S commodities giant Glencore was hit by accusations of tax evasion at its Zambian subsidiary yesterday, just hours before pressing on with its £7bn flotation in London today.
Five international non-governmental organisations lodged a complaint with the Organisation for Economic Co-operation and Development (OECD) alleging accounting manipulations at Mopani Copper Mines, owned by Glencore.
The NGOs said an audit by accountants Grant Thornton and Econ Poyry of Mopani from 2006 to 2008, conducted at the request of the Zambian government, showed the company inflating its costs to minimise profit and reporting unusually low levels of cobalt production. The complaint alleged that this lowered Mopani’s net income by hundreds of millions of dollars to avoid it paying tax.
The audit allegedly also found evidence that Mopani was selling copper to Glencore at artificially low prices, a practice called transfer pricing that breaches OECD principles of trading between parent and subsidiary firms.
In a sign that Glencore may not be ready for the transparency demanded of public companies, it declined to comment. It is due to publish its intention to list a 20 per cent stake in London today, which would value it at about £37bn.