Stealing Africa - Glencore, commodities, corruption

[Idaho]

A very interesting, and I'm afraid to say very depressing, programme on BBC4 yesterday regarding the business of African raw materials and the power of large multinationals:

http://www.bbc.co.uk/programmes/p010jx25

Clinton and Blair both implicated by association in the corruption.

Essentially the programme looks at a small and very rich Swiss town that has more tax revenue than it knows what to do with after Glencore paid it's local taxes. It then traces the source of that wealth - copper mines in the Zambia. Glencore extracts $4billion of copper from these mines a year, and yet the deal they struck with corrupt officials means that not only does Zambia receive small tax revenue from this, but they actually pay for the electricity that powers these mines. An attempt to redress this was taken up by a new prime minister.. who died... and was replaced by one who was less interested in the project.

Taxes are paid on the export value of the copper. But Glencore uses "transfer pricing" which means that Glencore mines sell the copper for pennies to Glencore Switzerland. Glencore Switzerland then make the money.

Glencore itself is based on a company created by a person convicted of the largest tax evasion in US history... and pardoned by Clinton. Blair is now helping the negotiations for Glencore to be merged with Xstrata.

So copper is taken, essentially tax free, from a country where people have an average wage of $2 a day, and sold to make huge profits, a small portion of which then goes to furnish a well heeled Swiss town.

[Idaho]

The whole transfer pricing issue is a fascinating one. Essentially it's the mechanism whereby multinationals have broken loose of the control of nations.

Here's a good overview from that most left wing and revolutionary source - a tax accountant writing in Forbes:

http://www.forbes.com/2010/06/24/tax...heppard_2.html

Newspapers use the phrase "transfer pricing" as shorthand for multinational corporations shifting profits to tax havens to avoid tax in developed countries.

Tax professionals bristle at this characterization, arguing that transfer pricing is a neutral phrase to describe the process by which profits are allocated among different jurisdictions as though corporate affiliates were separate economic actors transacting with each other at arm's length.

The newspapers are correct. The members of large multinational groups of corporations are not separate economic actors. The point of vertical integration is not to have to pay arm's-length prices for some goods and services. It is a fool's errand to try to divine arm's-length prices for intragroup transactions, particularly for valuable intellectual property (IP) that is never licensed to outsiders.

[rory_20_uk]

The Swiss hishonest??!? Say it ain't so! I guess between melting down gold fillings and being a tax haven to the extremely rich Europeans they have to have some hobbies.

But to be fair, they are just as happy doing the same thing in the USA / UK and probably elsewhere. Companies should be taxed on what it is perceived they earned in the country (I'm sure a decent accountant can stip out these things). The difference in most of Africa is the locals are corrupt enough to take a kickback. That nothing has yet to be done over here is... interesting.

[Sarmatian]

It's what most American companies do it South America. Before Chavez, They used the same deal for oil. Europeans do it in Africa all the time, it's getting harder to do it in Asia with China nowadays.

Nothing new under the sun.

[Beskar]

Amazon, Starbucks, Google, (etc) do it all the time in the United Kingdom. Been in the news for a while.

I guess the solution to this in the minds of many will be 'less regulation' of the Free Market to allow them to exploit people more.

[Idaho]

The Swiss hishonest??!? Say it ain't so! I guess between melting down gold fillings and being a tax haven to the extremely rich Europeans they have to have some hobbies.

But to be fair, they are just as happy doing the same thing in the USA / UK and probably elsewhere. Companies should be taxed on what it is perceived they earned in the country (I'm sure a decent accountant can stip out these things). The difference in most of Africa is the locals are corrupt enough to take a kickback. That nothing has yet to be done over here is... interesting.

There are honest politicians in Africa, but if they get in the way they get killed and replaced. It's happened time and time again. Patrice Lumumba in the Congo was perhaps the first example. Mark Thatcher was arrested trying to do the same. Africa attracts the greediest and least human.

http://en.wikipedia.org/wiki/Patrice_Lumumba

Lumumba’s pan-Africanism and his vision of a united Congo gained him many enemies. Both Belgium and the United States actively sought to have him killed. The CIA ordered his assassination but could not complete the job. Instead, the United States and Belgium covertly funneled cash and aid to rival politicians who seized power and arrested Lumumba."[25] U.S. President Dwight D. Eisenhower had said "something [to CIA chief Allen Dulles] to the effect that Lumumba should be eliminated".[26] This was revealed by a declassified interview with then-US National Security Council minutekeeper Robert Johnson released in August 2000 from Senate intelligence committee's inquiry on covert action. The committee later found that while the CIA had conspired to kill Lumumba, it was not directly involved in the actual murder.

The 2004 Equatorial Guinea coup d'état attempt, also known as the Wonga coup,[1] was an alleged coup attempt against the government of Equatorial Guinea in order to replace President Teodoro Obiang Nguema Mbasogo with exiled opposition politician Severo Moto, carried out by mercenaries and organised by mainly British financiers. Equatorial Guinea has vast oil and gas reserves.[2] One US official called it "the new Kuwait".[3] Prosecutors alleged Equatorial Guinea's opposition leader, Severo Moto, was to be installed as the new president in return for preferential oil rights to corporations affiliated to those involved with the coup.[4] It received international media attention after the reported involvement of Sir Mark Thatcher in funding the coup.

http://en.wikipedia.org/wiki/2004_Eq...%A9tat_attempt

[Idaho]

Those oil reserves that Mark Thatcher wanted to get control of would have been sold to one of the big companies. They would have been able to distance themselves, but I would like to think that intelligent people can see the connections well enough.

[Papewaio]

For resources they should be paying a royalty per ton Plus a percentage of the spot price.

Not sure how to treat services and ad revenue ie google. Or how Apple minimizes paying its by funneling through different states and then the Dutch sandwich. Personnally I think multinationals need to be reviewed. If they want the benefits of society they should be paying their way.

[Idaho]

Personnally I think multinationals need to be reviewed. If they want the benefits of society they should be paying their way.

A great idea. Let's get all the interested parties* in to discuss!



*interested parties is a registered trademark of Koch Industries

[gaelic cowboy]

A great idea. Let's get all the interested parties* in to discuss!



*interested parties is a registered trademark of Koch Industries

Funny you should mention them seeing as they were the focus of the next episode of Why Poverty on BBC4 last night. Twas a real eye opener so it was, basically it seems these Koch brothers have taken over the republican party through funding various governors and the tea bag crowd.

[Idaho]

Funny you should mention them seeing as they were the focus of the next episode of Why Poverty on BBC4 last night. Twas a real eye opener so it was, basically it seems these Koch brothers have taken over the republican party through funding various governors and the tea bag crowd.

That's just what the homosexual communist Mafia want you to think.

[Greyblades]

Ah the communist homosexual mafia, they'll kill you for owning a business but at least they do it looking faaabulous!

[Strike For The South]

It's good to see the jackboot still firmly on the neck of the brown man

I was getting worried for aa minute