in part.
In September, deputy minister of Mines Richard Musukwa said KCM was expected to show seriousness regarding the issue of pay anomalies, as it was a responsibility of the company to demonstrate competence and proficiency in the management of salaries for its employees.
Labels: KCM, PAYE, RICHARD MUSUKWA, TAX EVASION
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(STICKY) (LUSAKATIMES) Barclays accused of promoting tax havens in Africa
Time Posted: November 21, 2013 2:49 pm
Barclays is using its “Offshore Corporate” department to market a range of tax havens to big businesses in Africa including promoting the low tax levels that are available, a new ActionAid report has claimed.
ActionAid Tax Justice Adviser Toby Quantrill said every year developing countries lose billions of pounds of vitally needed revenue because of tax avoidance by big companies using tax havens.
“When companies avoid tax, they drain billions of pounds of revenues out of developing countries that could be used to help build schools and hospitals and lift people out of poverty.
“Now Barclays customers have sent a stark message to their bank. A clear majority are saying it is unacceptable for their bank to be providing the kind of services that can help businesses reduce their tax payments.”
Earlier this year Barclays Chief Executive Antony Jenkins promised that Barclays was “changing” following a range of scandals that have damaged the bank’s image, including allegations of corporate tax avoidance using tax havens.
But ActionAid’s report called “Time to Clean Up: How Barclays promotes the use of tax havens in Africa shows that in September Barclays Offshore Corporate increased the number of tax havens it was promoting, to include the key African tax haven of Mauritius.
Mauritius has a very low effective tax rate and its network of tax treaties with other African countries means that large companies can use it as a key location to avoid tax.
ActionAid is now demanding that Barclays honours its commitment to change and specifically to close down its Offshore Corporate department, which it uses to promote tax havens to big businesses in Africa.
Tax avoidance and the kind of practices that are frequently used in tax havens have been strongly condemned by former UN Secretary General Kofi Annan, who stated that it was “unconscionable” that companies were aggressively avoiding tax “while millions of Africans go without adequate nutrition, health and education.”
According to the Organisation for Economic Co-operation and Development, tax havens cost developing countries just under three times more than they receive in aid every year.
“Tax revenue is vital to helping boost investment in basic services in some of the poorest parts of the world. But for as long as major companies like Barclays promote tax havens, then there will always be businesses who avoid tax. We are asking Barclays to do better than that. We want them to show that when they say they are “changing” – they actually mean it,” said Mr Quantrill.
A recent report from the high level Africa Progress Panel estimates that lost taxation is costing sub-Saharan Africa US$63 billion every year.
Labels: BARCLAYS BANK, TAX EVASION
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(STICKY) (ZAMBIAN-ECONOMIST) Copper Colonialism
Foil Vedanta have today released a report (embedded below) on the operations of Konkola Copper Mines (KCM) in Zambia. The report reveals that, contrary to popular opinion in Zambia, Vedanta (KCM's parent company) is not Indian but wholly British owned and controlled, and is making large profits at KCM. The report demonstrates Vedanta's pattern of buying undervalued state companies, polluting, and operating without permission all over the world. It also reveals how investment companies like Blackrock have controlling interests in Zambian copper as key shareholders behind Zambia's biggest mining companies.
Foil Vedanta's(1) report 'Copper Colonialism – Vedanta KCM and the copper loot of Zambia'is a groundbreaking study of copper mining in Zambia, focusing on British mining company Vedanta, KCM's parent company. The report reveals that Vedanta made approximately $362 million, or 12.9% of their total group revenue, from KCM in 2013 (according to the company itself and analyst reports)(2). The authors, who visited Zambia in December, note the number of misconceptions about this company in Zambia – where Vedanta has created the perception that they are an Indian company, and are making such a loss at KCM that they may need to be rescued by the state. In fact KCM are one of the highest profit making subsidiaries of the parent company.
The report details how Vedanta, a FTSE 250 London based company which is 67.99% owned by Chairman Anil Agarwal via tax havens, bought KCM for a fraction of its true value, possibly losing the Zambian exchequer up to $1.4bn in total.(3) It goes on to record some of the environmental and social abuses of the company in Zambia – including pollution of the river Kafue in 2006 and 2010 which have led to ongoing health problems as extreme as deformed births and miscarriages in the Chingola area, as well as poor workers conditions and low pay. Vedanta's tax contributions in Zambia are close to zero, and they even brag that 50% of tax paid is via employees Pay As You Earn (PAYE). Vedanta hide these truths in Zambia by paying former journalists as PR agents to keep their image clean.
