20 December 2012

Zambia: State to Probe Siphoned K40 Trillion

Government will institute investigations into reports that the country lost a shocking K40 trillion from 2000 to 2010 in tax evasion and corruption, mainly in the mining sector.

Finance Minister Alexander Chikwanda said the Government would study the matter.

The minister said in an interview yesterday that he had only learnt of the news in the media and would give a comprehensive reaction at an appropriate time.

Washington-based group, Global Financial Integrity, in its report revealed that more than £5 billion (K40 trillion) had been illegally siphoned out of Zambia over 10 years, with most of it ending up in offshore banks and tax havens.

This is according to a report by financial transparency campaigners.

"I have only seen this in the Times of Zambia. We have to study this matter seriously and it will be investigated," Mr Chikwanda said.

The report indicated that the lost money, most of which could be traced to multinational copper mining operations, was equivalent to almost half of Zambia's Gross Domestic Product.

"The big global mining companies are robbing the opportunities for the countries to advance; it [the money] could have been used to build hospitals and schools and lift the economy out of poverty," said Dev Kar, an economist and co-author of the report.

Dr Kar said it was difficult to track where the money went, but noted that most of it ended up in offshore banks and tax havens.

Sarah Freitas, the other author of the report, said $4.9 billion of Zambia's lost funds could be traced to trade misinvoicing in which importers pretended to pay more to foreign companies than they actually did, with the remainder slipped into offshore bank accounts.

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