Bern/Lucerne, 16 April 2012. In a new study, Swiss Catholic Lenten Fund and Bread for all criticize the activities of Glencore in the Democratic Republic of Congo: The Swiss commodities group buys copper from middlemen, which has been mined under very precarious conditions, including by children. Moreover, Glencore engages in tax avoidance, violates labour rights and causes massive environmental damage. This is shown in a study published today by the two organisations. (auf deutsch , en français)
The Tilwezembe mine in the Democratic Republic of Congo is one of many mines that are part of the empire of the Zug-based commodities group Glencore. The concession for Tilwezembe is held by the Glencore subsidiary Kamoto Copper Company (KCC). The mine is designated as ‘dormant’ by Glencore. However, the fact is that around 1600 artisanal miners are working on their own account to extract raw materials on the mine site. More than a third of these artisanal miners are under age. Extensive research by the Swiss Catholic Lenten Fund and Bread for all has found that a proportion of the ore mined on the site ends up in the hands of Glencore, via various middlemen, although the company denies this.
Glencore thus shares responsibility for the inhumane conditions in the mines, where the artisanal miners descend into shafts up to 80 metres deep, with bare hands and without any safety provisions. Time and again, this leads to fatal accidents, and the appalling hygiene conditions cause numerous illnesses. Added to this is the fact that the artisanal miners only get a fraction of the proceeds they would be entitle to: Because the intermediary company Misa Mining reduces the concentrations of minerals and uses false exchange rates, the artisanal miners are deprived of a considerable proportion of their income.
Polluted rivers, abusive dismissals and tax avoidance
The study by Bread for all and Swiss Catholic Lenten Fund further shows that activities where Glencore is participating lead to serious environmental damage in some areas: In one of Glencore’s processing plants in Luilu, sulphuric acid is discharged untreated into the river of the same name, with devastating consequences for the environment and the people living in the surrounding villages, who have lost an important water source. When asked about this a few days ago, Glencore claimed that the problem had now been dealt with.
The working conditions in the mines officially operated by Glencore do not comply with the legal requirements either: Local employees are discriminated against in favour of foreign staff, abusive notices of termination are issued, and overtime is not paid. Contrary to the requirements of the Congolese Mining Code, Glencore has so far failed to engage in open dialogue with the affected communities of Luilu and Musonoi. Living conditions in these communities have massively deteriorated as a result of activities for which Glencore is mainly responsible, and people suffer from a chronic shortage of drinking water.
And not least, Glencore’s tax avoidance practices give cause for criticism: Glencore lawfully pays duties in the DRC in the form of licence fees and import / export tax. However, with the company shifting its profits made in the Congo through transfer pricing between its subsidiaries and into tax havens, the Congolese state’s according to calculations of the Swiss Catholic Lenten Fund and Bread for all loss in dividends and tax on profits amounted to around196 million US dollars in the last two years.
Glencore must take responsibility
‘We demand that Glencore acknowledges the existing problems and shows clearly what it intends to do to address them’, says Chantal Peyer, the author of the study by Bread for all and Swiss Catholic Lenten Fund. For her, it is clear: ‘Glencore still has a long way to go if it wants to become the responsible company which it claims to be in its sustainability report.’ Glencore must urgently open a dialogue with the affected population in the Congo and initiate practical solutions – particularly with regard to access to water – in order to improve the living conditions of the people affected by its activities.
Furthermore, there is a need for fiscal transparency. ‘Multinational companies like Glencore must open up their accounts by country, so it becomes transparent which taxes are paid and which aren’t’, says François Mercier, co-author of the study. This information is also needed by the Congolese state, which is working on a reform of its mining legislation. ‘If the mining sector in Congo was taxed properly, the tax revenue would more than exceed the development aid for the country’, says Mercier.
Glencore case exposes loopholes in Swiss legislation
The example of Glencore clearly shows once again that Swiss legislation relating to the activities of international corporations has serious loopholes. There is an urgent need for legal provisions to ensure that companies domiciled in Switzerland take responsibility for the activities of their subsidiaries abroad.
Moreover, people who have suffered harm should be able to institute legal proceedings in Swiss courts against Swiss companies whose foreign subsidiaries commit human rights violations and cause environmental pollution. These demands are made by the Swiss Catholic Lenten Fund and Bread for all in the context of the ’Corporate Justice’ campaign, an alliance of some 50 organisations.
In 2011, the two organisations handed in a petition with 27,000 signatures to the Federal Council. In addition to calling for greater legal accountability of companies, it demanded that transnational corporations should publish their financial flows for each country to put a stop to the widespread practice of tax avoidance.
François Mercier, Swiss Catholic Lenten Fund, Programme Officer DRC and Responsible for Development Funding
Chantal Peyer, Bread for all, Responsible for Human Rights and Companies
Executive Summary of the study (English, 0.3MB)
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