ZAMBIA: ABF denies Zambia tax siphoning allegations

By Michelle Russell | 11 February 2013

ABF strongly denies allegations it is involved in anything “illegal or immoral"

ABF strongly denies allegations it is involved in anything “illegal or immoral"

Associated British Foods has "emphatically" denied allegations of tax evasion on profits made by its sugar processing operations in Zambia.

In a report published by Action Aid at the weekend, the charity claims the Ryvita and Silver Spoon sugar producer has found ways to siphon over US$83.7m - a third of its pre-tax profits - out of Zambia into tax havens including Ireland, Mauritius and the Netherlands since 2007. It said that despite Zambia Sugar generating profits of $123m over the past five years, it had paid "virtually no corporate tax" in Zambia.

“International corporate tax avoidance is like a cancer eating away at both rich and poor countries," Chris Jordan, a tax specialist at ActionAid and co-author of the report said. "Tax avoidance by Associated British Foods in Zambia is helping to keep people locked in hunger. We know that business can be a force for good in Africa, but this is massively undermined when a company doesn’t pay its fair share of tax.”

ABF, which owns Zambia Sugar through a majority stake in South Africa's Illovo, strongly denied the allegations it is involved in anything "illegal, immoral or in any way designed to reduce the tax rightly payable to the Zambian government".

"We are very proud of Zambia Sugar and the major contribution that it makes to the Zambian economy," a spokesperson said.

Since 2008, ABF said it has invested GBP150m in doubling the production capacity in Zambia and therefore create "the largest sugar mill in Africa". Capital allowances on the investment meant no corporate tax had to be paid.

"The availability of these allowances, used by governments all over the world, has nothing to do with tax avoidance. African governments should be as free as any other to attract investors," the spokesperson said.

It said payments made by Zambia Sugar for the services of third party contractors, expatriate personnel in Zambia and export services provided by Illovo, were made at cost.

"We have responded in a transparent and detailed manner to ActionAid and despite this they have produced a report written in inflammatory language that is designed to mislead."

Expert analysis

Zambia Food and Drink Report Q1 2013

Business Monitor International's Zambia Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Zambia's food and drink industry.

Sectors: Commodities & ingredients, Financials

Companies: Associated British Foods

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