The authors demonstrate that this style of operation is a pattern for Vedanta across India and elsewhere, where they are consistently opposed by people's movements and under investigation by authorities for corruption and legal violations. In Chhattisgarh, India, they bought BALCO's bauxite refinery, smelter and mines for $89 million in 2001 when it was worth around $800 million. Vedanta Chairman Anil Agarwal is currently under investigation by the Central Bureau of Investigations in India over the original disinvestment of 51% of Hindustan Zinc Ltd (HZL) to Vedanta for only $72 million, claiming the deal was considerably undervalued, and may have lost the exchequer hundreds of millions of dollars in revenue.
Vedanta's subsidiary Sesa Goa are accused of exporting 150 million tonnes of iron ore from Goa, India in 2010/11 while only declaring 7.6 million, their agreed export allowance. The report suggests that Vedanta may also be exporting considerably more copper than they claim in Zambia, as well as cobalt and other minerals, and recommends citizens monitoring of trucks leaving their facilities to estimate the true amounts.
The report also looks at the real interests behind mining companies in Zambia. Using shareholder information it shows that secretive investment company Blackrock have high percentages of shares in Vedanta, Glencore and First Quantum, Zambia's three biggest miners. Blackrock and JP Morgan are currently buying the majority of the worlds available copper to launch a futures market which will control the price of copper, giving them high returns on their investments while leaving copper producing nations in poverty.(4) The report also draws attention to foreign governments such as Norway and the UK, who play a duplicitous game of funding transparency and accountability projects on mining via NGOs and the Zambian government, while also profiting from the abuses of the very same mining companies.(5)
Author Samarendra Das says, "We were shocked to discover how little information Zambian authorities and communities have about their own resource and the companies exploiting it. Despite its role in the economy, copper is the elephant in the room in Zambia. This report aims to expose the real interests controlling Zambia's copper industry - from banks and investment firms to foreign governments and NGOs."
Co-author Miriam Rose states, "Mining companies are commonly called 'investors' in Zambia, but what they are doing is far from investment, it is short lived extraction and loot of resources, leaving behind only environmental and social damage which will be paid for by future generations. There is limited time left for Zambians to change the course of history, make links with peoples' movements opposing these policies elsewhere, and truly profit from this resource before it is all gone."
Notes :
1.
Foil Vedanta are a London based international solidarity group focusing on the activities of British mining company Vedanta. We link up global communities affected by Vedanta, and hold them to account in London. We are currently aiming to make the case for Vedanta to be de-listed from the London Stock Exchange for their human rights and corporate governance abuses.
2.
Excerpt from report (p.12):
KCM and other mining companies in Zambia don't publish their profits, even though the Zambian taxpayer has a share in most of them via ZCCM-IH. However Vedanta's 2013 annual report claims KCM produced 216,000 tonnes of copper in 2013. In the same year costs of production were valued at 255.1 US cents/lb, putting the total cost of production that year at $1.2 billion, which would constitute a profit of $362 million (at a current copper price of $7,300). Analysts reports from Global Data reveal that KCM made 12.19% of revenue for the entire Vedanta group in 2012 so they are certainly not doing too badly.
3.
Excerpt from report (p.6):
A 51% share in KCM was sold to Vedanta Resources for just $25 million, paid in cash, and $23million in deferred payments, in 200412. The deal was facilitated by Clifford Chance and Standard Chartered Bank13 (one of the main bookrunners and lenders to Vedanta Resources). Within three months Vedanta had already recouperated its initial investment, making $26 million. The banks also helped Vedanta secretly negotiate a call option allowing them the right to purchase Zambia Copper Investments' 28.4% share14, which they exercised in November 2005 (a year after their initial purchase), giving them the 79.4% monopoly they currently hold on KCM, while the Zambian government - via ZCCM-IH (their mining investment wing), own the remaining 20.6%. The Competition Commission was even rendered irrelevant by the Zambian government to allow Vedanta such a large majority share.
The price negotiated for the buyout of ZCI's remaining shares is not reported, but analysts at the time valued it between $250 million and $550 million, putting Vedanta's original 51% share at between $455 and $910 million, nine to eighteen times what Vedanta paid! This means the Zambian exchequer lost between $155 and $340 million in from the sale of 21.4% of ZCCMIH's shares alone. In response, ZCI's 33% French shareholders (grouped into a company called Sicovam SA) called the deal 'the most outrageous and scandalous ever seen in Africa for decades'.
This puts the value of the entire 79.4% share held by Vedanta at between $705 and $1460 million, losing the Zambian exchequer between $600 and $1400 million in undervalued assets.
