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ABF denies allegations of tax dodging in Zambia

By Caroline Scott-Thomas , 14-Feb-2013

ABF has denied any illegal action
ABF has denied any illegal action

Associated British Foods (ABF) has emphatically denied allegations of tax dodging in Zambia levelled by anti-poverty charity ActionAid.

The charity has published a report accusing the ABF Group subsidiary Zambia Sugar Plc. of avoiding taxes by rerouting transactions through intermediate companies and using a series of legal loopholes in the Zambian tax structure.

Zambia Sugar’s parent company Illovo, of which ABF owns a 51% share, paid virtually no corporate tax in Zambia from 2007 to 2012, despite posting record profits during the period.

“Thanks to this financial engineering, we estimate that Zambia has lost tax revenues of some US$17.7 million (ZK78 billion) since 2007, when ABF took over the Illovo sugar group,” the ActionAid report said.

The Zambian government offers tax breaks to incentivise investment in the country.

ABF said in a statement: “Illovo denies emphatically that it is engaged in anything illegal, immoral or in any way designed to reduce the tax rightly payable to the Zambian government. We are very proud of Zambia Sugar and the major contribution that it makes to the Zambian economy.”

The company added that it contributes in other ways to Zambia.

“Illovo invested R1.6bn (£150m) to double the size of the sugar mill and improve productivity – gains that will benefit the nation for many years to come,” it said.

“The mill and related activities provide employment for more than 5,000 people. As a direct consequence of this investment in a sustainable business, capital allowances and tax incentives were available to the company as they are to other investors.”

The company said the ActionAid report was “incomplete at best and factually wrong in places” and claimed the non-governmental organization had declined to engage with Illovo.

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