Its Just Not a Cleaning Service Contract, It is Part of a Complex Tax Evasion Scheme
By Amb. Emmanuel Mwamba
In 2008, a fuming Minister of LABOUR held a press conference.
Minister of Labour Hon. Ronald Mukuma directed Kansanshi Mining PLC to cancel and re-advertise the contracts that had been awarded to two foreign companies to provide catering and cleaning services.
Hon. Mukuma said the action taken by Kansanshi was not only inconsistent with the provisions of the Citizens Economic Empowerment Act but also with the spirit of the mining development agreement that the company signed with the government.
Year in, year out this preferential awards to foreign companies to provide goods and services to the mines repeats itself as the contracts are given to foreign firms.
Further most of the mines hold certain management functions including procurement, in consultation with their regional offices in South Africa or Canada.
Last week the Union expressed similar concerns that the latest contract for cleaning services has been awarded to a foreign company.
The Union officials are fuming that Kansanshi can’t find a Zambian company that can clean workers’ clothes.
This is not just a contract about cleaning services.
Zambi loses over $1billion from multinational companies that engage in tax evasion and tax avoidance schemes.
This also involves transfer pricing, where subsidiaries of these companies abroad, buy the copper and cobalt at low prices for tax purposes, and resale at higher prices to final buyers.
This also involves the employment of expatriate staff who are given inflated salaries for purposes of the local accounting books.
Further the Mines are perpetually involved in capital expenditure that allows them to import “expensive” mining equipment and the VAT refunds due, run mine operations and meets the wage bill.
ZRA alone owes the Mines over $1billion in VAT tax refunds.
Tusalapuke bane…
We may never benefit from our own resources.