4.
Excerpt from report (p.26):
Blackrock is the world's biggest asset management company, in charge of $4.1 trillion of assets (including much of Zambia's copper via its shares). It is bigger than any bank, insurance company or government fund, and is the majority shareholder in half of the world's 30 largest companies. It was set up by Larry Fink - a Washington insider who was named as a potential treasury secretary in the US. Blackrock, JP Morgan and Goldman Sachs are currently working together in an attempt to buy up 80% of available copper on behalf of investors, and hold it in warehouses. This will create a copper futures market enabling speculation, futures trading, and backing of new loans and funds.
In 2010 JP Morgan bought more than half of the available warehoused copper in a few weeks, leading to a spike in copper prices. Manufacturers and copper wholesalers warned the Securities and Exchange Commission (SEC) that such a monopoly on copper would squeeze the market and send prices skyrocketing but under pressure from Blackrock and the banks the SEC approved their proposal.1 The aluminium futures market set up by Goldman Sachs, on which the copper takeover is modelled, is estimated to have cost consumers billions of dollars in price hikes, as market manipulations sent prices soaring.2
(5) See section on NGOs and civil society, p.30 of report.
1 The New York Times, July 21st 2013, 'Next up Copper.'
2 David Kocieniewski, New York Times, July 20, 2013. 'The House Edge: A Shuffle of Aluminum, but to Banks, Pure Gold'
Labels: BLACKROCK, COPPER, TAX EVASION, VEDANTA
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Vedanta chairman in Zambia over KCM, govt standoff
By Chiwoyu Sinyangwe and Joan Chirwa-Ngoma
Sat 16 Nov. 2013, 14:00 CAT
VEDANTA Resources chairman Anil Agarwa is in the country to help resolve the standoff between its subsidiary Konkola Copper Mines and government.
And former mines minister Dr Kalombo Mwansa says mining companies should be made to pay appropriate taxes to the government.
Meanwhile, Dr Mwansa says allowing mining companies to export copper concentrates without adding value is unacceptable.
Vedanta Resource which is London-listed owns a majority stake in KCM.
On November 2, KCM announced plans to lay off over 1, 500 workers in the next three years as it migrated towards automation and mechanisation at Nchanga Underground.
The move by KCM unnerved President Michael Sata who said embattled chief executive officer Kishore Kumar would be sorted out for attempting to blackmail Zambia.
"If he's threatening us that he wants to lay off people at Konkola Copper Mine let him lay off one person, then we take away the licence from him; that's the best way of laying him off because investment should be for the people," said President Sata on November 5.
"And if that Mr Kumar wants to threaten us, to blackmail us, he can go to hell. We shall sort him out."
Mines minister Christopher Yaluma confirmed that Agarwa arrived in the country yesterday to help the troubled mine.
"Yes, I am supposed to meet him Agarwa this evening," said Yaluma.
And Yaluma said no miner would be retrenched at KCM.
"We had told them that that was non-negotiable and the President made it clear that whoever laid off even a single worker at KCM...and obviously you saw what happened," said Yaluma.
On November 9, Kumar 'voluntarily left' Zambia after home affairs minister Edgar Lungu demanded a meeting with him to discuss his "rhetoric" taunt targeted at President Sata on November 8.
Kumar, who is also chief executive officer for Base Metals Africa, left the country aboard South African Airways.
And Dr Mwansa said Zambia had room to collect enough revenue from the mines through proper taxation.
"We don't get enough from the mining industry. Whatever revenue we can get, we must get it. We must do everything possible to maximise revenue," he said in an interview yesterday.
With an industry that is estimated to be worth around US $10 billion, Dr Mwansa said it was unacceptable for the mines to contribute below US $600,000 (about K3 million) to the treasury in form of taxes.
"On the revenue side, we are very low. Every avenue we can get to increase revenue from the mines should be looked at," he said.
The government recently raised mineral royalty tax on copper from three per cent to six per cent, but shelved plans to re-introduce windfall tax on copper that was suspended by Rupiah Banda's regime.
Dr Mwansa said the country's efforts in the mining industry must be towards value addition, and supported President Sata's statement that mines "should not be allowed to export soil".
Finance minister Alexander Chikwanda on October 4 signed statutory instrument (SI) 89 which allowed mining companies to export copper concentrates tax free.
But President Sata cancelled SI 89, saying mining companies should not be allowed to export copper without adding value.
SI 89, which was to be in force up to September 30, 2014, was to reverse the November 2011 decision of the PF government to impose a 10 per cent export levy on copper concentrates and ores to encourage value addition and to improve accountability in the vast mining sector.
