SABmiller: world’s second largest brewer is dodging millions in poorer countries


1:30 pm - December 7th 2010

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contribution by Sarah Palmer

With Vodafone, Boots, and Topshop already in the UKUncut firing line over tax avoidance, this week ActionAid has exposed how SABMiller, the owner of Grolsch and Peroni beer, is siphoning millions out of developing countries.

For the last year, we’ve been working with former tax inspector Richard Brooks (also behind the Vodafone expose) to show exactly how SABMiller is using tax havens to avoid its taxes in South Africa, Mozambique, Tanzania, Zambia and India.

This results in developing countries losing an estimated £20 million a year. That’s enough to put an extra 250,000 children through school in Africa.

SABMiller is the second bigger brewing company in the world, making profits of £2billion from its offices just off Park Lane.

Our research also unveiled the scandal that SABMiller’s brewery in Ghana has paid less tax in the last two years than Marta Luttgrodt, who sells its beer in the market outside the brewery in Accra. When we told her this she said:

We small businesses are suffering from the authorities. If we don’t pay, they come [to lock our stalls] with a padlock.

We’ve launched a campaign calling on SABMiller to stop using tax havens to siphon profits out of developing countries and make tackling tax avoidance a key part of its corporate social responsibility policy. Governments should also do more to increase transparency and crack down on the loopholes which allow for tax avoidance in the first place.

The broader scandal is that tax avoidance is common business practice. SABMiller is doing something that many multinational companies do: playing the international tax system – there is no suggestion that they are breaking any laws.

But when companies exploit international loopholes to minimise their taxes, ordinary people both here and around the world have to pick up the bill.

Tax dodging may be common practice, but this also means that few companies are safe from public scrutiny and campaigning. This is a real reputation risk that they cannot ignore.


Sarah Palmer is a Tax Justice Campaigner at ActionAid

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Reader comments


Q all the tory butler trolls on here to defend the rich parasites.

sally,

What is a butler troll anyway? A troll in the image of Rab Butler? A well-trained troll dressed in smart clothes who serves wine and directs the domestic staff (which we all have, don’t we…)? A random insult of no significance?

And back to the original thread.

If you are relying on the same person who got the figure for the tax evasion by Vodafone totally wrong to produce your case, I’d suggest you might need to be careful.

That said, I would fully support a boycott of all large brewers – the homogenisation of beer is generally a bad thing in terms of quality…

*sigh*

But I suppose it is OK for the Guardian Media Group to avoid taxes in the same (perfectly legal) way?

When we see the same people attacking GMG for the same thing, then I’ll bother to give some of the people making these arguments the time of day.

Poor old Watchman does not know what a butler is.

He serves his masters.

And tory trolls are always on here serving the interests of their corporate masters.

That said, I would fully support a boycott of all large brewers – the homogenisation of beer is generally a bad thing in terms of quality…

Mostly. In Mozambique, the old state brewery produced a beer called Manica. It didn’t display the alcohol by volume, because it varied from bottle to bottle. Opinion was divided as to whether the best approach was to put a lemon quarter in the top to strain out the bits, or to pour it into a glass so you could see where the bits were. I once got a plaster in mine. Nice beer, sometimes but I suspect the new brand is an improvement.

I do wonder though whether Sarah Palmer has ever run a business in Africa. There are reasons other than tax dodging why you’d prefer to run it all through another jurisdiction.

But I suppose it is OK for the Guardian Media Group to avoid taxes in the same (perfectly legal) way?

gosh – this is getting so predictable isn’t it. I’ve responded to this a million times – can you point out how much profit Guardian makes every year?

Also, I thought you right-wingers hated whataboutery, Tyler? You seem to come here only to derail threads.

Sarah Palmer

You rightly say that the money SABMiller saves in tax could put a lot of African kids through school.

But is that what governments in developing countries would do with it? How much would go in corrupt skimming or badly managed projects?

You say SABMiller saved 20 million via tax efficient schemes.

What has SABMiller done with it?

In 2009 the company :

announced a broad-based black economic empowerment transaction in South Africa, involving an equity issue of approximately 10% of The South African Breweries Limited and reflecting the group’s long-standing commitment to socio-economic progress in South African society.

SABMiller invested $250m for future growth in Angola, and opened a new $125m brewery and soft drinks plant.

SABMiller was granted a license by the Namibian government to brew and bottle beer in Namibia and announces plans to build a brewery in the country.

Following the success of its initiative to convert locally grown barley into brewing malt, SABMiller plc announced construction of a $16 million maltings plant in Uganda.

You might think that bringing employment and wealth on this scale is a better use of the money than giving it to corrupt governments, no?

@7 – Im not familiar with this, does the Guardian dodge tax in the same way or don’t they.

although you may have answered a million times already could you be so noble as to humour my ignorance (without asking me a question in return)

Sally – I don’t think I’ve ever heard you say anything remotely original or even to the point at hand. Its always about Tory trolls, why not try growing up a little. You make the first comment and its about trolls, its pathetic. Go outside and play in the snow or something.

