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Illicit financial flows severely impact developing countries, not least South Africa

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19cash2Illicit financial flows are a massive problem impacting developing countries in general and in particular South Africa, and require urgent attention. This became clear during a roundtable meeting convened by three well-known international civil society organisations (CSOs) - African Monitor, Economic Justice Network and Oxfam - in South Africa during May. In a statement released Friday last week, the organisations noted that illicit financial flows also impacted developed countries and was such a huge and complex field that it would be best solved by a wide range of organisations working together to address the challenges caused by such flows.

In the case of South Africa, a Working Group was established during the roundtable to work with South African CSOs, the government and the private sector. The Working Group will ensure that there is purposeful cooperation to address the issue among South African CSOs. The group will liaise with other like-minded groups and task forces involved in addressing the issue.

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Submission on Base Erosion and Profit Shifting (BEPS) to the Davis Tax Committee

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Following the formation of the Davis Tax Committee, sub-committees were established to focus on specific tax-related issues, according to the terms of reference (attached). CSO’s are instrumental in policy processes and therefore, we have undertaken to tackle particular issues under the sub-committees of base erosion and profit shifting (BEPS) and mining extractives and tax, respectively, in order to produce two respective submissions to these sub-committees. The purpose of this meeting was to provide recommendations for the sub-committees from a CSO perspective. This was further highlighted by presentations from Savior Mwamba (TJN-A) and Thembinkosi Dlamini (Oxfam GB).

Click here to read the full submission: SUBMISSION_TO_THE_BASE_EROSION_AND_PROFIT_SUBCOMMITTEE.pdf

 

5th Alternative Mining Indaba Declaration

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DeclarationWe, representatives of Civil Society Organisations; Faith Based Organisations, Pan-African Networks and Organisations, Labour Movements, Members of Parliament, media,  international partners and Community Based Organisations; gathered at the Ritz Hotel, Cape Town on the occasion of the 5th People’s Alternative Mining Indaba (AMI) from 4th to 6th February, 2014, to express our deep concern regarding the continued limited contribution of the extractive sector to the pro-poor development agenda of African countries.

These organisations, representing persons from a range of countries in Africa, Latin America, Asia, and Europe, met and reaffirmed their belief in a society that puts people before profits. Once again, we find ourselves  confronted by corporate greed and the lack of government will in protecting the environment, social and economic well being of communities.

We are dismayed by the continued rush for profits by Multinational and Trans National Corporations at the cost of human rights, women’s rights, livelihoods, environment and health.

 

 

We continue to note with concern, that the “Rich People’s Indaba”, has once again excluded the true owners of the land from their conference, and warn that severe hardship, social conflicts and unsustainability will result, when our land and heritage is sold at the altar of foreign governments and transnational corporations.
Conference organisers reported at the (Rich Peoples) Mining Indaba (International Convention Centre in Cape Town) has over the past year attempted to stop us from using the phrase Alternative Mining Indaba, which runs contrary to free speech granted by our constitution. As civil society representatives, committed to building a society based on socio-economic and political justice and the values of Ubuntu, we have an inalienable right to speak and organise whereever we want. It is worth mentioning that the word Indaba is not a thing to be privatised. For us it is not just a word, but a means of Africans getting together, thinking, sharing and working out solutions together. This was evident in our deliberations.
The Alternative Mining Indaba deliberated on a range of themes that included community rights - a key to empowerment; mining and social protection, extractives –illict financial flows, oil, gas and foresty sector. These are some of our concerns:
1. Community rights - a key to empowerment;
i. We note with concern that communities continue to be marginalised in matters affecting their own lives. In South Africa for example, communities are excluded from being participants in Social and Labour Plans, matters related to community infrastracture and economic well being. This is anti democratic, and reinforces colonial and Apartheid practices. Truly democratic legislation will ensure that people remain the centre of their own development.
ii. We continue to learn of the continued impoverishment of mining communities, and mining sending communities, in contrast to the mass profits of the share-holders and chief executive officers.
iii. Communities continue to cry out against the rush for extractives profits, which defy all norms of fair play, consulations and negotiations with communities.
iv. We have observed a blatant disregard for human rights and a continued externalisation of mining costs. Whilst profits are privatised, the true costs to health, environment, ecology, economy and social wellbeing of workers and communities is ignored in law and practice by the elites in our countries. 
v. Instead of Free Prior and Informed Consent (FPIC), we find sham consultations and agreements with unmandated elites circumventing full participation of the communities in determining whether mining should take place or not. For us FPIC, is not a once-off process, but  continuous processes of negotiating and consulting with communities on matters of importance to them. FPIC also means the right to say NO to mining and we urge governments to ensure that communities’ wishes are respected and the alternatives funded, so that communities are not punished for choosing alternatives to mining.
vi. We have resolved to name and shame companies that are found to have violated Human Rights and Environmental Rights at every gathering we will have,  which will be followed by cases being laid against the company  
On customary law;
vii. We reject the current practice which gives individual and unelected chiefs all the powers over the resources to his or her community.  
viii. We further call on governments to mobilise the political will and recognise and use customary law which will assert the customary laws and entitlements of the community as equal to statutory regulation. This will grant communities greater rights than corporations to own, and utilise their own natural resources. We trust our goverments and law makers will read into these values of our progressive constitutions such as community entitlement, anti racism, anti sexism and equal rights for women.

