Former Ambassador to Ethiopia, Emmanuel Mwamba has called on the Zambian authorities to cancel the Agreement ZCCM-IH immediately has with GLENCORE PLC.
In a demand letter written to the Minister of Mines, Hon. Paul Chanda Kabuswe and copied to the Attorney General, Mr. Mwamba who is also a presidential aspirant, said following recent developments where GLENCORE has been found guilty in the USA, Britain and Brazil, the Zambian Government had a legitimate and legal right to cancel or void the sale contract it had with GLENCORE.
Mr Mwamba said the Supreme Court in Zambia in May 2020, found GLENCORE guilty of tax evasion and fined it $13million. He said with these malpractices, the Zambian authorities must have sanctioned GLENCORE heavily and forced it to exit from MOPANI Copper Mines.
Mr Mwamba said as global authorities closed in on GLENCORE, it began to exit from its global operations but forced Agreements that retained the lucrative marketing rights and that GLENCORE acted with deceitfulness and the contract must therefore be deemed null and void.
Mr Mwamba said Zambia must stop paying the $1.5billion and must repossess its marketing rights that were unfairly given to GLENCORE.
He said as the USA authorities have done, Zambia must fine GLENCORE with heavy penalties for its criminal conduct while it operated in Zambia.
This week Glencore finally faced up to allegations that it embarked on foreign bribery and market manipulation schemes on a grand scale. According to reports from the US, Glencore International AG (Glencore) and Glencore Ltd, both part of a multinational commodity trading and mining firm headquartered in Switzerland, each pleaded guilty and agreed to pay over $1.1-billion to resolve the government’s investigations into violations of the Foreign Corrupt Practices Act (FCPA) and a commodity price manipulation scheme.
According to the BBC, the UK’s Serious Fraud Office said it had exposed “profit-driven bribery and corruption” across Glencore Energy UK’s oil operations in five African nations, adding that the firm will find how much it must pay in fines at a sentencing in June, although the firm previously set aside $1.5bn to cover the investigations it faced in the UK, US and Brazil.
Glencore’s chairman said “unacceptable practices” had taken place in relation to the bribery charges it pleaded guilty to at Westminster Magistrates’ Court on Tuesday.
In the deal, ZCCM-IH will pay GLENCORE $1.5billion and the firm holds absolute and exclusive marketing rights to sale MOPANI Copper Mines production.
Below is the full letter;
The Minister of Mines
Ministry of Mines and Minerals Development
New Government Complex Building, Nasser Road
12th & 14th Floor
P.O Box 31969
ZCCM-IH, GLENCORE $1.5BILLION DEAL IS A VOID CONTRACT
In a special report on Zambia in the publication “War on Want”; ‘Extracting Minerals, Extracting Wealth, How Zambia Loses $3billion a Year” details were published on how Zambia loses revenue in billions of dollars from just three firms that were listed on the London Stock Exchange; GLENCORE, VEDANTA and Associated British Foods.
It was calculated that the amount of taxes avoided by the three companies alone in Zambia was around $3 billion a year.
Looking at the three companies, the report established that they engaged in extensive tax-avoidance schemes including the use of complex corporate structures and mispricing, transfer pricing and illegal tax evasion.
The companies also illegitimately benefited from unwarranted tax incentives where the Zambian Treasury loses over $1billion a year because of tax incentives agreed to by the government. These assertions have also been established as true by various reports of the Extractive Industries Transparency Initiative (EITI).
Further, In May 2020, the Supreme Court of Zambia found GLENCORE guilty of engaging in business and tax malpractices. It fined Mopani Copper Mines $13 million! This was a case in which the Zambia Revenue Authority (ZRA) had been battling with Mopani Copper Mines and its Swiss parent company Glencore since 2009.
The background was that the ZRA conducted an Audit of Mopani Copper Mines for the period 2006 – 2009, which revealed that the transactions between the company and its Swiss parent multinational, Glencore International AG (GIAG) violated the Arm’s Length Standards (ALS). An arm’s length transaction refers to a business deal or transaction in which a buyer and seller act independently without one party influencing the other. Therefore the latest revelation that Glencore Plc has been found guilty of bribery and market manipulation by USA, British and Brazilian authorities gives Zambia both a legitimate and legal right to void the $1.5 billion debt contract it signed with GLENCORE.
Authorities in the United States, Britain and Brazil announced that three of GLENCORE’s subsidiaries had pleaded guilty to crimes. GLENCORE has agreed to pay $1.5 billion in the United States and Brazil, with Glencore representatives also appearing in courts in the United States and Britain.
SELL OF MOPANI NOT ISOLATED
It should be noted that as global Authorities closed in on GLENCORE’s crimes and illegalities, it engaged in an abrupt exit from those markets. So the exit from Zambia was not a normal business transaction but a pre-emptive action to walk away with billions of dollars before their guilty and criminality were established.
This move was not unique as GLENCORE did the same in their other global operations. Glencore sold 20.5% stake in the South African chrome unit to Merafe Resources. GLENCORE also sold two zinc mines in Namibia and Burkina Faso for $400m to Trevali Mining Corporation, a Canadian listed company with ambitions to become a mid-tier zinc producer. The mines in question were Glencore’s 80% interest in Rosh Pinah, a zinc mine in Namibia, and its 90% stake in the Perkoa mine located in west Africa’s in Burkina Faso. Glencore has recently agreed to sell CSA copper mine in New South Wales, Australia, to Metals Acquisition (MAC).
VOID THE CONTRACT
A void contract is a formal agreement that is effectively illegitimate and unenforceable from the moment it is created. GLENCORE engaged in negotiations and final Agreement to dispose off its interest in MOPANI Copper Mines when it knew very well that it acted in a deceitful manner. Authorities at the time must have sanctioned GLENCORE for the malpractices listed above and forced it to surrender the MOPANI Copper Mine Assets. Therefore the Zambian government must declare the contract sale illegal and cancel the absolute marketing rights of Mopani’s copper that were granted to GLENCORE.
The Zambian Government must also stop paying any money to GLENCORE towards the sale price if $1.5billion. ZCCM-IH had agreed to take over Glencore’s majority stake in Mopani Copper Mines in a $1.5 billion deal funded by debt. GLENCORE’s subsidiary, Carlisa Investments Corp. (“Carlisa”), in which Glencore held 81.2% of the shares, had signed an agreement with ZCCM Investments Holding plc (“ZCCM”) to transfer its 90% interest in Mopani Copper Mines plc (“Mopani”) to ZCCM-IH, the owner of the remaining 10% interest in Mopani, for US$1, the Transaction Debt of $1.5billion and surrender of marketing rights of copper until the debt is liquidated.
We hold that the conduct of GLENCORE whilst invested in Zambia was criminal as shown above and authorities in Zambia must have revoked it’s mining licence and forced it to shut operations and punish it with heavy fines for these flagrant actions to disregard the law and for engaging in extensive tax avoidance schemes that have deprived Zambia resources required for it’s national development.
CC; THE ATTORNEY GENERAL