RAID vs. Anglo American

Allegations

The complaint related to a number of issues arising from the privatisation of the copper industry in Zambia during the period 1995 -2000. RAID alleged that Anglo American (AACSA, which later became Anglo American plc) influenced the privatisation process in the company’s favour. Specifically, it alleged that AACSA was able to purchase the Konkola Deep Mining Project without entering into a competitive tendering process and that the company also obtained right of first refusal over the purchase of facilities at Mufulira (smelter and refinery) and Nkana (mine), thereby denying the opportunity for other enterprises to make an offer. Anglo American plc, after the company’s incorporation in London, derived a continuing benefit from these actions.

RAID also alleged that the company sought and received exemptions from Zambian legislation with regard to taxation and environmental controls. This resulted in weakened standards of environmental controls, such as those on emission targets, and affected the health and safety of workers and the population in general. The weakened environmental controls were not disclosed.

Linked to the taxation exemptions, RAID also alleged that the company secured a number of financial incentives and concessions that were not available to other enterprises.

Relevant OECD Guidelines

• Version 2000 Chapter II
• Version 2000 Chapter II Paragraph II.1
• Version 2000 Chapter II Paragraph II.2
• Version 2000 Chapter III
• Version 2000 Chapter III Paragraph III.2
• Version 2000 Chapter IX
• Version 2000 Chapter IX Paragraph IX.1
• Version 2000 Chapter IX Paragraph IX.3
• Version 2000 Chapter V
• Version 2000 Chapter V Paragraph V.0
• Version 2000 Chapter V Paragraph V.2 Subparagraph V.2.B

Outcome

The company responded saying that the RAID complaint was ‘without foundation within the terms of the Guidelines’. Anglo American rejected RAID’s allegation about favourable treatment stating, “Far from seeking to negotiate fiscal terms that would produce unusually attractive returns, terms were negotiated in a transparent manner between the parties”.

In most respects, this complaint – the first the UK NCP received following the 2000 review of the OECD Guidelines – was, in its initial stages, well handled. The NCP acknowledged the complaint promptly, immediately sought and obtained legal advice on its admissibility and within a few weeks had requested DFID Zambia to conduct a fact finding visit. When the company raised objections regarding the UK NCP’s competence, the NCP referred the matter to the OECD’s Investment Committee for clarification. On receipt of that clarification, the NCP resumed the specific instance process.

Despite the positive start, a protracted dispute with Anglo American over jurisdiction led to the NCP’s failure to conclude the matter within a reasonable time frame.

A final statement was eventually issued in May 2008, an unprecedented six years after the complaint had been filed. It said, “the NCP does not propose to make any recommendations aimed at achieving compliance for the pragmatic reason that a considerable period of time has passed since the ZCCM privatisation was concluded, during which Anglo American has sold the companies that are the subject of the complaint.” The original assessment was instead appended to the final statement.

RAID regrets the fact that the failure to timetable the case effectively meant that the NCP never reached a final determination on the substantive issues raised, despite the wealth of information presented by both parties. However, two important principles were established: firstly, that the 2000 Guidelines could be applied retrospectively and; secondly, the acknowledgement in the final statement that “it is usual practice for the NCP to make determinations of compliance and to issue recommendations in respect of a specific instance on those matters which remain unresolved”.

More details

Documents

• statement

  1 May 2008

  The UK NCP issued a statement that was based on the 2002 initial assessment. The NCP did not attempt to reach any conclusion in view of the inordinate delays in dealing with the case but acknowledged that ‘it is usual practice to make determinations of compliance and issue recommendations on matters that remain unresolved.

  NCP UK
• statement

  1 April 2004

  The Investment Committee releases a statement, which concludes that although the company was not registered on the London Stock Exchange until 1999, it concurred with the complainants that the actions it had taken prior to that date might have had “a continuing effect” and should be taken into consideration. It confirmed that the Guidelines applied to operations outside of the OECD area. It also stated that there was no need to refer to the previous version of the Guidelines, as this had been repealed when they were revised in 2000. The NCP had advised the complainants to set out the allegations in the light of the version of the Guidelines in force at the time (i.e. both the 1991 and 2000 versions). In other words, even if the events pre-date the 2000 revision of the Guidelines, this version of the Guidelines should be used to measure company behaviour. In private, NCPs expressed frustration at the questions raised, which they felt did not need to be “clarified” by the Investment Committee at all and regarded the exercise as a waste of time. The Investment Committee urged the UK NCP to help resolve the differences between the parties. The NCP, which had declared that it would regard the Investment Committee’s decision as binding, took up the case again.

  NCP UK
• file

  27 February 2002

  Complaint filed with UK NCP.

  RAID