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New ruling highlights ongoing secrecy around Glencore tax case in Zambia

18 March 2015 - In a new twist in the long-running tax mystery around Glencore’s Zambian subsidiary, the European Union’s own bank has been officially accused of hiding what it knows about the affair.

In response to a complaint by Christian Aid about secrecy at the European Investment Bank (EIB), the EU’s watchdog, the European Ombudsman has issued a damning ruling.

It accuses the bank of covering up the conclusions of its investigation into allegations that Glencore’s Zambian subsidiary evaded tax. The bank also broke its own rules on transparency, said the Ombudsman.

Christian Aid spokeswoman Rachel Baird said: “We welcome this official recognition that the EIB is covering-up what it knows about alleged tax evasion by a Glencore company in one of the world’s poorest countries.

“This is the sort of thing you expect in a John Le Carré novel - not in reality. What we see so far is that important evidence about alleged crimes by a major multinational company in Zambia has been repeatedly concealed by a bank which is wholly owned by the UK and other EU countries.

“How are developing countries supposed to collect the tax billions that multinational companies owe them, when the European Union’s own bank engages in what appears to be a conspiracy of silence with a company accused of being one of the perpetrators?”

In her ruling the European Ombudsman Emily O’Reilly criticises the EIB’s claim, in a published summary of its Mopani-Glencore investigation, that it could not comprehensively prove or disprove the tax allegations.

She states: “The Ombudsman considers that this statement does not adequately reflect the information contained in the [EIB] investigation report on this issue. The Ombudsman is not in a position to reveal fully the information which supports this conclusion.”

Ms O’Reilly was allowed to see the secret bank report in full – but is not allowed to reveal its findings.

Her ruling also criticises the Bank for breaking its own transparency rules. It states: “In its handling of the request for access to the report in question, the EIB failed to meet its obligations under its own Transparency Policy.”

Glencore and its Zambian mining subsidiary Mopani have always denied the allegations against them. However, Ms Baird added that their case is not helped by the secrecy surrounding what really happened and that only full transparency around its finances will reveal the truth.

“For Glencore to refute these allegations, it must reveal far more about its finances, in Zambia and around the world, than it has ever been willing to do,” she said. “For now, it is hard not to conclude that the company has something to hide.”

Allegations of major tax evasion have swirled around Glencore-controlled Mopani Copper Mines since the leak of a draft auditors’ report in February 2011 highlighted disturbing information about how the company appeared to be artificially lowering its tax bill in Zambia.

In May 2011, the European Investment Bank, which had lent $50million to Mopani, announced an investigation. However it then repeatedly refused requests from Christian Aid, Counter Balance (a Brussels-based organisation which campaigns on the EIB) and many other organisations for the Bank to publish its findings.

As a result, Christian Aid made an official complaint to the Bank and then, when the Bank failed for months to give an answer, to the Ombudsman.

For more information please contact Rachel Baird on 0207 523 2446 or rbaird@christian-aid.org  24 hour press duty phone – 07850 242950

Notes to editors:

1. Christian Aid works in some of the world's poorest communities in around 50 countries at any one time. We act where there is great need, regardless of religion, helping people to live a full life, free from poverty. We provide urgent, practical and effective assistance in tackling the root causes of poverty as well as its effects.

2. Christian Aid’s core belief is that the world can and must be changed so that poverty is ended: this is what we stand for. Everything we do is about ending poverty and injustice: swiftly, effectively, sustainably. Our strategy document Partnership for Change explains how we set about this task.

3. Christian Aid is a member of the ACT Alliance, a global coalition of more than 130 churches and church-related organisations that work together in humanitarian assistance, advocacy and development. Further details at http://actalliance.org

4. Follow Christian Aid's newswire on Twitter: http://twitter.com/caid_newswire

5. For more information about the work of Christian Aid visit http://www.christianaid.org.uk

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