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SHAME: £5Billion illegally Taken Out Of Zambia Over Past Decade, Says Report

More than £5bn has been illegally siphoned out of Zambia over 10 years, with most of it ending it up in offshore banks and tax havens, according to a report by financial transparency campaigners.

Washington-based group Global Financial Integrity blamed “crime, corruption and tax evasion” for the loss of $8.8bn (£5.4bn) from the resource-rich country.

The lost money, most of which can be traced to multinational copper mining operations, is equivalent to almost half of Zambia’s GDP.

Dev Kar, an economist and co-author of the report, said: “They [big global mining companies] are robbing the opportunities for the countries to advance, it [the money] could have been used to build hospitals and schools, and lift the economy out of poverty.”

Kar said it was difficult to track where the money goes, but said most of it ends up in “offshore banks and tax havens”.

Sarah Freitas, the other author of the report, said $4.9bn of Zambia’s lost funds between 2000 and 2010 could be traced to trade misinvoicing, in which importers pretend to pay more to foreign companies than they actually do, with the remainder slipped into offshore bank accounts. “This is a very serious problem,” she said.

“Zambia’s GDP was $19.3bn in 2011. Its per capita GDP was $1,413. Its government collected a total of $4.3bn revenue. It can’t afford to be haemorrhaging illicit capital in such staggering amounts.”

Zambia’s deputy finance minister, Miles Sampa, said the report highlighted “what we have always been saying with regard to tax avoidance and income leakages in general”.

Sampa has accused multinational mining companies of using legal tax avoiding measures to escape $2bn a year in taxes. He said only one or two mining operations declare they are making profits from Zambian copper mines, which hold 6% of the world’s known copper reserves.

“The other mines for one reason or another, some genuine, some not, are always making losses,” he said. “Most of it is due to transfer pricing or tax avoidance. We’re looking at developing a law that will criminalise false reporting.”

He said closing the loopholes could generate Zambia at least an extra $1.5bn a year. “How many hospitals can that build? How many roads can that help us to develop?”

The UK government has investigated allegations surrounding Zambia’s lost tax revenues from foreign-owned mines, including claims that Glencore avoided paying up to £76m a year in tax on its Mopani mine in the countrty. Glencore denies the allegations.

Zambia is currently investigating its justice minister, Wynter Kabimba, over claims he took bribes from multinational trading company Trafigura. Both Kabima and Trafigura deny the claims.

The GFI report (pdf) said “illicit capital flight” has cost developing countries $859m in 2010, the last year for which IMF figures are available. “Astronomical sums of dirty money continue to flow out of the developing world and into offshore tax havens and developed country banks,” Raymond Baker, the GFI’s director, said. “Regardless of the methodology, it’s clear: developing economies are haemorrhaging more and more money at a time when rich and poor nations alike are struggling to spur economic growth. This report should be a wake-up call to world leaders that more must be done to address these harmful outflows.”

Guardian.co.uk

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Posted by on December 24, 2012. Filed under LATEST NEWS. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

25 Responses to SHAME: £5Billion illegally Taken Out Of Zambia Over Past Decade, Says Report

  1. Ba Medza Reply

    December 24, 2012 at 7:15 pm

    Ulesosa!!!? Awe kwena.Anyway I can’t comment much kaili lelo ni xmass eve.@ Democrat where is it gonna be cranking I jst feel like awarding u tonight man.happy xmass

  2. Keegan Reply

    December 24, 2012 at 7:57 pm

    I HOPE THAT THE NEW GOVERNMENT CAN TAKE ADVANTAGE OF SUCH INFORMATION AND — USE TO PUT PROPER MEASURES TO CURB SUCH FRAUDULENT ACTIVITIES, THO THE UNFORTUNATE PART IS THAT, SUCH DUDIOUS ACTIVITIES ARE CARRIED OUT BY VERY HIGH PROFILED PEOPLE IN THE MARKET AND IT DOES NOT EXEMPT PRESIDENTS AND SENIOR MINISTERS IN COLABORATION WITH CORPORATE THUGS SUCH AS CEOs.
    I JUST PRAY THAT IT WONT BE WORSE IN MR. SATA’s TENURE IF HASNT STARTED ALREADY.
    SHAME INDEED.