2. Mining and social protection, 
i. Whilst shareholders and CEOs have raked in millions, mining communities remain trapped in extreme poverty and inequality. We call for extreme and urgent measures to relieve hardships in the short term, and to lay the basis for sustainable socio economic development which does no harm to the ecology, local commuities and their wellbeing.
ii. We  call for a critical review of the whole system of revenue collection and distribution, royalties, to evaluate if it works, where it works, and how it works on the continent. Participants acknowledge that the implementation of these are adhoc, non transparent and generally yield no benefits to communities.
iii. We also call on governments to regulate the corporations without fear or favour, and ensure that mining and other extractive companies are held accountable for the true costs of mining as they impact on local communities and individuals.
iv. We learnt about the value of a universal incomes support and will be studying the possibilities for a SADC wide Basic Income Grant as a temporary measure to alleviate destitute poverty as more comprehensive forms of sustainable decent work are being explored. 
Fighting Corruption, maladministrationv. Corruption and mismanagement of our natural resources undermines sustainable development and is a loophole for corrupt and unscrupulous individuals in government and in corporations. We call for community vigilance in exposing these acts and ask the law enforcement agencies to prosecute those found wanting.
Beneficiation vi. Governments should embrace the concept of beneficiation that entails value addition and the transformation of a mineral  to a higher value product, which can either be consumed locally or exported and yield higher revenues for producing countries. 
vii. We call on all the mineral-producing national governments to beneficiate all the minerals with a large share of development being vested for hosting communities as prescribed by negotiations with the communities 
3. Extractives – illict financial flows,
The alternative Indaba expressed outrage, when they learnt that Africa is “losing” mineral revenue estimated at USD 50 Billion per annum due to illicit financial flows often facilitated by governments working with transnational corporations through tax avoidance and tax evasion.i. We call on African governments to prioritize combating the scourge of illicit financial flows in the mining sector by strengthening the capacity of regulatory institutions in order for these Institutions to effectively carry out their work in identifying and curbing illicit financial flows.
ii. Governments must redouble their commitment to strenghtening and enforcing tough disclosure measures that are timely, transparent, and accountable to parliament and communities. We believe it is high time, to enact legislation that promotes mandatory reporting of taxes and other payments to governments, production, sales, and profits by all Transnational Corporations in all jurisdictions where they operate in their audited annual reports and tax returns and for governments to make public this information to the general citizenry.  For this to be effective, government should build the capacity of regulatory institutions to carry out their own independent audits to validate reports of the companies.
iii. We call on governments and companies to make all contracts and legal agreements for extractive industries projects public, to align with global norms and best practice on the continent. 
iv. We call upon African governments to enact legislation that prohibits public officials from engaging in business activities, owning shares or sitting on a board of a company or companies that will conflict with or compromise their public responsibilities in the sectors that they are meant to be regulating. 
v. We demand complete transparency of Beneficial Ownership of multinational corporations and state companies through a public registry in order to make public the control, accounts of companies, trusts and foundations in each jurisdiction they operate in. 
vi. We call on our governments to adopt Automatic Exchange of Tax Information amongst governments. This should be done by collecting data from financial institutions on the financial assets within their domain and automatically provide it to governments where the non-resident individual or entity beneficially controlling the structure is located. 
vii. We must harmonise laws that deal with the offences for money laundering including tax evasion and fraud, as well as crimes committed both at home and abroad.
4. Oil, gas and foresty sector
i. We note the new push to develop unconventional gas resources through fracking. We oppose fracking, because of the significant risks of water pollution and risks to health and livelihoods. It is clear that African governments are not prepared to evaluate or address the inherent risks.  
ii. Communities spoke out against current inequitous land laws in many countries where ownership only refers to surface land. We demand genuine land reform, and fair and equal compensation for those evicted to make way for mining. This decision must be subject to communities’ free prior and informed consent.
iii. Communities demand that they be included to jointly search for just, participatory and inclusive alternatives to sourcing and use of energy. More resources must be made available to poor communities to reduce their reliance on charcoal burning. These alternatives include geothermal, wind, water and gas -sources of energy that put the needs and aspirations of people and their communites, and the environment above the race for profits.
Way forwardWe, civil society organisations at large, from  Zambia, Zimbabwe, South Africa, Tanzania, Bostwana, Nambia, Kenya, Malawi, Burma, Brazil, Angola, Cameroon, Lesotho, Swaziland, Mozambique, United Kingdom, United States, Sweden, Canada and Norway;
Commit to fight for these demands and will meet again to evaluate our progress next year. To ensure implementation of this programme, we call on communities to meet in national mining indabas which will build unity amongst various communities and civil society organisations so that we can effectively monitor and ensure governments and corporations become accountable to communities, and the wider society.
We recognise that our strength lies in unity, we have resolved that to best achieve the results we will rally faith communities to join hands with us in the struggle to protect integrity of creation as God has bestowed trust in all of us, particularly the faith community who are best placed to exhort the fulfilment of the prophetic role as we pray and advocate for change.

