Saturday, February 26, 2011

(STICKY) Mopani lacks accountability - Sichinga

Mopani lacks accountability - Sichinga
By Chiwoyu Sinyangwe and Mwala Kalaluka
Sat 26 Feb. 2011, 04:01 CAT

MOPANI Copper Mines lacks accountability evidenced by its reaction to the recent audit which revealed glaring irregularities in the books it submitted to ZRA for tax administration, according to chartered accountant Bob Sichinga.

And Sichinga praised the Zambia Institute of Chartered Accountants (ZICA) for summoning accountants and auditors at Mopani Copper Mines (MCM) to appear before its disciplinary committee over alleged tax avoidance.

Meanwhile, Vice-President George Kunda said the MMD government did not want to lose power the way former Australian prime minister Kevin Rudd did after he imposed punitive taxes in the mining sector.

Mopani Copper Mines chief executive officer Emmanuel Mutati this week labelled as “flawed and incomplete” a recent pilot audit which revealed irregularities and inconsistencies in production and revenue figures it submitted to ZRA for tax administration.

Mopani “refuted conclusions” of the independent findings of the audit conducted by lead auditors Grant Thornton Zambia and Econ Pöyry – a Nordic branch of a global consulting and engineering company – most of which hinged on its links to Glencore AG, which resulted in massive transfer pricing.

Commenting on Mutati's reaction, Sichinga said Mopani failed to address the real issues raised in the audit.

“Emmanuel Mutati did not respond to the real issues raised by the independent auditors,” Sichinga said in an interview. “He did not address the defects in what they are doing at Mopani.”
He dismissed Mutati's claims that Mopani was committed to accountability.

Sichinnga said a lack of accountabilty at Mopani was evidenced by the independent auditors who complained of hostility from the mining firm during the audit conducted in 2009.

“Why didn't they Mopani respond to the queries raised by the audit team during the periods of investigations,” he said.

“Accountability is being able to disclose things without being asked. And in any case, was Mopani going to follow up these differences raised by the report if the audit report was kept a secret?”

Sichinga also criticised the lack of accountability on the amount of mineral resources leaving the country's borders.

“There is simply no verification process on the volumes of the minerals leaving the country and what the mines are declaring to ZRA. I just wonder how they calculate taxes like mineral royalty, even the so-called variable profit tax,” he said. “Let the ministry of mines and finance show us the verification results.”

Sichinga, who is also a business consultant, said the recent independent reconciliation which revealed an absolute discrepancy of K247 billion between what mining companies paid and what the government received in 2008 confirmed the high level of revenue leakage the country was suffering in the mining sector.

“The report also confirms there is no verification process in what is leaving our land,” he said.

Sichinga commended the Zambia Institute of Chartered Accountants for summoning officers in the finance department of Mopani. He said accountants had a duty to uphold high accounting and professional ethics that hedge them against undue influence from employers.

“This is very good move by ZICA because in practice and according to international accounting standards, the accounting officers have to uphold personal accountability and responsibility to professional ethics,” said Sichinga.

On Wednesday, ZICA president Chintu Mulendema said auditors and accountants at Mopani would soon appear before its disciplinary committee for alleged breach of the accountants Act of 2008.

Mulendema said ZICA's practice review committee was compiling a report on the Mopani audit and should a prima facie case be established against accountants and auditors at the mining firm, they would be put on their defence.

The accountants at Mopani risked losing their practising licences or suffer other punishments should they be proven guilty, Mulendema said.
And during the Vice-President's question time in parliament yesterday, Vice-President Kunda said the government had put in place a reasonable and equitable tax regime.

Vice-President Kunda was responding to Nchanga PF parliamentarian Wylbur Sim-usaa and Pemba UPND parliamentarian David Matongo's concerns on the tax regime in the mining sector, particularly the recent audit involving Mopani Copper Mine's tax payments.

Vice-President Kunda said there was some confidentiality between a taxpayer and the Zambia Revenue Authority ZRA when it came to matters of paying tax.

He said there was currently an on-going verification within the ZRA on the issue involving Mopani's tax audit.

“The Zambia Revenue Authority and the company you are referring to have engaged and they are still trying to come up with the correct position,” he said. “So don't give credence to leaked reports.

On Matongo's question that the pathetic poverty situation in the countryside was a result of the government not getting the required revenue from the mining sector, Vice-President Kunda said the government was concerned with the equitable development of the country.

“At the same time we need to get benefits from the mining sector. Over the years our revenue from the mining sector have improved tremendously,” Vice-President Kunda said. “We don't want to impose punitive taxes . . . the prime minister in Australia lost his job because of imposing punitive taxes. We don't want to make the same mistake.”

And mines deputy minister Boniface Nkhata said the alluvial diamond mining licence ML56 given to Spirit of the River on a 25,000-square-kilometre land space in Western Province was cancelled in August last year.

Nkhata said in response to Luena Alliance for Democracy and Development ADD parliamentarian Charles Milupi's query that the cancellation followed an issuance of a default notice on the investor in June last year.

He said records at the Ministry of Mines showed that the company had never declared any production returns and the government did not raise any taxes from the investment.

Mines Minister Maxwell Mwale said the government allowed the mining company to operate across such a large area due to the nature of alluvial mining.

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