SI 89 has since been replaced with SI 99 to reinstate the 10 per cent export duty on copper concentrates and ores, which Chikwanda briefly abolished after being lobbied by First Quantum Minerals and Lubambe Copper Mines.
"It's not good to export soil, like the President put it. We have to add value… Mining companies can also put resources together to put up a big smelter," he said, and advised the government, mines and mine workers unions to promote dialogue in the industry.
His comments follow KCM's plan to lay off over 1,500 workers as the company seeks to switch to mechanisation.
"If they (mines) have a problem, they should sit down with the government. There is need for government, mines and the unions to find time to sit and exchange ideas. They should not only meet when there is a crisis," said Dr Mwansa, adding that the current government's policies on the mines and job creation were good.
Labels: KCM, STATUTORY INSTRUMENT 89, TAX EVASION, VEDANTA
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Kumar says he'll return on Nov 28
By Chiwoyu Sinyangwe
Tue 12 Nov. 2013, 14:00 CAT
KCM chief executive officer Kishor Kumar says he will return to Zambia on November 28. And mines minister Christopher Yaluma has revealed that Konkola Copper Mines has not been fulfilling its tax obligations to the Zambia Revenue Authority.
In an internal memo to workers in the company, Kumar said he had flown to attend to Zinc International business in South Africa and would return at the end of this month.
"During this period, Mr David Kaunda who is vice-president human capital management will act in the position of chief executive officer, and all decisions will be jointly taken with the EXCO members," Kumar stated in the November 8 memo.
"Please accord him all the due cooperation during this period."
Kumar, who is currently chief executive officer for Zinc International, functions as chief executive for Base Metals (Africa), which includes control of KCM operations and copper mines of Tasmania (CMT) in Australia.
Kumar "voluntarily exited" the country last Thursday after the government pursued him over his remarks that President Michael Sata was full of political rhetoric.
This was after President Sata directed that KCM halts the planned retrenchment of over 1,500 workers as the company planned to migrate to mechanization and automation to cut down on labour costs at one of the most labour-intensive mines in the country.
And in a separate interview, Yaluma said the government would constitute a team of experts from ZRA, Ministry of Finance and Ministry of Mines to probe KCM which was struggling.
He said KCM was currently failing to meet its production targets as well as tax obligations to ZRA.
"Based on the discussion with KCM and ourselves, this team we will constitute is for specific things we want to find out and also KCM, they want to prove to us something that they have been telling us," said Yaluma.
"It's totally agreed by both parties and that is what we want to dwell on.
They have not been honouring or fulfilling their targets and they lack capacity to pay. They are in arrears with ZRA. They are in operations but they are not performing well."
Labels: CHRISTOPHER YALUMA, DAVID KAUNDA, KCM, KISHOR KUMAR, POLLUTION, TAX EVASION, ZRA
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KCM has insulted govt - Musukwa
By Misheck Wangwe in Kitwe
Mon 11 Nov. 2013, 14:01 CAT
MINES deputy minister Richard Musukwa says KCM management has persistently insulted the intelligence of the government by giving flimsy and inconsistent reasons over its intentions of mass layoffs.
Meanwhile, ZEMA is investigating KCM and other mining houses on latest reports of pollution of the Kafue River, the Mwambashi stream and other sources of water supply on the Copperbelt.
The government has since announced plans to constitute a team of experts to investigate KCM's operations.
In an interview in Kitwe, Musukwa said the investors in KCM had seriously disappointed the government with their behaviour and the manner in which they wanted to blackmail the government through maneuvers to retrench over 1,500people.
"They gave reasons for their latest intentions to layoff our people as automation, mechanisation and dwindling grades of the ore. The dwindling grades of the ore are a common scenario in a mining operation and it cuts across all mining companies. Any best mining operation of a world class nature like as KCM as it claimed, should be able to plan and organise operations at the lowest price and the lowest grade of the metal and that's how the copper business is managed because it is very unpredictable," Musukwa said.
"These reasons that KCM is advancing today, in case they have forgotten, are different from those they gave five months ago when they wanted to retrench 2,000 people."
He said five months ago, KCM did not mention anything to do with its plans to take the route of automation, mechanisation and challenges of dwindling grades but rather gave a set of different reasons such as fluctuating copper prices and challenges to appreciate various tax incentives that the government had put in place.
Musukwa said KCM would not be allowed to manipulate Zambians over their own mineral resources.
