DAILY
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Vol. 6. Issue 2604
Thursday May 21, 2020
CHEATING MOPANI FINED US$13 MILLION Kingsley Chanda
By CHINTU MALAMBO
C
HEATING Mopani Copper Mines which colluded with its parent company Glencore International AG (GIAG)
to undervalue the price of Copper has been charged US$13million. This was confirmed by the Supreme Court which yesterday ruled in favour of Zambia Revenue Authority (ZRA) after determining
from the year 2006 to 2009. This is a result of an audit done on Mopani by the ZRA which revealed sales pricing differences on prices that an associated party bought copper and the price that an independent
that the transactions between Mopani and GIAG International were less than arm’s length, and intended to reduce tax liability. Mopani will pay the State through the ZRA over K240 million tax charges assessed
No blame game on Bill 10 - Lewanika
party bought it at. According to a judgement delivered by Chief Justice Irene Mambilima sitting with two other Supreme Court judges Mumba Manila and Nigel Mutuna, the court found that the audit by ZRA
revealed issues that could cause any prudent tax authority to have misgivings about the arm’s length claim transactions between Mopani and GIAG, a shareholder in the mining firm. To Page 3
Monetary policy rate reduced to 9.25 p.c Story on Page 3
832 Cases 10 0 0 900 800
Covid-19 stats
70 0
Total test
600
Cases
135,000
50 0 475
Over 100 shops were gutted in Mongu on Tuesday. Story on P.3 Recovered
14,229 3,994
Deaths
New Cases
680 745
Egypt
450
13,753
425 400 375 350 325
275
225 20 0 175
197
7
60
Covid-19 update Cases
300
250
832
Zambia
• • • • •
Deaths
Discharged
832 total cases recorded 495 tested in the last 24 hours 5 patients discharged 60 new cases in the last 24hours 197 recovered
150 125 10 0 75 50 25 0 Days
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Burundi election: Facebook, Twitter, WhatsApp blocked BURUNDI has blocked social media platforms on election day as voters choose a leader to replace long-serving president Pierre Nkurunziza. The BBC has confirmed that Facebook, WhatsApp and Twitter are not accessible. Only those using Virtual Private Networks (VPN), which mask a user's identity, can access the social media sites.
The authorities have not responded to requests for comment. Polling stations for the election opened early on Wednesday morning. The build-up to the poll - in which seven candidates are vying to replace President Nkurunziza - has been marred by violence and accusations that the vote will not be free and fair. - BBC
Thursday 21, May 2020
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MOPANI SAGA
WHAT has been happening in the mining industry is not only shocking but should be a wake-up call to the nation not to take things for granted. Mining is the goose that lays the golden egg, Zambia’s major foreign exchange earner from which the nation expects to derive benefits to drive its development agenda. But it appears some mining firms have in fact been ripping the country dry through blatant cheating over their operations. Yesterday, the Supreme Court charged Mopani Copper Mines US$13 million after it established that the firm colluded with its parent company Glencore International AG (GIAG) to undervalue the price of copper. The court determined that the transaction between Mopani and GIAG International were less than an arm’s length as expected. Simply put, Mopani was selling copper to GIAG International at a lower price which in turn sold the same product to Glencore who were then able to sell it at a higher price, sharing the profits. Mopani will thus pay the State through the Zambia Revenue Authority (ZRA) over K240 million tax charges assessed from 2006 to 2009. The Supreme Court ruling has laid bare an elaborate scheme through which Mopani has milked the country dry through shady dealings. The case highlights the manner in which multinational companies have throughout the world operated, taking advantage of their weaker partners. Mopani, it has turned out, has been cheating over its sales, thus evading to pay the appropriate taxes. It was undervaluing the copper sales. The genesis of the matter stems from an audit done on Mopani by the ZRA which revealed sales pricing differences on prices that an associated party bought copper and the price that an independent party bought it at. But Mopani objected the assessment, arguing that the source of ZRA’s data informing the assessment was erroneous as all of its sales were based on LME Copper A Grade cash settlement over a quotation period. It also claimed that there was failure on the part of ZRA to take into account the Hedging Agreement that had been concluded between it (Mopani) and GIAG and implemented to minimise exposure to price risks, which was a common practice in the industry. Mopani then appealed to the Revenue Appeals Tribunal which dismissed the appeal and ordered that the original assessment for charge years 2006/07 and 2007/08 of K311, 113, 798.30 would stand together with the assessment for the charge years 2008/09 and 2009/10 in the sum of K140, 891, 939.89. It then appealed to the Supreme Court, advancing seven grounds of appeal against the tribunal. But according to a judgement delivered by Chief Justice Irene Mambilima sitting with two other Supreme Court judges Mumba Malila and Nigel Mutuna, the court found that the