  3. PROFESOR Reply

    December 24, 2012 at 8:40 pm

    the govt must seal all the loop holes now
    we cant be making other countries rich mean while our local people are spending nights without decent meals .

  4. Wanu Ngwee Reply

    December 24, 2012 at 8:43 pm

    THIS AMOUNT IS APPROXIMATELY K42.5TRILLION. NOW, (A)RDA NEEDS K29.00TRILLION FOR ITS AMBITIOUS PROGRAMME OF TARRING 8000KM OF ROAD THROUGHOUT THE COUNTRY!THEN THE REMAINING K13.5TRILLION:

    (B) K9.0TRILLION COULD HAVE BEEN — USED TO BUILD 6 TECHNICAL COLLEGES @ K1.5TILLION EACH FOR EACH OF OUR RURLA PROVINCES(LUAPULA, WESTERN, NORTH-WESTERN,EASTERN,SOUTHERN AND MUCHINGA)

    (C) K4.5TRILLION COULD HAVE BEEN — USED TO BUILD T1E HOSPITALS LIKE THE NEW LUSAKA GENERAL HOSPITAL AT K450BILLION EACH.

    THIS IS HOW MUCH WE’VE LOST OUT AS A COUNTRY IN THE LAST TEN YEARS!!! SHAME INDEED. BUT THE POINT IS: WHAT ARE WE DOING NOW TO CLOSE THE LOOPHOLES WHICH LEAKED OUT SO MUCH?

  5. Wanu Ngwee Reply

    December 24, 2012 at 8:45 pm

    SORRY: ‘… TEN HOSPITALS…’

  6. Zambia My Foot Reply

    December 24, 2012 at 8:48 pm

    This is Zambia, Bwana.
    I mean I never Designed it.
    It was Designed By GOD Almighty.
    One Love.
    Cheers.

  7. South African Reply

    December 24, 2012 at 9:04 pm

    Imwe ba Tumfweko namipele iyi story last week. Mwaikalapo pantu ndichifita?. Nomba mwamona abasungu ba Guardian balemba elyo mwapublisher when the story is even stale. Mwalemona kwati ndiwabufi ngaimwe?

  8. VJ Reply

    December 24, 2012 at 10:12 pm

    Do we have people/institutions within zambia with such knowledge? Why wait for the UK to do such a “typical zam-task”? Where are our UNZA and CBU economists n accountants graduates(those working 4 GRZ)/ZRA / ACC,what re they doing? Are they paid for clearing goods coming in or for ensuring incoming nd outgoing good follow the right channels? This is a clear indication that all these figures are a “inside job” our people are a problem they should be held accountable for every digit that were and are still being lost, ve been to boarder posts and l know how dice is played, this is indeed shame to the govt and it shows how irresponsible our leaders are.Let the new govt put strict measures to investors especially the mining sector, copper taibola investors with a heart will come if what they want is here not bunch of conmen half signed documents nd you call them investors,fúçk, bapompwe sana bantu besu, mamba yabo bakulamitontonkashako abamuleteleko isukulu, wakwata degree bakwibila,what more Regi…?

  9. george Reply

    December 24, 2012 at 10:56 pm

    i wish government cn jst take over any of the mine especially mopani and give it to serious investors

  10. chanda Reply

    December 24, 2012 at 11:13 pm

    Ndeloleshafye

  11. Bufu bufu Reply

    December 25, 2012 at 1:43 am

    umukulu wansaka afita itole ku chushi.

  12. Bufu bufu Reply

    December 25, 2012 at 1:44 am

    umulembwe wachipuba wapwile muli tumfwe.

  13. bk Reply

    December 25, 2012 at 4:59 am

    Where is Windfall tax?

  14. andradenofees Reply

    December 25, 2012 at 5:24 am

  15. jojinto Reply

    December 25, 2012 at 6:16 am

    I write to complain about the water situation in water works and how area mp, Liven Gubinda, has failed or ignored to assist residents. The suburb started in 2004 and up to now there is no water despite being next to the biggest water plant in Zambia. It is a sorry sight how women’s bodies have changed shape as a result of pushing heavy drums of water!