"People have not been very productive recently because this KCM have brought fear that they will lose jobs. People are operating as if they have no jobs, their morale is dampened. Many Zambians world over are known to be hardworking and they account for their presence at the place of work. Our wish has been that KCM must drive our people to the level of production of world class nature," Musukwa said.
Meanwhile,deputy minister of labour Rayford Mbulu said the government was managed on the premise of laws and it would not allow people to be condemned to misery by KCM and its intentions of mass layoffs.
Mbulu said KCM disrespected the government from the time it announced its intentions to cut jobs of about 1,529 mineworkers through the media without even communicating to the state.
"This government is premised on laws and these laws must be respected. What we have gotten from KCM is embarrassing to say the least. They (KCM management) must know that the employment and labour relations Act Cap 268of the laws must be respected to the latter.
And KCM breached this when they chose to go to the media before they could even engage government," said Mbulu."Acts of intransigency from KCM will never be tolerated."
KCM chief executive officer Kishor Kumar announced at a press briefing in Kitwe a week ago the company's intentions to lay off 1,529 mineworkers.
Kumar cited dwindling copper ore and the company's new route of mechanization and automation as major reasons for the layoffs.
President Michael Sata, however, warned Kumar that he would be sorted out if he attempted to fire even a single employee and that KCM's operating license would be revoked if the mining company wanted to blackmail government with mass layoffs following the decision to stop the export of copper concentrates.
On Wednesday, it was learnt that KCM had in fact terminated employment of about 76 employees, a situation that angered government.
Labour minister Fackson Shamenda later told journalists in Lusaka that government was extremely disappointed and annoyed with Kumar who had dismissed President Sata's warning that the government would revoke the company's license if it fired even one worker, as mere rhetoric.
On Friday, Kumar left the country in unclear circumstances before he could be taken to task by the government over his statement against President Sata's directive.
Vedanta Resources, the majority shareholders in KCM, have since appointed a KCM vice-president for Human Capital Management David Kaunda to act as chief executive officer in the absence of Kumar.
And in an interview yesterday, Zambia Environmental Management Agency northern region manager Patson Zulu said the matter was being seriously investigated and KCM had already been written to.
Minister of Local Government and Housing Emerine Kabanshi on Thursday warned Konkola Copper Mines over its alleged pollution of the Kafue River, saying it had resulted into the closure of two water treatment plants for Nkana Water and Sewerage Company.
"We have recorded such cases and I can say it's not only KCM, we are also investigating other mining companies, the polluters of the surface water bodies on the Copperbelt. Apparently it's not just the Kafue River but also other streams critical to human life. We have identified a number of firms that will be summoned over this pollution and we are meeting them because this is a matter of urgency and it's very serious," Zulu said.
He warned that mining companies that were culprits of the pollution would be taken to court and risked having their plants shut down for breaking the law.
Zulu said over KCM and allegations of pollution, ZEMA was closely working with the Department of Water Affairs, National Water and Sanitation Council as well as Nkana Water and Sewerage Company to establish facts and the extent of pollution.
"For KCM, we will not give more details because the matter is being investigated and we will be pre-empting the minister's statement. It's only fair that we leave it to the minister and details will be availed to you at a later stage," Zulu said.
At a press briefing in Lusaka last week, Kabanshi warned KCM that the government would deal with it firmly if it fails to stop the excessive pollution levels which had affected Mwambashi dam in Kalulushi and Mutipa stream in Chingola on the Copperbelt Province.
Kabanshi said the government will be left with no option but to shut down KCM's operations at their tailings leach plant until the company puts up remedial measures to protect people's lives.
She further said the government would not allow a situation where mining companies continue to deliberately fail to meet environmental regulations.
Kabanshi, who on Saturday visited NWSC in Kitwe, directed KCM to take its environmental protection obligations seriously and stop discharging mining effluents carelessly.
Labels: DAVID KAUNDA, FDI, KCM, RICHARD MUSUKWA, TAX EVASION
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Why should the mines PS sit on FQMO board?
By Editor
Fri 08 Nov. 2013, 14:00 CAT
IT is difficult to understand why the permanent secretary in the Ministry of Mines should be sitting on the boards of First Quantum Minerals Operations, Konkola Copper Mines
or indeed on the board of any mining corporation.
The Ministry of Mines is the controlling authority, the overseer, the regulator of all mining activities in this country. And the permanent secretary of the Ministry of Mines is at the helm of these mining regulating responsibilities.
How can there be no conflict of interest if in the morning, the permanent secretary in the Ministry of Mines is sitting as a director in a board meeting of a mining company planning the mining operations of that company, and in the afternoon is chairing another meeting at the ministry to regulate those same activities? This is not making sense.
