FTSE 250 mining company Vedanta has been targeted by protestors in Zambia, in a one-day demonstration over claims it has sought to evade local taxes by disguising the level of profit it makes from mines in the country
The protest on 29 May, organised by international development agency ActionAid, saw hundreds of demonstrators march on the Lusaka headquarters of Konkola Copper Mines (KCM) which is 79% owned by Vedanta.
The move follows the release on YouTube of a video of Vedanta’s executive chairman Anil Agarwal, in which he tells a trade conference that for the past nine years KCM has made the company up to £1bn(£600m) each year.
ActionAid says this statement is in sharp contrast to Vedanta’s own claims that KCM is making only a minimal profit. The company has not released a detailed financial statement for the subsidiary, but Vedanta’s last set of accounts show a $15.9m (£9.5m) operating loss from its Zambian operations, with a $63.6m(£38m) profit the year before.
Murray Worthy, tax expert at ActionAid, said: ‘Vedanta must now disclose a full breakdown of where Agarwal’s figures come from and how they can claim such large earnings while reporting minimal profits.’
ActionAid Zambia director, Pamela Chisanga, reported that there was real anger in the country, saying that if Agarwal’s claims of KCM’s profitability are true, it would appear the company has either been hiding its true profits from the Zambian Revenue Authority or shifting them out of the country.
Chisanga said: ‘Vedanta and KCM must pay their fair share of tax. The Zambian government should carry out a forensic audit of KCM’s accounts and publish the results.’
In a statement, Vedanta said that Agarwal’s comments were taken ‘negatively out of context’ and that the firm had invested nearly $3bn (£1.8bn) in KCM and ‘nearly all the returns from KCM have been reinvested back into KCM’. The statement made no mention of the company’s profitability or tax payments.
Vedanta also said it ‘always fully adheres to the highest regulation and disclosure requirements. As such, there should be no doubt over the accuracy of our reporting or the taxes we are paying.’
The Zambian Revenue Authority has now started an investigation into the allegations. ActionAid is also calling on the Zambian government to introduce legislation to mandate the auditor general to audit all mining companies in Zambia.
