By Mwansa Chalwe Snr
The New Dawn government has been accused of being too cosy to the mining houses despite their poor record. The UPND administration’s development strategy is mainly anchored on mining without making changes to decades old agreements and unfair incentives, through negotiations with mining houses, despite overwhelming evidence in the past 20 years which shows that they have been ripping Zambia off with all sorts of legal machinations as well as through financial and environmental criminal practices.
The corruption guilty verdict in the US, of Glencore, the former owners of Mopani Copper Mines (MCM), vindicates the New Dawn critics. Glencore bought MCM for $30m and sold it back to Zambia for $1.5billion, after 20 years of paying no income taxes, claiming losses throughout the period.
Glencore, is expected to pay to authorities in the US, UK and Brazil the sum US$1.5bn after pleading guilty to a 10-year international bribery scheme as well as a plot to manipulate commodity prices. Guess what, the penalty may even be paid from the loan repayments they receive from Zambia for MCM which they sold us at such an exorbitant amount having bought it for a song.
“The scope of this criminal bribery scheme is staggering,” Damian Williams, US attorney for the Southern District of New York told a press conference. “Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore bribed judges to make lawsuits disappear. At bottom, Glencore paid bribes to make money – hundreds of millions of dollars. And it did so with the approval, and even encouragement, of its top executives.”
According to the US Department of Justice, Glencore was involved in a “decade-long scheme by Glencore and its subsidiaries to make and conceal corrupt payments and bribes through intermediaries for the benefit of foreign officials across multiple countries”. And between 2007 and 2018, Glencore paid around US$80mn to third-party intermediaries to secure business with state-owned or state-controlled entities. The practices took place in several African and Latin American countries, including Nigeria, Cameroon, Brazil and Venezuela. Glencore is also said to use inflated invoices, sham consulting agreements and intermediary companies to conceal payments to foreign officials
In its recent opinion piece on the verdict, the UK Financial Times wrote: “Glencore is not alone in needing a cultural overhaul on bribery. Broadly, the contribution of global resources companies to the impoverishment and penury of African nations was considered a niche concern in the Square Mile.” (the Square mile is the City of London- Central London- which has been a doyen of dirty and bloody money which we never knew until the Ukraine-Russia was has exposed the City)
The Financial Times Opinion clearly show that Glencore is not the only Mining house involved in corruption but others are also guilty of this. But Glencore appears to have been in the premier league of Multinational corruption and has been caught red handed. Although Zambia is not mentioned by name in guilty the verdict, it is included in the phrase “multiple countries”, “African Countries”. It follows that Zambia should not be naïve and have blind trust of other Mining houses. In any case, Vendetta Resources is another mining house in Zambia whose record in Zambia for various crimes is well documented.
It is with the above back ground, that critics including the author of this article have been critical of the New Dawn’s fallacious belief that ramping up production to 3million tonne will benefit Zambia without negotiating better deals, including revision of the archaic development agreements. The reality is that increased production will only benefit foreign mining houses’ shareholders and very little will remain in Zambia for development. The argument by critics is that Zambia will not sufficiently benefits from increased mining production as Mining houses having been involved in widespread schemes financial crimes like corruption, tax evasion through transfer pricing and other machinations to deny Zambia sufficient benefits from their natural resources due to pure greed by foreign investors and their local accomplices.
The Author has written so many opinion pieces on this issue ad nauseam, including a full chapter in his book, “China-West Battleground in Africa: Debt Ridden Zambia”, .He has argued for a new cooperation model between resource rich countries like Zambia and Mining houses which he coined Rational Resource Nationalism (RRA) meant to result in win- win situation.
Rational Resource Nationalism: How Zambia/Africa can benefit from Minerals
It is the light of our past experience with Mining houses, which has been brought to the fore by the Glencore guilty verdict, that I and many other enlightened Zambian critics, are sceptical of the recent pledge of $1.5billion investment by FQM – even after Professor Saasa “validation” report of the investment, his conflict of interests notwithstanding. We are simply not excited by these pie in the sky and mirage investments. The question Zambians should ask is how much foreign exchange, tax revenue, skills and technology transfer, infrastructure built, entrepreneurship promotion etc will flow to Zambia as a result of these investments. Your guess is as good as mine.
