Glencore: Hiding profits abroad, attacking workers and the environment at home

The Paradise Papers show that Glencore was involved in currency swaps of up to $25 billion between the Bermuda-based and Australian-based arms of its company.
November 10, 2017

The Australian operations of mining giant Glencore have been implicated in the Paradise Papers revelations – the largest leak of documents in history.

The Paradise Papers investigation into tax havens has caused huge controversy around the world, as it has provided a window into the hidden tax avoidance affairs of the super-rich and the multinational corporations they run.

Involving 13.4 million documents and 1.4 terabytes of data, the leak was obtained by German newspaper Sueddeutsche Zeitung and shared with the International Consortium of Investigative Journalists. Since then, the collection has been shared with nearly 100 media partners worldwide.

The Paradise Papers show that Glencore was involved in currency swaps of up to $25 billion between the Bermuda-based and Australian-based arms of its company.

While theoretically "legal”, these types of swaps are being investigated by the Australian Tax Office under suspicion they may be used to avoid tax by shuttling interest payments from high-tax nations to low-tax jurisdictions.

According to the documents obtained, two Bermuda-based arms of Glencore changed A$25 billion to US dollars through Glencore Australia Investment Holdings in April 2013.

Another Australian entity, Glencore Australia Finance, engaged in currency swaps with Bermuda-based Glencore Capital, for A$25 million in April 2013 and A$10 million in June that year.

Bermuda is one of the world's most infamous corporate tax havens. Moreover, the company is one of the largest clients of leading offshore law firm Appleby, which is a key target of the tax avoidance revelations.

Swiss-based Glencore – which took over XStrata in 2013 – has operated in Australia for nearly 20 years. The company employs more than 15,000 people across 24 mines in three states and the Northern Territory.

Glencore has attracted fierce criticism for its impact on the communities where it has operated.

In the Northern Territory, Glencore's McArthur River mine – one of the world's largest zinc and lead mines – has faced strong community opposition and its operations have been blamed for the contamination of fish in local waterways.

In 2015-16, Glencore paid no royalties to the NT government for McArthur River by offsetting its capital investments, thereby reducing its royalties bill to zero.

In the north Queensland city of Mount Isa, Glencore's Mount Isa Mine raised the levels of lead in the air, soil and water. A Glencore-commissioned report found the mine is a source of "potentially significant" lead pollution, and that young children were most vulnerable to the heavy metal, which can impair intellectual development.

In central Queensland, some miners at Glencore's Oaky North and Oaky No. 1 coalmines have been diagnosed with pneumoconiosis (black lung disease), a potentially fatal condition caused by long-term exposure to coal dust.

Until recently, black lung was thought to have been eliminated from Queensland more than 30 years ago.

The Queensland government has threatened to close Glencore mines for failing to properly monitor coal dust levels in its mines. The company itself admitted in a statement earlier this year that it had been "non-compliant" with the law.

On top of all this, Glencore is engaged in a bitter dispute with mineworkers and the Construction Forestry Mining and Energy Union (CFMEU) at its Oaky North coalmine over pay, conditions and contractors.

The same day the Paradise Papers were released, November 6, Glencore locked out 190 workers at the mine for a further two weeks.

"Glencore has already locked out the Oaky North workforce for 123 days, equating to a loss of 265,000 production hours," CFMEU Mining and Energy Queensland district president Stephen Smyth said on November 7.

"This further lock-out will take that to a record 132 days. The workers have overwhelmingly voted to reject Glencore's agreement on two occasions now.

"The company has been exposed for their unscrupulous tax avoidance strategies. Despite making mega-profits from Australian coal mining, they want to impose an agreement on workers that offers worse conditions and rights than they currently have.

"Glencore has a single objective: to replace all their existing workforce with contractors they can screw over on pay and conditions ...

"We will fight Glencore every step of the way."

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