audit by ZRA revealed issues that could cause any prudent tax authority to have misgivings about the arm’s length claim transactions between Mopani and Glencore International AG (GIAG), a shareholder in the mining firm. It said the nature of the business relationship between Mopani and GIAG and how that special relationship reflected in the sales of copper produced by Mopani raised reasonable suspicion to lead the Commissioner General of ZRA to invoke Section 95 of the Income Tax Act. Moreover, Mopani had initially agreed to pay K100 million to the ZRA after the Revenue Appeals Tribunal findings. The nation has been taken for a ride and this must stop. Miming firms have through the years claimed they were not making any profits because of the high taxes. Mopani is currently at loggerheads with Government over its plans to place the Kitwe and Mufulira mines on care and maintenance that would have resulted in 11, 000 miners losing their jobs. Government said no though Mopani has notified it again to place the Mufulira and Kitwe assets on care and maintenance after 90 days. We are glad Government appears to have had enough and has told Mopani to clearly state its position within 14 days on what will happen to the mine after the 90-day period elapses. Finance Minister Bwalya Ng’andu said it was not acceptable to leave the future of the mine in balance without clarity Dr Ng’andu is leading a delegation of ministers - Richard Musukwa for Mines, Labour Minister Joyce Simukoko and Copperbelt Minister Japhen Mwakalombe – and was speaking after a closed door meeting with Mopani management in Kitwe yesterday. Mopani must definitely shape up or call it quits.
PURSUING JUSTICE AND EQUITY WITH INTERGRITY
DAILY
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FARMERS WARN STATE … We’ll sell maize on open market if FRA price delays By SILUMESI MALUMO
T
HE delay by Government to announce the maize floor price will force us to sell to buyers who are coming on board because we need money to survive, farmers have said. Youths Generation of Zambia, an agricultural out-grower scheme with over 1, 000 farmers, said briefcase buyers were on the loose, looking for maize and that it was only a matter of time before farmers give in. Organisation president, Author Mukeya, said farmers depended on their produce to
earn a living, therefore, they could not hold on to maize when some buyers were already on market. He said the moisture content was reasonable and that it was up to the Food Reserve Agency (FRA) to stock the maize. Mr Mukeya said if Government continued delaying, farmers under the organisation's out-grower scheme would not hesitate to supply to buyers who were on the market. He warned that the time FRA would get on the market, it would find that all the commodity had been bought by the private sector. “Our farmers have no money to survive right now, why
should they hold on to the maize when they need to earn a living,” he wondered. On Tuesday, Agriculture Minister Michael Katambo appealed to farmers to wait patiently until the moisture content reached 12 percent so that they could sell their commodity to FRA at a reasonable price. But Mr Mukeya told the Daily Nation yesterday that if FRA would not go into the market soon, farmers would sell the grain to serious buyers on the market. "For us we were thinking that the minister will announce the maize price by now because the moisture content is very reasonable,” he said.
FRA has offloaded over 400, 000 tonnes By MUYANI SHINJABALE
THE Food Reserve Agency (FRA) has disbursed over eight million of 50 kilogramme bags (434,678 tonnes) of white maize to date to avert the hunger caused by the drought during the 2018/2019 farming season. FRA Public Relations Coordinator, John Chipandwe, said the organisation had disbursed 8, 693, 562 bags of 50 kilogrammes of white maize to cushion the hunger crisis in the country.
Solwezi cop shoot fellow cops By NATION REPORTER
A POLICE officer in Solwezi has reportedly shot dead his fellow officer who along with three others ambushed and attempted to rob a Trade Kings truck on Monday evening. A Constable Ignitius Chola allegedly died on the spot after being shot while another police officer is said to be battling for his life with gunshot wounds. At the time of staging the robbery, Chola was allegedly serving a suspension from police after he was convicted of stealing an excavator from a construction company last year. The Zambia Police is yet to comment on the matter
Mr Chipandwe said the maize was disbursed starting from January first 2019 to May 8th this year. He said the disbursed quantities of the commodity was equivalent to 434,678 tonnes of white maize. "The quantity released from the national strategic grain reserves represents a value of one billion, thirty-five million, two hundred and eighty-nine thousand, six hundred and thirty-six kwacha, forty ngwee (K1, 035,289,636.40)," he said. He indicated that the corresponding realisable sales
were remitted to Central Treasury as per Government requirement. Mr Chipandwe said the disbursed quantities were conducted through maize sales programmes such as community sales to vulnerable communities and emergency programmes under the Disaster Management and Mitigation Unit. FRA also released the grain to the school feeding programmes under the Ministry of Education and the millers through the the Tripartite Agreement.
