By Pamela Mutale Kapekele | Fri., September 16, 2:44 PM
The Glencore logo is seen on a sign in front of Swiss commodities trader Glencore building in Baar near Zurich January 5, 2010. REUTERS/Christian Hartmann.
By Pamela Mutale Kapekele
Sometimes, stories just fall into place (David White writes). It may be by luck or judgment, but usually a mix of both. This was definitely the case with the story about corporate governance in Zambia's mining industry that Pamela Mutale Kapekele writes about here.
Pamela took part earlier this year in a Thomson Reuters Foundation course on financial and economic reporting, one of a series being run for African journalists in co-operation with the Norwegian Agency for Development Co-operation (Norad). Norad has especially wanted to focus on the money that goes missing from developing countries – not just through graft and crime but also through the accounting tactics of big companies in their effort to pay as little tax as possible in the places where they operate.
It’s been a new subject for most participants. There’s been keen interest, but we’ve found that the leap from there to digging out the stories, in what are often quite difficult conditions for news reporting, is a big one. At this course in Johannesburg, though, the topic clearly rang a bell. Controversy about Glencore, up to then one of the world’s least known corporate giants, had already started to rumble in Zambia. At the same time, the commodities group was emerging into the limelight as it prepared to float its shares for the first time, making several top executives into overnight billionaires. Read on….
On February 9, 2011, a former colleague at The Post Newspaper broke a story of the leaked Glencore subsidiary Mopani Copper Mines audit report that revealed irregularities and inconsistencies in the tax that Glencore was paying to the Zambian government.
The mines audit (which was carried out at four mines) was ordered by the Zambian government on suspicion that the country’s biggest sector was not honest in the figures that they submitted to the Zambia Revenue Authority (ZRA) for tax administration.
Working with this former colleague (who has also previously attended the Reuters Financial and Economic training) we followed up the story but we were hitting a huge brick wall as no one wanted to give serious evidence based comments on the topic.
However, the story attracted a lot of political debate from opposition political parties and civil society organizations.
On March 21 to 25, 2011, I attended a Reuters Course on Financial and Economic reporting in Johannesburg, South Africa where we were asked to work on a business story as personal projects.
I choose to pursue the Glencore story because I felt that we had not done justice to it.
I submitted the story to David white and Nick Koch, our tutors, who critiqued the work and made comments on how it could be improved.
What I had at that point was just the leaked audit report which the government had disowned, making it difficult to prove that Glencore was committing any tax offences.
After the course, I took David and Nick’s advice and encouragement that the story needed the voice of Glencore representatives in Zambia and that of the government.
When I got back home, I travelled 400 km to Mopani Mines from my Lusaka base in the company of the United Nations country representative Kanni Wignaraja.
We met with the then chief executive officer (now board chairman) Emmanuel Mutati and I asked him about the audit report.
Mr Mutati said the report was flawed and dismissed it as malicious.
At the time of our meeting, there was a rumour that Mopani was causing widespread pollution around its operating area and I also asked about that.
The question was not answered because at that point I received a note from a Public Relations Officer at the mine who asked to see me outside.
I was told to leave the premises and wait for the UN delegation in the car park.
This officer told me that they were taking the UN delegation for a tour of the mine and that journalists were not allowed to accompany them.
I wrote my story from the little information I had managed to gather and I also managed to get a comment from Zambia Institute of Chartered Accountant (ZICA), the government regulator of accountants and auditors, who summoned accountants at the mines over the tax fraud allegations.
At that point the story started generating a lot of interest from international media and other organisations.
Working with my former colleagues at The Post we continued working on the story for a couple of weeks.
Later we found out, the story was keenly followed by the European Union and a delegation from there visited the country to investigate the tax and pollution allegations.
The story was also picked up by campaign groups Counter Balance and Eurodad who took complaints of Mopani Copper Mines widespread pollution and avoiding tax in Zambia to the European Investment Bank in a letter signed by more than 50 Members of the European Parliament.
On June 1, 2011, the European Investment Bank froze all new lending to Glencore and its subsidiaries, citing ‘serious concerns about governance.’
On June 7, 2011, the government of Zambia asked Glencore’s Mopani Mines to pay more tax to the country.
In 2010, the mines boasted of US$7.2 billion export earnings but only paid US$1.6 million in taxes.
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