To put the issue in perceptive, Glencore claims to have invested $4.4 billion in Mopani since 2000. I challenge anyone, to show me tangible evidence of the benefits to Zambia of this $4.4 billion investment by Glencore, in Mufulira and Kitwe especially – where they were located- during their ownership of MCM for 20 years, before taking off on expiry of the Development Agreements incentives and selling the Mines to Zambia for billions.
The jury is now out for the New Dawn government to carefully handle the other bad boy of the Zambian mining industry – Vendetta Mining Resources. The World’s number one super power has just confirmed that Zambia’s two major foreign Mining investors for the past 20 years, are criminals. How can anyone challenge home grown critics unless there are grateful beneficiaries?
The writer is a Chartered Accountant and Author. He is a retired international MSMEs Consultant and an independent financial commentator. He is also an Op-Ed Contributor to the Hong Kong based, Alibaba owned, and South China Morning Post (SCMP). Contact: [email protected]
Some of the contents of this article are abridged excerpts from my book whose link is below.
CHINA-WEST BATTLEGROUND IN AFRICA: DEBT RIDDEN ZAMBIA: Why U.S. May Lose Geo-Economic Competition to China https://www.amazon.com/dp/B097DVXBKH/ref=cm_sw_r_wa_api_glt_7PR5H7YBZZ14FCDNT54Y
We are struggling! They laugh at us all the way to the bank! Truly depressing.
#plant a tree please.
They’re their partners because they’re their sponsors. Why would Anglo sponsor UPND for 20yrs? It’s time to reap from where they’ve been sowing. We’ll talk until our mouths run dry, the UPND won’t listen to us. With the threat of a PF bounce back in 2026 they’ll ensure that they cut as many deals within this period. If we want our sovereignty back we must not rely on foreign partners to sponsor our politics. Our model of democracy is very costly.
@2 – very true. Your last paragraph is food for thought for the next government. Our people are being held to ransom. Disheartening.
The key takeaway from Mwansa Chalwe Snr`s article is that the NEW Dawn ought to take into account the GLENCORE saga and the experience with Vedatta, moving forward when negotiating new Mining Contracts. ALSO, and this important, he is URGING the government to CLEAN UP THE MESS done by PREVIOUS government, PF INCLUSIVE !!! by revisiting the current contracts. Therefore, STOP BLAMING THIS GOVERNMENT for MESS DOWN BY OTHERS, instead encourage it to make good/better decisions. This CRAP of saying UPND was sponsored by ANGLO or that, “UPND is trying to please its masters”. That is nonsense at its highest level, and should NEVER be encouraged. PF should NEVER be allowed back to POWER, what is it that they can do now, after 9months, that they could NOT do in 10 YEARS??? COME UP with POSITIVE…
PF should NEVER be allowed back to POWER, what is it that they can do now, after 9months, that they could NOT do in 10 YEARS??? COME UP with POSITIVE critism to help this government, it’s the ONLY HOPE.
Who agreed to this deal in the first place? PF Government. Let us not be fooled, yes, Glencore is out of Mopani but will be paid every cent they signed for. That said, we need to introspect as a country on all these deals we sign. Citizens should take a keen interest in such matters. The UPND are walking a tightrope on mining and how they handle the Copperbelt will have a telling effect on their quest for reelection.
4# General KANENE
The author has written a fair and good piece. The mistake here is that UPND is not even trying to clean up the mess when they have known this while in opposition. They are only interested in telling Zambians, especially the youth that we have created jobs for you by unlocking the mines. Unlocking but to what extent of losing taxes. I am not sure how much access you have to the people in government, but I can tell you that I do talk to people in government such as Senior Directors, Technocrats, Permanent Secretaries and Ministers & Advisors. And I am in their WhatsApp groups. I am probably exposing myself here, but the truth must be addressed without fear or favour.
Several government officials are complaining that the president is not listening to advice from other people and are not happy with how the president is running these crusades on mining deals. He is has created this impression that only he has more experience with both local and international people and well connected, more than anyone else. This is why he is making unofficial trips to do deals such as the secret trip to SA without telling his ministers what he is doing, which my view is very wrong. He lives in his private house and is inviting people to talk business and no one can follow protocol because it’s not State House but his private house. Finally this is not about PF its about moving forward. Just how long can we keep mentioning PF or MMD this and PF that…. UPND need to…
ZRA should conduct a thorough transfer pricing audit audit for the periods Glencore owned MPM .
I guarantee the ZRA assessment will yield more the the $1.5 Billion which is owed to them . ZRA can then offset the debt and chance after the balance
Something to think about
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