@8 – So them not paying taxes is a good thing because they can afford to build new breweries, which assumedly will also dodge tax payments?

11. Luis Enrique

It’s possible that the net contribution of SAB to Africa is positive … but could be more positive still if they reported more profits and paid tax on those profits in the local country.

I wonder, how many of these countries charge SAB for a license to operate, which may generate as much revenue for the host government, but by other means.

Does anybody know of any workable proposals to limit the ability of multinationals to turn local profits into royalties paid on brands owned elsewhere, or to charge for ‘management services’ provided out of low tax jurisdictions?

perhaps hoping that the companies in question will voluntarily give up using legal tax avoidance schemes is futile. It might be that eliminating low tax jurisdictions in the better solution. Not sure how to go about that, but it might be the better answer.

12. Flowerpower

Dave

I’m not familiar with this, does the Guardian dodge tax in the same way or don’t they?

The Guardian are very transparent:

Guardian Media Group, the parent company of the Guardian newspaper, has used an offshore structure to complete its acquisition of Emap’s trade magazine and events interests, in partnership with the private equity firm Apax partners. The deal, completed March 20, 2008, involved GMG incorporating a new company in the tax haven of the Cayman Islands and integrating it with an existing network of Cayman companies set up at the same time by the private equity firm.

The structure is complex and the financial information made publicly available about the new companies remains limited.

However we have been told it will eventually involve a holding company in the low tax jurisdiction of Luxembourg that will own a group, which includes a number of Cayman Islands’ companies. One of those companies is Eden Bidco, which was incorporated in the Caymans on December 17 2007 as the vehicle to orchestrate the £1bn bid by GMG and Apax for Emap. Another is GMG Hazel Acquisition 1 Limited, a GMG-owned company, which was incorporated in the Caymans on the same, date and will be transferred into the existing Apax structure.

The Apax Caymans structure at the time of the deal involved a complex network: Apax Nominees WW Ltd owned Eden Acquisition1 Ltd which owned Eden Acquisition 2 Ltd which in turn wholly owned Eden Bidco. The rate of corporation tax in the Caymans Island is zero.

more at http://www.guardian.co.uk/media/2008/may/03/1

So them not paying taxes is a good thing because they can afford to build new breweries, which assumedly will also dodge tax payments?

Yep. Poor folks need jobs and beer, not pols & bureaucrats driving by in ever flashier Mercs.

@7 – Im not familiar with this, does the Guardian dodge tax in the same way or don’t they.

Briefly, the claims about the Guardian boil down to three separate issues:

1. They set off the profits from the GMG sale of 49% of Autotrader in 2007, so that an annual profit of £300m resulted in an £800k tax credit being paid to them by the taxpayer.
http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/2794081/Guardian-group-uses-Gordon-Browns-rules-for-tax-holiday.html

2. GMG itself, the Guardian’s parent company, is structured through a joint-venture with a private equity firm via an SPV located in the Caymans, in order to avoid UK Stamp Duty.
http://business.timesonline.co.uk/tol/business/columnists/article6959685.ece

3. The Scott Trust, which ‘owns’ the Guardian was recently dissolved as a trust and re-incorporated as a limited liability company in order to avoid potential inheritance tax liabilities.
http://www.dailymail.co.uk/money/article-1076324/Guardian-owner-Scott-Trust-wound-shake-up.html

None of the above are illegal in any way, indeed all are sensible responsible moves taken to limit their overall tax exposure. What’s slightly ironic, of course, is that the Guardian has launched exposes in the past at companies doing similar things. Their attack on Tesco (which ultimately led to a front page apology, and £800k of Tesco’s costs) rather amusingly turned out to be an attack on an identical scheme to that listed above at 2.
http://www.pressgazette.co.uk/story.asp?storycode=42077

11 Luis

“perhaps hoping that the companies in question will voluntarily give up using legal tax avoidance schemes is futile”

Quite. You’d be as well expecting turkeys to vote for Christmas. It is vanishingly unlikely that companies would “do the right thing” in a corporate responsibility sense without legislation to force them, twinned with political and consumer pressure to adhere to the policies desired.

Although it isn’t impossible that certain companies WOULD take progressive measures unilaterally (whether relating to tax avoidance, environmental protection or health and safety) the vast majority are only likely to do it if forced, and their compliance will be generally be grudging unless and until the benefits of complying outweigh the costs of not complying or staying with the status quo.

15. Luis Enrique

in the same way we would like journalist at a Murdoch owned paper to write things that disagree with Murdoch, and to criticise things Murdoch does, don’t we also want journalists at a tax-dodger-owned newspapers to keep writing things that disagree with tax-dodging?

I don’t think the fact GMG indulges in tax dodging should stop the Guardian campaigning against tax dodging. It should however make their journalists stop and think about how irresistible companies find using legal means to reduce their tax bills, and this realization should inform the nature of their campaigns. Meaning they should seek to change the legal environment companies operate in, and not merely hector companies to change their behaviour, and voluntarily pay more tax.