We know that the Zambian government, through ZCCM-Investment Holdings, is a minority shareholder in the Zambian operations of most of these mining corporations. But this in itself does not warrant the permanent secretary in the Ministry of Mines to sit on the boards of such corporations. The most the permanent secretary can do is to sit on the board of ZCCM-Investment Holdings, since this is an investing company majority owned by the Zambian government and is not directly involved in mining operations.
Imagine what would happen if, similarly, the governor of the Bank of Zambia - a government institution tasked with the responsibility of regulating the operations of banks in the country - was allowed to sit on the board of Zanaco and Indo-Zambia Bank simply because the Zambian government hold some shares in those banks! What a type of regulation would the governor carry out in connection with these two banks?
There is clearly a breach of fiduciary duty here. The permanent secretary in the Ministry of Mines has a duty to the Zambian government to act in its best interests and he also has a duty as a director of First Quantum Minerals to act in the best interests of its shareholders. Therefore, in this case, there is a conflict of interest. Whose best interests is the permanent secretary in the Ministry of Mines serving?
We should not forget that Frederick Chiluba was successfully sued in the United Kingdom court for the breach of fiduciary duty.
What does the permanent secretary in the Ministry of Mines say when that board he sits on starts to talk about government policy? And now that First Quantum Minerals Operations has sued the government, what does he say to First Quantum when he sits on their board meetings? And what advice does the permanent secretary give to the government concerning these matters? This is like a lawyer representing the plaintiff and the defendant at the same time! Is this acceptable? Is this ethical? Is this right? And this is the government officer who the government should depend on when it comes to its differences, legal or otherwise, with First Quantum Minerals.
In reality, or in truth, the permanent secretary in the Ministry of Mines who is also a director of First Quantum Minerals, is regulating his own company. Is this right? Is this acceptable? Is this the way things should be done?
This opens up one to corruption and abuse of one's office for personal gain. We know that there are good allowances being paid to the directors of these mining corporations. But surely, should government interests be traded on the altar of sitting allowances and other perks accruing to directors of mining corporations?
There is no doubt that the permanent secretary in the Ministry of Mines is serving the interests of First Quantum Minerals Operations and other mining operations better than those of the government. There are certainly government policy decisions that the permanent secretary is more likely to push in favour of the mining corporations than the government. The mining corporations know government policy even before it is announced. But does the government really know what these corporations are plotting in their boardrooms?
It is surprising that the permanent secretary in the Ministry of Mines can sit on the board of a company that is suing government for such gigantic sums of money. And it's not difficult to guess what happens when it comes to licences! Can the permanent secretary deny a company on whose board he sits a licence? Moreover, it is the collective duty of directors to assist the company to get its licences, favourable taxes and other things from government. How possible is it with one hand, the permanent secretary gives concessions to a mining corporation on whose board he sits and with the other hand, he is demanding a fair return for the government from these same mining corporations? Things are not tying up here. There is something seriously amiss here. This whole arrangement stinks of corruption and abuse of office.
In defence of this arrangement, we are told it has been there since Frederick Chiluba's regime, this is the way things have been for a long time. So simply because a wrong thing has been there for a long time, then it should continue forever and ever - with no redemption? This is warped reasoning. We know what type of regime Chiluba led! It was a corrupt one. So the corruption of the Chiluba regime should be continued even under this government that has vowed to stamp out corruption?
No one can deny the fact that the government needs representation on the boards of the mining corporations it has stakes in. But the individuals the government appoints as directors to these companies should not come from the Ministry of Mines, a regulatory institution. There is nothing wrong with ZCCM-Investment Holdings appointing some of its directors or any other individual to represent the government interest on the boards of mining corporations it has stakes in.
There is no good reason for the permanent secretary in the Ministry of Mines to continue sitting on the boards of these mining corporations other than greed and corruption. This is undermining the interests of government and it needs to be put to an end.
Labels: FIRST QUANTUM MINING, PERMANENT SECRETARIES, TAX EVASION
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TEO questions role of mines PS on FQMO board
By Misheck Wangwe in Kitwe and Stuart Lisulo in Lusaka
Fri 08 Nov. 2013, 14:00 CAT
THE Earth Organisation says it is a scandal for the permanent secretary in the Ministry of Mines to sit on the boards of mining companies as a director.
In an interview yesterday, TEO executive director Lovemore Muma said the organisation would demand an explanation from the government and interested groups on why and
how the permanent secretary in the Ministry of Mines was one of the directors at First Quantum Mineral Operations.