Chirundu on Covid-19 spotlight By SILUMESI MALUMO
WE are now doing community screening in Chirundu border to detect the extent of the pandemic, Zambia Public Health Institute Director Victor Mukonka has said. And Professor Mukonka said community health workers have been trained to supervise the home isolation management, others include 18 workers to supervise community health workers and 30 health workers entry staff for infection prevention and control in Nakonde. Prof Mukonka said on Tuesday about 277 people were screened and tested at Chirundu border. He said during the routine media briefing in Lusaka yesterday, those tested include truck drivers, point of entry staff and members of the community. And Prof Mukonka said Nakonde being an epic-centre, health workers had intensified screening and testing. A package of interventions are being done, in order to quieten the situation in the area. He said quiet a number
of community health workers had been trained to supervise the home isolation management. In addition 18 nurses had been trained to supervise the community health workers and 30 health workers had been trained in infection prevention and control. Meanwhile Prof Mukonka said 60 new Covid-19 cases had been recorded across the country. He said in the last 24 hours 495 tests were conducted and out of that 60 cases were positive. Prof Mukonka said 48 cases were recorded in Muchinga Province and these include four health workers, 24 from community screening and testing conducted in Nakonde, 17 were contacts to known positives, two truck drivers who came through Nakonde and one from Isoka. The 12 positive cases detected, eight are truck drivers in Ndola who entered through Nakonde to deliver fuel to Indeni and one from Kitwe. Prof Mukonka said one case was from Mpulungu , another from Nsenga Hill and one case in Kasama in Northern Province.
Tutwa warns CDF contractors By KETRA KALUNGA CONTRACTORS doing shoddy works on the Constituency Development Fund (CDF) and other projects risk being arrested for stealing the Government money, Kabwe Central Member of Parliament (MP), Tutwa Ngulube has warned. Mr Ngulube said all the contractors who had failed to complete the CDF projects in his constituency should refund Government. He said he would not hesitate to have such contractors arrested for taking Zambians for granted. “For Kabwe Central CDF projects, we want to warn all the contractors that have failed to finish the works that they must refund the Government,” Mr Ngulube said. He was speaking yesterday when he inspected Makandanyama and Katondo police posts being constructed under CFD. Mr Ngulube said he was disappointed with the contractor Jopper Mining and the engineering department from the Kabwe Municipal Council for the shoddy work done at Makandanyama police post. He said it was shocking that despite the poor works done on the K125 000 CDF projects, the contractor was claiming to be paid a K36 000 balance. Mr Ngulube, who is Deputy Parliamentary Chief Whip, said because of the poor works done, the police post whose works started in 2013 had been rejected twice by the community. And Mr Ngulube has committed to take up all the CDF projects he inherited in 2016 among them Kafulamase clinic and Makwati community school.
DAILY
Thursday 21 May, 2020
No blame game on Bill 10 - Lewanika By SANDRA MACHIMA
T
HE controversial Bill 10 of 2019 should not be blamed on anyone because it is a product of a continuation distortion of the independence dispensation, veteran politician Akashambatwa Mbikusita Lewanika has said. Dr Lewanika said the 1969 referendum did not pose the question on how to change the Constitution, but instead moved the country from a democratic nation to a ‘personalised’ leadership. He said therefore, Bill 10 was actually a product of an already manipulated constitution that was endorsed by the Zambian people’s vote of 1969 referendum. The veteran politician said it was against that background that some of the arguments in the bill should not be blamed on anyone. “It doesn’t matter who person is in the presidency, but what is wrong with the bill is about its betrayal of promise of the independence and not as in pointing a finger to anyone,” he
said. Dr Lewanika said it was cardinal to go back to the drawing board, whether the idea was bad or not, because the matter on hand was whether or not the independence dispensation was honoured, where all the stakeholders were represented that allowed Zambia to be totally independent. “Whatever government or person who may come into office will still have such challenges because this was the sort of history the nation had found itself in,” he said.