 

This is the Real Mining Indaba: SayAMI 2014 delegates

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The_Real_IndabaAlthough multinational mining companies are often criticised, African governments are the biggest culprits in the leakages of mineral proceeds from Africa, the 5th Alternative Mining Indaba heard in Cape Town yesterday.

Figures released in one of the four thematic breakaway sessions of the indaba, which seeks to give voice to mine workers and communities affected by mining show that under-invoicing, transfer pricing,  tax avoidance  and evasion and dubious inter-company loans among other shenanigans by the corporate sector, accounted for 60% of mining revenue leakages while official corruption accounted for  5%. A Zambian official said his country had lost more than $8.8 billion over ten years to these kinds of practices.

The Alternative Mining Indaba, attended by about 200 delegates from civil society organisations and faith-based groups as well as international development organisations such as Oxfam,  is taking place at a hotel in Seapoint, Capet Town, a stone’s throw away from the upmarket Cape Town Convention Centre where about 6000 delegates from the world’s 2000-organisation oligarchy have descended for their own annual Mining Indaba. However, in spite of its smaller gathering, the AMI maintains that it is the true mining Indaba as it represents people’s voices.

“This is the real mining indaba.  The other represents  the interests of the minority while here, in an insignificant corner of Cape Town it is the interests of the majority of the people that are under consideration,”  keynote speaker Dr Godfrey Kanyenze  said.  He concurred with social activists that mining had only brought huge profits for the large mining corporations but displacement, environmental degradation, health hazards and squalor for  most communities in Africa.

Kanyenze tore apart what he called the myth of the “Africa is on the rise” mantra now being found in most mainstream mass media.  He said the same media had once labelled Africa “the hopeless continent.” The economist and pro- labour activist said those claiming Africa was on the rise were merely looking at overall GDP figures without analysing them and considering the welfare of people.

He argued that a closer look at the Africa Rising phenomenon would reveal a very skewed pattern where the so-called rise in GDP was largely only a growth in mining output that was simply shipped out of the continent.  The same applied to the growth in foreign direct investment. Real growth would come if there was value addition to the minerals In Africa and a growth in other value adding economic activities such as manufacturing and service provision.

“But as things stand we are merely perpetuating the objectives of the Berlin Conference of 1887,” Kanyenze pointed out.

The Executive Director of the Economic Justice Network, conveners of the indaba, Rev Malcolm Damon, said Africa cannot be said to be rising when the quality of life of its people is not rising along with the GDP growth figures. He said his organisation would continue to fight for the economic rights of the oppressed in the mining sector in spite of the threats issued against its use of the name Alternative Mining Indaba by the corporate backed Mining Indaba.

“One of the outputs of this meeting is to come out with a statement that we can take from here and share with our stakeholders,” Malcolm said. The delegates are expected to carry out a march on Thursday to air grievances on behalf of those exploited by mining companies. He stressed that events such as the strike at Marikana platinum mines were merely a manifestation of unmet expectations by workers, who he said should be paid a living wage. Natural resources should not only be exploited for the benefit of a few shareholders, he said.

Many participants at the indaba were in a radical mood, with some insisting that the time for holding dialogue with mining companies was over and there should be unspecified action. Delegates from Brazil suggested that it would be better to stop mining activities that did not benefit locals and instead concentrate on agriculture which in the long term could earn 500% more than minerals which deplete resources such as land and water.

This was well-received by some of the African delegates who felt that it would be better to stop exploitation of the exhaustible minerals and preserve the lands. Furthermore, it was observed, many of the mining laws in Africa stemmed from colonial days and were therefore designed to exploit the local communities at the expense of a few elites.

This saw some participants standing up and chanting the chorus “Leli yilizwe labokhokho bethu abantu abamnyama” (This is the land of our black forefathers) in defence against exploitation.

However,  it was not only foreigners exploiters that came under fire at the meet, participants showed outrage at the complicity of African leaders and politicians in the exploitation of the continent’s minerals for a song. Delegates from different countries gave examples of how corrupt politicians in their countries signed away concessions for a song in return for bribes. Also, in many African countries, particularly in Angola and Zimbabwe the military were heavily involved in mining activities, exacerbating lack of transparency.

African Union representative Dr Kojo Busia said this was one of the issues the AU’s African Mining Vision intended to tackle.

“The benefits of mining in Africa are not being felt by its citizens. Failure to address this will result in strife,” Kojo warned.

 



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Let us touch the dying, the poor, the lonely and the unwanted according to the graces we have received and let us not be ashamed or slow to do the humble work. - Mother Teresa