But mines permanent secretary Dr Victor Mutambo said only the Minister of Finance could explain his participation on the boards of mining companies as he was the one that appointed him to represent the government.
He is the one who appoints the government director to sit on these mining companies' boards, said Dr Mutambo, adding that the mines permanent secretary also sits on boards of other mining companies as a government representative.
However, Muma said other individuals and mining technocrats within the government through the Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH) could be appointed to serve as board members to protect the stakes of government in some mining giants, rather than the permanent secretary who is on the other hand the regulator of the mines and also has powers to issue operating licences.
He said TEO had no doubt that it was because of such irregularities that strange decisions that were not in the best interest of Zambians were being made on the mines in the recent past and "only the investor and few individuals have benefited, leaving people destitute in their own land".
"In a case where mines contravene the law like we have seen lately in North Western and other mines on the Copperbelt, how do you expect such a senior government official to protect the people? He cannot and it becomes difficult for the permanent secretary to exercise partiality because he sits on the board and he is a beneficiary from some mines and personal gains are attached.
The PS in this case has both his legs in government and in the mine so he cannot act in the interest of the nation. We want to see urgent remedial measures taken to address this serious scandal," said Muma.
Muma said such an irregularity was pure corruption and his organisation would want President Michael Sata to take serious action to correct the situation.TEO questions role of mines PS on FQMO board
Labels: FIRST QUANTUM MINING, LOVEMORE MUMA, PERMANENT SECRETARIES, TAX EVASION, VICTOR MUTAMBO
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Chitala urges opposition to support Sata on KCM
By Allan Mulenga, Noel Iyombwa and Abigail Chaponda in Ndola
Thu 07 Nov. 2013, 14:01 CAT
MORE than 70 workers have received letters of termination of employment from Konkola Copper Mines (KCM). On Monday, President Michael Sata warned KCM not to lay off workers and warned that he would revoke KCM's mining licence if the mine dared to lay off even one miner.
According to letters of termination to some employees at Konkola shaft number one that had been sent earlier before President Sata's warning, made available to The Post, and signed by Eve Banda KCM manager for human capital and management(HCM) at Konkola, the mine advised that the affected employees (76 in total) should see respective HCM business partner for exit formalities.
One of the letters dated September 19, 2013 and addressed to Kazarous Kanengoki mine number 2004348 stated that either party may terminate the agreement by giving the other party 30 days written notice.
"Reference is made to the termination of contract clause in the offer of fixed term contract of employment with KCM which is either party may terminate this agreement by giving the other party 30 days written notice. Accordingly we wish to advise that your contract of employment will be terminated effective October 19, 2013.Your last working shift will therefore be on the same date. In accordance with the terms and conditions of your contract, terminal benefits will be calculated as follows; wages worked for, gratuity at 11 per cent, accrued leave pay and Christmas bonus," one the several the letters given to one of the workers.
President Sata had said KCM chief executive officer Kishor Kumar would be sorted out if he wanted to blackmail government.
Speaking ahead of a Cabinet meeting, President Sata said KCM wanted to blackmail the government after it stopped the company exporting copper concentrates.
Kumar last Friday announced plans to carry out outplacement of 1,529 employees as the mining giant pursued a mechanisation programme for all its operations.
And Dr Mbita Chitala has advised opposition political parties leaders to avoid politicising President Sata's stance on the proposed layoff of over 1,500 workers at Konkola Copper Mines.
So far, key opposition leaders such as MMD's Nevers Mumba, National Movement for Progress' Ngandu Magande and Alliance for Better Zambia's Frank Bwalya have spoken on KCM's intention to cut over 1,500 jobs at Nchanga underground. Others like UPND have been quiet.
Mumba urged KCM to reduce their rhetoric in the media and seek for talks with the government.
Magande said President Sata's warning to KCM to revoke the mining licence was a wake up call to other mining companies.
Bwalya said the threat to revoke the licence could create instability in the mining industry.
And in an interview yesterday, Dr Chitala, who is Zambia Research Foundation director, urged politicians to come together and safeguard the interests of the nation.
"This is not partisan at all. It is the national issue where all political parties should agree on how we could use what God gave us to end our poverty and underdevelopment. This is where all the politicians unite until they defeat the enemy and continue with politics after that is done," he said.
"It will be sad and unforgivable that we who are in charge of our country, we leave nothing other than environmentally hazardous holes, where copper have been taken away to other countries which are smarter than us."
Dr Chitala advised the government through ZCCM Investment Holdings, to increase shareholding capacities in all mining firms.
