Tax avoidance in Zambia
Lead NCPSwitzerland
Supporting NCP(s)Canada
DescriptionSpecific instance notified by five NGOs regarding the activities of Mopani Copper Mines Plc. and their majority owner, the Swiss enterprise Glencore International AG, and a minority owner, the Candian enterprise First Quantum Minterals Ltd in Zambia.
Theme(s)General policies, Taxation
Date12 Apr 2011
Host country(ies)Zambia
Industry sectorMining and quarrying

Read the final statement issued by the Swiss NCP concluding the specific instance - 28 November 2012

In April 2011 the Swiss and Canadian NCPs received a request for review from a coalition of five NGOs (Declaration of Berne, SHERPA, MiningWatch Canada, L'Entraide missionnaire and The Centre for Trade Policy and Development CTPD), alleging that the Zambian extractive enterprise Mopani Copper Mines Plc. and its majority owner, the Swiss enterprise Glencore International AG, as well as a minority owner, the Canadian enterprise First Quantum Minerals Ltd had breached the general policies, and taxation provisions of the Guidelines.

Both NCPs agreed that the Swiss NCP will take the lead regarding this specific instance.

Based on a leaked draft report, the NGOs claimed that Mopani was using various techniques to transfer taxable revenues out of Zambia in order to avoid paying taxes in the country. This draft report had not been endorsed by its authors Grant Thornton and Econ Pöyry and a final version of the report had not yet been published.

Glencore submitted a written statement to the NCP on 2 June 2011 denying the allegations and emphasizing that the draft report was a preliminary and incomplete version, which was unofficially circulated in Zambia. Some fundamental and factual errors were also identified in the report on which the allegations in the submission to the NCP are based. Glencore furthermore pointed to the fact that Mopani is audited every year by Deloitte, a major international audit firm.

Upon accepting the specific instance, the Swiss NCP separately invited representatives from both parties for informal, bilateral meetings. The NCP also created an ad-hoc group with other departments of the Swiss federal administration concerned by the specific instance.

On 5 October 2011, the Swiss NCP concluded its confidential initial assessment and informed the parties concerned that it found the issues raised to be relevant and that they merited further examination. The NCP then offered its good offices to facilitate a dialogue between both parties with the aim of reaching a mutually acceptable outcome.

A framework for a dialogue on the issues raised was prepared by the NCP, who also suggested contracting a professional external mediator to help facilitate this dialogue.

The parties met on 11 July 2012 in the presence of the mediator and an NCP representative, and a mutual agreement was reached. Parties agreed to disclose the following points of their mutual agreement:

  1. The parties reached a certain level of mutual understanding on the issues raised and clarification of issues raised;
  2. The parties had a thorough exchange of information and open and very constructive discussions;
  3. Both sides agreed to an exchange of information with the other parties, within the limits of applicable laws;
  4. Both parties will explore ways how to engage in further dialogue; and
  5. The parties discussed and agreed on certain further steps.

In light of this outcome, the NCP issued a public statement on 28 November 2012 and concluded the specific instance.