Dr Lewanika
HH seeking cheap sympathy – Chanda By OLIVER SAMBOKO
HAKAINDE Hichilema is seeking cheap sympathy by crying foul over violence because it's actually him who is running a terrorist organisation in the name of UPND, PF national media director Sunday Chanda has said. Speaking yesterday, when he featured on Christian Radio chat back programme, Mr Chanda said Mr Hichilema was seeking cheap sympathy from the public by accusing the PF of being a terrorist organisation when he was the architect of political violence in the country. He said Mr Hakainde had in the past committed many atrocities including an attempt to collide with the Presidential Motorcade, in Mongu during the Kuomboka ceremony. Mr Chanda also dispelled rumours by the UPND that Mr Hichilema was attacked while appearing on live radio programme in Muchinga Province. He said at no time did the PF cadres attack Mr Hichilema because the opposition leader was not physically at a radio station but on self-quarantine at his home in Lusaka. He said it was sad that Mr Hakainde had developed a
tendency of calling radio stations lobbying for sympathy while sabotaging measures that government had put in place against Covid-19 fight. He said it was morally wrong for the opposition leader to start politicking in Muchinga Province where the country was recording a high number of Covid-19 cases. Mr. Chanda also condemned the attacks by unknown suspected party cadres on radio stations in Muchinga that had featured Mr Hichilema. Meanwhile, Mr Chanda thanked various stakeholders for standing with President Edgar Lungu and his PF Government in the fight against Covid-19. “The President was clear that he would not be persuaded to make decisions informed by fear so it’s important to thank the Zambian people for standing with the President and the government of the Republic of Zambia, and to thank the partners of our cooperating partners, different players from the private sector," he said. Mr. Chanda also commended the Ministry of Finance for publishing the full list of donations which Government had received in the wake of the Covid-19 outbreak.
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CHEATING MOPANI FINED US$13 MILLION From Page 1
The court found that the nature of the business relationship between Mopani and GIAG and how that special relationship reflected in the sales of copper produced by Mopani raised reasonable suspicion to lead Commissioner General of ZRA to invoke Section 95 of the Income Tax Act “Based on the audit findings the respondent concluded, in terms section 97A of the income Tax Act that the actual condition on the sales to GIAG were not in line with the expected arm’s length conditions as defined in that section. Consequently the prices had to be adjusted upwards in order to come up with the arm’s length conditions on pricing,” the court said. The court found Mopani
Over 100 shops gutted in Mongu By PETER SICHALI
OVER 100 Shops and goods wealth thousands of Kwacha have been burnt at Mongu's Southwest Market, Western Province Permanent Secretary Daniel Bukali has confirmed. Mr Bukali said the inferno which gutted the southwestern end of Mongu central is reported to have gutted over 100 shops along with goods worth thousands of kwacha. Mr Bukali who rushed to the scene in company of Mongu District Commissioner Tombi Tombi said the fire which started around 20:00 hours spread quickly through the southwestern side of the market burning a Zesco electricity pole and melting cables in the process. Mr Bukali said it was suspected that the fire could have emanated from a shop where the owner is said to have been the last person
liable to pay K240, 891,939.89 in taxes made up of K140, 891,939.89 for the charge years 2008/09 and 2009/10 and K100, 000,000.00 for the charge years 2006/07 and 2007/08. In this matter Mopani had appealed the decision of the Tax Appeals Tribunal given on December 8 2010, where the tribunal held against it on a complaint it raised, disputing tax assessments made by the ZRA. The background is that ZRA’s raised some concerns regarding certain related party transactions between Mopani and GIAG. ZRA questioned some related party transactions and in particular the issue whether these transactions were indeed at arm’s length. And Mo-
seen with a brazier, which was believed to be the source of the inferno. He said told the grieving marketeers that he had contacted the President to inform him of the disaster in the night adding the Head of State was deeply saddened by the incident. "As a government, we are happy when citizens are actively involved in economic affairs," Mr Bukali said. And Southwest Market chairperson Kelvin Mukanda said he was sad the market that had over 105 shops had been gutted. Mr Mukanda said some marketers lost goods in the inferno, others lost goods as a result of petty thieves who took advantage of the commotion to break into shops of those that were not present at the time of the fire. He appealed to the government support shop owners so they could restart their businesses. Meanwhile, marketeers have accused fight fighters of responding late to the alarm and running out of water in the process. Mongu District Disaster Management committee chairperson Mwitelela Jingi said it was wrong to rubbish the efforts of the fighters as their response was what saved the remainder of the market.
