CRIMINAL CAPITALI$M

ZAMBIA

Glencore’s Corruption guilty verdict vindicates Critics of the New Dawn’s blind trust in dodgy Mining Houses


June 2, 2022
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.

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: pmchalwe@gmail.com
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