  16. Disgusted resident! Reply

    December 25, 2012 at 6:21 am

    I agree with you jojinto, why should LWSC wait for President Sata to visit the area that voted for him before they act? Given Lubinda decided to take water to an area further away than water works because that is were he has built his house. This is IMMORAL and corruption and should be investigated by the ACC. I am lodging a complaint with ACC 2moro!

  17. nshendi Reply

    December 25, 2012 at 9:02 am

    The figures may be new but we have always known that mopani & other international mining firms have been siphoning money money out of the country illegally

  18. kibwela kasongo Reply

    December 25, 2012 at 3:10 pm

    Politicians will always be comedians, the extent is what we strive to see form one politician to the other; Chama chakomboka and the like……Only others have polished tongues!!!!!!!!

  19. kk Reply

    December 25, 2012 at 4:24 pm

    nkayamailo…nkayamailo.apwile ubunga(copper).

  20. EEEEEE Reply

    December 26, 2012 at 12:01 am

    When people make comments on this site nobody takes them seriously. The law on transfer pricing in there and some people within ZRA know what Glencore is doing. They are paid by tax offenders for deliberately ignoring fraud. All ZRA Commissioner Generals concerned should be held accountable and be charged for negligence of duty if corruption cannot be proved. I know one officer who resigned from ZRA because he could not stand the corruption within ZRA. When resigning he told some managers that ZRA could be collecting less than 50% of the taxes due, due to corruption within the institution. But they ignored him and instead they allowed him to leave.

  21. Wanyafye FC Reply

    December 26, 2012 at 9:29 am

    Google “Al Jazeera zambia copper report” by Khadija Sharife and read – Lord have mercy on us.

  22. NIKITA Reply

    December 26, 2012 at 11:39 am

    GREED thats what it is and politicians with their messed up heads.

  23. Wanu Ngwee Reply

    December 26, 2012 at 1:48 pm

    THE PAINFUL REVELATION FROM THIS STORY IS THAT THE ZAMBIAN ECONOMY DOES GENERATE ENOUGH INCOME FROM ITS RESOURCES NOT TO NEED MUCH OF FOREIGN DEBT WHICH MAKES US BE RATED AMONG THE MOST INDEBTED COUNTRIES ON THE PLANET. WE NEED TO LEARN FROM SOUTH AFRICA – THEIR REVENUE AUTHORITY ALWAYS EXCEEDS THEIR REVENUE COLLECTION TARGETS, AND THE TAX REGIME IS RUTHLESS TO DEFAULTERS!!

  24. Wanu Ngwee Reply

    December 26, 2012 at 1:57 pm

    IT NOW SEEMS TO ME THAT ZRA NEEDS TO ESTABLISH OFFICES AT EACH MINE TO MONITOR
    1. DAILY, WEEKLY, MONTHLY AND ANNUAL ACTUAL TONNAGES OF COPPER PRODUCTION AND COMPARE THE FIGURES WITH THOSE OFFICIALLY DECLARED BY THE MINES
    2. MONITOR THE DELIVERY OF TOOLS, EQUIPMENT, CHEMICALS AND OTHER MINING INPUTS WHICH THE MINES ACTUALLY RECEIVE, COMPARED TO THE INTERNATIONAL ORDERS AND INTERNATIONAL BANK TRANSFERS MADE.
    3. COMPARE MINE PRODCUCTION FIGURES TO THOSE RECORDED AT BORDER EXIT POINTS.
    RECONCILE ALL OF THE ABOVE WITH THE BOOKS AND BANK ACCOUNTS OF THESES MINES. ACTUALLY, WE NEED BOTH ZRA AND SHU SHU SHU OFFICES AT EACH AND EVERY MINE. COPPER IS OUR LIFELINE AND WE CANNOT AFFORD TO BE COMPLACENT ABOUT THIS MATTER!!!

  25. gweny Reply

    December 27, 2012 at 12:31 pm

    @george, so if the government takes over mopani what will happen, it will still sink the way zccm sank, the same zambians announced that zccm yalipwa, but what happened, the the whites, came regardless from which race, as long as one is white skined, yali buka, leka fye baleiba, kabili eba kwete amano, what is happening to zamtel now that ba lapgreen baliya, tali naitampa to shake. just go to sleep.

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