"These development agreements these mining firms were supposed to offload to list on the stock exchange to enable Zambians to buy, none of them have done that. By this time we should have more than 30 per cent in shares all the mines, but there is nothing like that. We need to increase our ownership of the mines, but nothing is happening. Right now the shares vary, three per cent, some are 20 per cent, some five per cent, some 10 per cent and so on," he said.
"It is not much. We need to increase our shareholding in these companies and also allow shares as we agreed to be quoted on the stock exchange. My suggestion will be the minimum of 30 per cent shares from every mine should be floated so that our middle class can also be participating in development porgrammes."
Dr Chitala said the government should start buying back the shares to get controlling interests in the industry.
"We have a challenge as a country now that we must adopt programmes anchored on nationalism where we can use these minerals to contribute to economic development of Zambia. The time to advance nationalism has come again. We have ZCCM IH as the government which has shares in all these mining companies," he said.
"They must start buying back the shares so that we are able to get controlling interests in the industry. Furthermore, they must use their powers as directors of these mines to safeguard the interests of our country. The minister of finance has got a golden share, we have never heard it being used to safeguard our interests as a country."
Dr Chitala said the government should ensure that Zambians benefit from the availability of natural resources.
"Our country is blessed with copper and cobalt where we get more than 80 per cent of export earnings. And in the same way Angola has oil, Arab nations have oil, Botswana has diamond, even us God gave us copper and cobalt and we should not even be sorry about it. We should use these resources to tackle poverty and underdevelopment. If we do not use these resources wisely, we shall remain poor. It is only copper that can enable Zambia quickly accumulate surpluses and allows us as a country to fight poverty and underdevelopment," said Dr Chitala.
"Copper is a waste asset, meaning within 60 years it will be gone and the multi-national corporations mining our copper will go back to their countries, leaving us with environmentally hazardous holes on the ground to our children."
Meanwhile, Australian Ambassador to Zambia Matthew Neuhaus has advised politicians in Zambia not to undermine the mining industry because doing so may not be good for the economic development of the nation.
During a visit to Northern Technical College (NORTEC) in Ndola on Wednesday, Ambassador Neuhaus said undermining the mining industry is not good for Zambians and institutions like NORTEC which produce the skills absorbed by the mining industry.
"There is a populous of some sort of politicians who want to undermine the mining industry sector, that is not good for Zambia and the people of Zambia and institutions like yourself (NORTEC) who produce the skills for Zambia and growing prosperity of Zambia," he said.
Ambassador Neuhaus however, described the economic outlook for Zambia as fantastic saying his country would stand by Zambia in its continued development.
"As long as Zambia continues to take the path it has taken over the decade, it will be indeed the star of Africa. Your GDP is two times more than Zimbabwe, your economic growth is fantastic, obviously, it's important that those policies continue," he said.
Ambassador Neuhaus said he was impressed with First Quantum Minerals (FQM) for adding value to its cathodes and that the mine was doing well in the area of value addition technologies.
"I was impressed when I went to Kansanshi mine to see the value addition that they have done to the cathodes. I must say that it is short sighted of those who object to exporting some of the existing copper until the smelter is there, you need cash flows to be able to develop further, so if your aim is value addition, you have to build from where you are and then encourage the technology that is there," he said.
He said FQM was able to do well because the mine was always looking at technical things.
"So I think there has been some ill-informed debate in some of the press of late here, but we will stand by Zambia for continuing development of the country and we want to help them. We want Zambia to be running the industries; it should be Zambian entrepreneurs into the future who will be putting together the capital," he said.
Ambassador Neuhaus further said it was important to maintain investor friendly approaches because it was Zambians who are benefiting.
He, however, said the new Australian government knows that a lot of development assistance has been wasted in the past and that the country wanted to focus on helping Zambia in areas like Aid for Trade.
Ambassador Neuhaus said Australia's focus was not on trade zones which get special privileges and deny the rest of the country development, adding that the whole country should be a trade zone.
He said trade zones were an excuse for one or two people to make money for themselves adding that Australia did not need the concept of trade zones that the country had been hearing about.
"Our focus is on supporting institutions like NORTEC and supporting companies that are building towns in remote areas like what the mines are doing and spreading the wealth throughout the country; we don't want to see it (wealth) sitting in Lusaka, we want to see it across the country, we want to see those areas that are producing the Copper and other minerals to diversify too; we want to see those areas benefiting as well," said Ambassador Neuhaus.
Labels: EVE BANDA, KCM, MBITA CHITALA, MINING, TAX EVASION
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