kcm cheating on copper exports

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Message Ven 4 Juil 2014 20:15

kcm cheating on copper exports

kcm cheating on copper exports
By Mwala Kalaluka
Fri 04 July 2014, 14:00 CAT [935 Reads, 0 Comment(s)]


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Konkola copper mines
Konkola copper mines
THE High Court of Justice in London has heard that Vedanta Resources-owned Konkola Copper Mines is cheating on its copper exports prices by under-pricing and selling it through subsidiaries in Dubai.
The assertions pertaining to KCM's business practices came up during a hearing on Wednesday at the Royal Courts of Justice in London, where the High Court of Justice held that the London Court of International Arbitration's order to KCM to pay U&M Mining Zambia Limited US$14,619,900.12 and 15,155.23 British pounds over disputed copper mining agreements was valid and could be enforced in Zambia.
This is in a matter before Justice Eder in the commercial court of the High Court of Justice Queen's Bench Division in London, where KCM was the claimant and U&M Mining Zambia Limited the defendant.
Following three arbitration awards dating as far back as September 2013 that the London Court of International Arbitration (LCIA) granted to U&M in the matter, KCM took action in the Zambian courts to challenge the arbitration awards.
According to Justice Eder's judgment, U&M Mining Zambia Limited filed applications in the High Court of Justice in London, stating that there was cogent evidence that KCM was being deliberately grounded and that Vedanta may be preparing to abandon it along with its substantial debt in the region of US$1.5 billion.
The court heard that the juxtaposition of KCM's apparently poor position on paper with owner Anil Agarwal's statement that KCM was giving Vedanta US$500 million profit every year since 2009, was obviously troubling.
"The accounts for KCM do not make any provision for any such payment. This may be occurring through "transfer mis-pricing", i.e. by the selling of copper to an associated company at an undervalue allowing the seller to declare less profit (or even a loss) and reduce its tax liability. The associated company, usually based in a tax haven or lower-tax jurisdiction, then makes a large profit on resale of the copper. In the case of KCM, it appears that this practice is indeed being done through a subsidiary called Fujairah Gold (owned by Vedanta) based in Dubai. These transactions amount to transactions at an undervalue, putting KCM's assets beyond the reach of creditors," the court heard.
KCM has stated that they have made an investment of US$2.8billion in upgrading equipment, building new facilities and expanding capacity.
But the Government Technical Audit Committee (GTAC) findings are that KCM has not made any such investment. The same findings were made by the Grant Thornton Report.
The thrust of U&M's application before the High Court of Justice was that KCM would not be able to pay it the arbitration awards due to its current financial position, its relationship with the Zambian government and activist groups and the steps it has taken in the Zambian courts challenging the LCIA's holding in favour of U&M.
Justice Eder noted that KCM and U&M entered into a number of contracts which were, in essence, for the provision by U&M of open pit mining and related services at one of the mines on the Copperbelt and disputes arose subsequently.
The Michael Lee-chaired LCIA found in favour of U&M that the settlement agreement that was entered into by the parties in 2012 was binding and it ordered KCM to pay US$14,619,900.12 and 15,155.23 Pounds.
"The first award was not challenged in England although KCM is now resisting its enforcement in Zambia based on a number of allegations," said Justice Eber in his judgment. "It seems to me that the first award is plainly to be regarded as valid and binding as a matter of English law."
Justice Eber said in the second award of US$40,205, 995.31, KCM failed to render any argument to the contrary despite the 14-day ample time accorded to it.
In its application before the High Court of Justice, U&M expressed concern over KCM's current financial position and the steps which it has taken not to honour the first and second awards granted to U&M by the LCIA.
But KCM responded that while it has experienced difficulties in its relationship with the Zambian government and certain activist groups in Zambia in recent months, that does not reflect the reality of the commercial challenges it faces.
"There is evidence that KCM has not defaulted on the payment of employee salaries, repayments or interest payment of bank loans, or payments to the Zambian government or utilities," the judgment read.
KCM also emphasised that the evidential weight of its response far outweigh all the rhetoric, politically motivated reports and hearsay media stories relied upon by U&M.
However, U&M insisted in additional evidence before Justice Eder it was clear that KCM was now at the centre of very heated public controversy as to its business practices, what happens to the vast amounts of money it earns from mining in Zambia, and whether it was wrongfully diverting its assets to Vedanta or other third parties.
U&M argued further that KCM would not be able to trade its way out of its financial difficulties in the short term.
In his judgment, Justice Eder agreed with U&M that the evidence shows a real risk of dissipation of assets.
"The steps employed by KCM in Zambia in seeking to resist enforcement of the first award which is, on its face, a valid and enforceable award as a matter of English law are such as to demonstrate that there is, at the very least, a real risk that KCM will refuse to pay any costs order this court might make against KCM or at the very least, delay payment for as long as possible," read the judgment in part.
Justice Eder said although the LCIA's second arbitration award against KCM was enforceable in Zambia, there was no evidence as to what the court in Zambia might or might not do in the circumstances because U&M has not taken steps to enforce the award in the country.
"For these reasons, I am not persuaded that there is any relevant prejudice so as to justify an order under s70 (7)," said Justice Eder. "For these reasons, I upheld the application by U&M for security for costs in the sum of 300,000 British pounds...but, in the exercise of my discretion, rejected the application by U&M for security...."

http://www.postzambia.com/post-read_art ... leId=51057
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Message Ven 4 Juil 2014 22:26

Re: kcm cheating on copper exports

Il y a qqs temps KCM donnait régulièrement sa production et le coût unitaire... et il était aisé de connaître, par une simple règle de 3, le bénéfice avant impôt, et il était énorme...Depuis des années, KCM nous gruge...
MB

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