by KHADIJA SHARRIFE
African nations such as Zambia are often seen as grossly corrupt. Yet it is corporate tax ‘avoidance’ on the part of mining companies that costs the nation hundreds of millions annually, while lining the pockets of middle-men in countries such as Switzerland. And the much-lauded Extractive Industry Transparency Initiative (EITI) may help – rather than hinder – this reality.
Zambia recently became the 26th country to publish the EITI report, disclosing payments from mining companies for the year 2008. The EITI standard is meant to ‘facilitate transparency’ by assessing net discrepencies between resource rents – royalties and taxes remitted by multinationals and received by governments.
…
ELIMINATING CORRUPTION
…
But the EITI theory is vastly different from the reality and has more to do with corporate and ‘first world’ country supply-side corruption. Zambia’s first report, for instance, revealed that mining companies remitted $463 million in payments to the government in 2008. The EITI report claims ‘significant discrepencies’, noting a net total of ‘unresolved discrepencies’ of $66 million.
In that same year, much of Zambia’s exported copper, almost half of which was earmarked for Switzerland, never arrived at its destination – disappearing into thin air. Moreover, the pricing structure for Swiss copper – remarkably similar to Zambia’s exported copper – was six times higher than the funds Zambia received, facilitating a potential loss of some $11.4bn. This is especially interesting when taking into account that Zambia’s entire GDP for 2008 was $14.3bn.
PN for more