Share

Lonmin lashes out at profit shifting report

Cape Town - A report claiming Lonmin is engaging in two transfer pricing arrangements is misleading and false, the company said on Thursday.

It was responding to a report titled "The Bermuda connection: Profit shifting and unaffordability at Lonmin 1999-2012", released by the Alternative Information and Development Centre (AIDC) on Thursday morning.

"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 Service (Sars)," it said in a statement.

"The report is misleading and false and Lonmin reserves all its rights with regard to legal recourse."

The report claimed Lonmin transferred over R2.3bn in fees to two of its subsidiaries, one called Western Metals Sales Limited in Bermuda.

AIDC economist Dick Forslund told the Cape Town Press Club on Thursday that between 2008 and 2012, $162m (around R1.2bn) in "commissions" was paid to Western Metals Sales.

He said 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 all the data used to compile the report was based on materials made public in the proceedings of the Farlam Commission of Inquiry up until September 29.

The commission is investigating the deaths of 44 people during a violent wage-related strike at Lonmin's mining operations at Marikana, near Rustenburg in North West in August 2012.

Lonmin said it had chosen not to prevent AIDC from holding its press conference despite being of the view that the report undermined the working of the commission.

It said commission evidence leaders had deemed it fit not to oppose the AIDC.

Asked whether Lonmin planned to take the centre to court, Forslund said he would be very surprised if they did.

The company's legal team had apparently told him the report was defamatory.

Lonmin said that to sustain operations and save jobs, it had to raise about R8bn from its shareholders in the four years to 2012.

In 2013, it again raised around R9bn from its shareholders to keep the mine operational.

"The idea that Lonmin hid profits from shareholders while asking them for a total of R17bn is not credible," the company said.

Forslund conceded during his address that he was not an expert on taxation.

He also said it was up to the Sars 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.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.0%
Rand - Pound
23.91
-0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders