Cape Town - Mining communities and South African citizens have suffered as a result of two transfer pricing arrangements that Lonmin is allegedly involved in, a report released by the Alternative Information and Development Centre (AIDC) claimed on Thursday.
The report, titled “The Bermuda connection: Profit shifting and unaffordability at Lonmin 1999-2012”, claimed Lonmin transferred over R2.3-billion in fees to two of its subsidiaries, one called Western Metals Sales Limited in Bermuda.
It said that between 2008 and 2012, $162 million (around R1.2 billion) in “commissions” was paid to Western Metals Sales.
AIDC economist Dick Forslund told the Cape Town Press Club on Thursday that the primary purpose of the report was to work out whether Lonmin could have met the R12 500 wage demand put forward by Marikana rock drillers in 2012.
The report, described as a case study, concluded that a wage agreement could have been reached that year had the one alleged profit shifting arrangement been collapsed and the other drastically reformed.
“If you were to divide the average payment, the sales commission, to Bermuda over each individual rock drill operator at Lonmin in 2012, you would get an average wage increase of R3 800 a month,” Forslund said.
He said the data used to compile the report were based on materials made public in the proceedings of the Farlam Commission of Inquiry up until September 29.
The inquiry was investigating the deaths of 44 people during a strike at Lonmin's Marikana mine in August 2012.
In a statement on Thursday, Lonmin denied the allegations.
It said that AIDC had admitted it was not an expert in tax and that it regarded South Africa's tax law as irrelevant for the purposes of its report.
“Nevertheless it continues to produce documents and press statements containing false accusations, misleading generalisations, ignorant conjecture and destructive innuendo,” the company said.
“Lonmin pays tax fully and properly in all jurisdictions in which it operates. Our financial statements and structures are audited by KPMG and SA Revenue Services (Sars).”
It said it was not aware of the centre reporting its findings to Sars. Forslund conceded during his address that he was not an expert on taxation.
He also said it was up to the SA Revenue Service to investigate claims made in the report.
It was the centre's belief that political pressure needed to be put on companies engaging in such schemes because it was disrupting the local labour market.
The report stated it was not guided by any belief that Lonmin was more unequal, negligent or “ruthlessly profit-maximising” than other mining companies.
“It may well be the opposite. However, this does not at all mean that Lonmin could not have disposed of its resources very differently before August 2012 or that the company cannot do so now, or in the future,” the report stated.
Sapa