pani claimed that the transactions between it and GIAG were at arm’s length and that the prices of Minerals is determined by the London Metal Exchange (LME). ZRA however, for the first two charge years, assessed Mopani the sum of K311,113,798.38 for charge years 2006/07 and for the years 2009/10 charge years the assessment sum was K140,891,939.89. But Mopani objected the assessment, arguing that the source of ZRA’s data informing the assessment was erroneous as all of Mopani’s sales were based on LME Copper A Grade cash settlement over a quotation period. It also claimed that there was failure on the part of ZRA to take into account the Hedging Agreement that had
been concluded between it (Mopani) and GIAG and implemented to minimise exposure to price risks, which was a common practice in the industry. Mopani then appealed to the Revenue Appeals tribunal. But the tribunal dismissed the appeal and ordered that the original assessment for charge years 2006/07 and 2007/08 of K311,113,798.30 would stand together with the assessment for the charge years 2008/09 and 2009/10 in the sum of K140,891,939.89. It then appealed to the Supreme Court, advancing seven grounds of appeal against the tribunal. The Supreme Court dismissed the six grounds but said only one group of appeal had succeeded.
Monetary policy rate reduced to 9.25 percent By BENNIE MUNDANDO
THE Bank of Zambia (BoZ) has reduced the monetary policy rate by 225 basis points to 9.25 from the initial 11.5 percent as a mitigation measure against the adverse impact of the Coronavirus Disease (Covid-19). BoZ Governor Denny Kalyalya said the cut in the Policy Rate also complemented the other broader set of measures the central bank had already announced to mitigate the impact of Covid-19. He was presenting the Monetary Policy Committee (MPC) report during a media briefing at the Mulungushi International Conference Centre in Lusaka yesterday, Dr. Kalyalya said the committee noted that the economy was projected to record a recession in 2020 on account of the Covid-19 shock, the first contraction in more than 20 years. He said the Covid-19 pandemic was having an unprecedented impact on human life and livelihoods and that the exponential rise in infections, that characterised the onset of the pandemic, led to a strain
By OLIVER SAMBOKO
State lifts ban on fish feed exports
GOVERNMENT has lifted the ban on the export of fish feed which was effected to stabilise supply and deal with high pricing of the commodity on the local market. Addressing the media yesterday, Livestock and Fisheries Minister Nkandu Luo said Government was committed to ensuring that the fish deficit in the country was narrowed.
She said Zambia had a deficit of 80, 000 metric tonness of fish and that Government through her Ministry was undertaking an ambitious programme aimed at bridging the Gap. The minister said it was the desire of the PF Government under the leadership of President Edgar Lungu to make sure the country was self-sufficient in fish to ad-
dress food and nutrition challenges in the country. Professor Luo, however, disclosed that the ban on stock feed for animals will remain in force until her ministry met millers and other stakeholders to chat the way forward adding that Government could only lift the ban after the local market was satisfied. She said to sustain the
on health care systems and adversely affected fiscal budgets. “The Monetary Policy Committee, at its May 18-19, 2020 meeting, decided to lower the Policy Rate by 225 basis points to 9.25 percent. This is to mitigate the adverse impact of Covid-19 on financial sector stability, economic activity, and ultimately on people’s lives and livelihoods. The cut in the Policy Rate also complements the other broader set of measures the Bank of Zambia has already announced to mitigate the impact of Covid-19. And Dr. Kalyalya says a country cannot access an International Monetary Fund (IMF) bailout if it did not have a substance debt situation or had a credible plan that brings to sustainable levels. “On the IMF support, the minister was very clear on. If you go to the IMF website, go to the low-income countries and the facilities that are there. All IMF facilities have conditions that they can only provide the facility only to a country which has a sustainable debt situation or if it is not in that state, at least it must have a credible plan that brings it to sustainable levels.
growth of the aquaculture subsector, there was need for not only high quality but also affordable fish feed on the market to ensure that the country closed the deficit gap in the fish production and supply chain. Prof Luo said the country had learnt a lot of lessons from the Covid-19 outbreak and that it was the desire of the PF Government to develop the aquaculture subsector so that the country could stop importing fish.