Logging Industry Tax Scams Hurt Africa
At a press conference in Zürich Greenpeace International presented a new report that exposes the tax scams used by international logging companies in the Congo basin. Guest speakers from the global Taxjustice Network (TJN) and Alliance Sud condemned the practice known as transfer pricing and explained how it affects the local population. - Press release, July 30, 2008
„Conning the Congo“, the report presented by Greenpeace International today in Zürich, takes a close look at the practice of transfer pricing as used, for instance, by the Danzer Group, an international logging company headquartered in Canton Zug, Switzerland. Far from being an isolated example Danzer actually represents the rule. The report shows how international logging companies use elaborate systems to move profits, transfer their African income to offshore bank accounts, and thus avoid paying taxes. The report provides more evidence that international logging companies, far from contributing to the fight against poverty, actually move their profits to Europe at the expense of the environment and the local African populations.
Internal documents of the Danzer Group show in detail how prices are fixed among the subsidiaries of the parent company: The company Siforco (based in the Democratic Republic of Congo, DRC) sells wood to the Swiss company Interholco at an official price well below market value. The resulting deficit is balanced by unofficial payments to offshore bank accounts in Europe and this allows the Danzer Group to avoid a number of taxes in the DRC. „The Greenpeace Report proves that the wood industry continues to rip-off the people of Congo“, says Michelle Medeiros, Africa Forest Coordinator for Greenpeace International. „With the world’s last remaining pristine forests becoming ever more important as defenses against climate change, donor states should stop subsidizing international wood corporations. The international community should be finding alternative solutions to logging, such as forest carbon financing funds that will benefit the people of Congo and the global climate.”
Bruno Gurtner, President of Taxjustice Network International also criticizes transfer pricing: „Transfer pricing abuses prevent governments from collecting a fair and appropriate share of taxes from multinational corporations. Almost two thirds of the worldwide trade in goods and services do not take place on the free market but in transactions between subsidiaries of the same corporate parent.”
Peter Niggli, Executive Director of Alliance Sud, comments the conclusions of the Greenpeace International report: “While Danzer spares no effort to keep its tax bill small or to avoid taxes in both Congo Republics altogether, a number of donor countries including Switzerland are using public aid money to improve the social services and the infrastructure there. In other words – relations could hardly be more contradictory.”
Today also marks the start of a critical phase of a government led legal review of all forest concessions in the DRC. This legal review does not include criteria that would uncover this level of tax-evasion. Therefore, Greenpeace is calling on the DRC government to cancel any non-compliant titles and to maintain and enforce the May 2002 moratorium on the awarding of new logging titles and the extension and renewal of old ones.
Contact: Peter Niggli, Alliance Sud
