TJN-A at the Alternative Mining Indaba/ Tax avoidance blamed for Africa's loss of resource income

TJN-A at the Alternative Mining Indaba/ Tax avoidance blamed for Africa's loss of resource income

Tax avoidance blamed for Africa's loss of resource income 

The top 10 global mining companies have an estimated 6 000 subsidiaries,
many of which are located in tax havens, Alvin Mosioma of Tax Justice
Network Africa told delegates at the Alternative Mining Indaba yesterday. 

Mosioma said this complicated network of companies was part of "the flawed
financial infrastructure" that resulted in Africa losing a significant
portion of its resource income through complex tax avoidance schemes. 

He said one of the difficulties facing African governments in their bid to
secure a greater share of the wealth generated by their resources was that
as a result of the use of complicated corporate structures and tax havens,
"it is impossible for any government to know how much profit is generated
from its mineral wealth". 

Mosioma said it was not just the mining companies at fault but also their
banks, lawyers and accountants who assisted in setting up the financial
structures. "How is it possible that you have 3 000 employees in Malawi and
three in the Cayman Islands and you can attribute 70 percent of your profit
to the operation in the Cayman Islands?" Mosioma said. 

He called for greater transparency and also for African governments to stop
providing tax incentives, as these merely created avenues for countries to
lose their resources. 

The indaba, which was attended by hundreds of delegates from across Africa,
heard from representatives of communities around the continent about the
need for a more equitable redistribution of wealth from mining activities. 

A note prepared for the indaba argued that one of the major problems facing
Africa was the "very limited capacity within governments to negotiate good
mining contracts especially with multinational companies". 

"In most cases, the multinational companies have skilled personnel and
negotiators while governments do not. Mining companies may bring
consultants, bankers, economists and lawyers to the negotiating table and
often outnumber government. teams. 

"Access to this many resources, knowledge and expertise too often means that
contracts ultimately benefit the mining companies and the government will
always get the short end of the stick," the Economic Justice Network's
briefing note said. 

John Capel of the Bench Marks Foundation told Business Report that while
mines might bring in revenue for the government and shareholders, the land
on which they operated belonged to communities. "A legal licence does not
equal a social licence to operate." 

Capel urged mining houses in South Africa to reconsider the way in which
they operated. 

In the short term, they should review their corporate social investment,
which "must be done in-house and not outsourced to so called experts" and
should involve consultation with communities. 

With regard to wages, Capel said mining houses needed to develop a policy
that allowed workers to "justly benefit from their labour and that meets
their basic needs". 

The mining houses should steadily increase the numbers of local community
members and should stop using chiefs and local councillors to recruit. 

Capel also urged mining houses to stop actively recruiting "politically
connected individuals, senior administrative and government personnel onto
company boards or as shareholders". - Ann Crotty 

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