15 – I don’t disagree with that, but it’s hard not to argue that the moral authority of a newspaper campaign against a specific action is greatly diminished if that newspaper itself is taking part.

It’s a disgrace that x happens!
Um, you do that.
Yes, and it’s a disgrace!

@flowerpower

SABMiller does generate jobs in many poor countries, ActionAid believes that investment by multinational businesses can be beneficial to developing countries. In our report we went out of our way to talk about the positive contribution of SABMiller’s sustainable development work http://bit.ly/callingtime

But it does great business there too. The Chief Executive has stated that “if there was any more of Africa, we’d be investing in it”. It’s making big profits, so has a real responsibility to stop dodging its taxes. Developing countries need jobs, but they also need health and education services for their citizens, and tax is the best way of paying for these.

Corruption is indeed a problem. ActionAid does lots of work in developing countries to monitor government spending – all the way from the national budget, to the local village. In this way, the people in a country hold the government accountable and corruption is gradually reduced. Countries like Ghana have already proven they can effectively invest government tax revenues in tackling poverty. In the long term, increasing the tax revenues will help to make governments more accountable to their people. Remember the old slogan ‘No taxation without representation?’ A government can only raise significant taxes if its people broadly agree to what it is doing with them.

SABMiller has a very active CSR programme – but CSR should be more than just window dressing. Their Chief Executive has publically stated that “paying taxes” is one of the best ways that business can help poor countries develop. It’s high time he put this into practice. They have an opportunity to become a leading company on tax matters by making tax a new top priority in their CSR programme.

@ 7 Sunny

I hardly think pointing out naked hypocrisy amounts to “derailing a thread”.

Thanks to Flowerpower and Tim J at 12 and 13 for detailing what GMG get up to. Not that I think there is anything wrong with what GMG have done, as long as it’s legal. I do think it’s a bit weak to complain about other companies doing the same things though to score points.

Regarding Grolsch – I know the head of marketing for the brand here in SA very well (she’s my ex….). When She gets back from business in the US I’m sure she’d be very interested to comment on this article.

“Meaning they should seek to change the legal environment companies operate in, and not merely hector companies to change their behaviour, and voluntarily pay more tax.”

No company is going to do that. TopShop will not be closed down. Vodafone will carry on as before.

And you will not stop companies moving to low tax jurisdictions. Are you intending to close Switzerland down?

The Scandinavian solution is to keep corporate taxes low and to transfer that burden to higher rate taxpayers who will be (amongst) the owners of those companies. That seems the best option. As well as simplifying the tax system itself of course – the opposite of what government tends to do.

And please do try to remember: “companies” do not pay tax. Owners, employees and customers do. So tax the owners directly, which is what I assume you want to do.

“that the moral authority of a newspaper campaign against a specific action is greatly diminished if that newspaper itself is taking part.”

It’s never stopped the tabloids complaining about Paedophiles whilst having explicit pictures of teenage girls with “countdown until she is legal”

Planeshift,

It’s never stopped the tabloids complaining about Paedophiles whilst having explicit pictures of teenage girls with “countdown until she is legal”

Well, if you can’t see the fact that they were counting down until the girl in question is legal (which tabloid is this anyway? I’ve never seen or heard of this) kind of suggests a respect for the laws that are broken by paedophiles (the word should not be capitalised unless it is a proper name, probably for someone who needs to get a deed poll quickly). Kind of suggests consistency to me – the message of wait till its legal is clear in both cases.

And as a point of order, the teenage girls in question are presumably physically mature (or we would of heard of it, a lot). So they are by definition not attractive to paedophiles…

21 – It has, arguably, reduced the moral authority of the Sun and the Star to make such arguments. /irony

Yep. Poor folks need jobs and beer, not pols & bureaucrats driving by in ever flashier Mercs.

This seems to be based on the assumption that people are poor, and so its ok they remain so.

25. Flowerpower

@ 24

This seems to be based on the assumption that people are poor, and so its ok they remain so.

…er, no. The best way out of poverty is to get a decent job.

Sarah Palmer @17

they also need health and education services for their citizens, and tax is the best way of paying for these.

Nope, can’t agree with that. Almost certainly not, in fact.

“which tabloid is this anyway?”

I was thinking of the Sun and its countdown until Charlotte Church became legal a while back, but the point stands in the sense that tabloids regularly use images that portray women as girls. There is plenty of literature on this if you search, and as someone who claims to have been around universities for 20 years you’ll know exactly how to search for it rather than take this thread off topic. It isn’t as if you think tabloids are not the biggest hypocrittes is it 😉

CJCJ – yes, but you then still have the problem of individuals moving to escape taxation, and these days it is more than possible to run a company from abroad with the occasional face to face trip.

20 cjcjcjcjcjcjcjcjcjcj

I tend to agree with the Scandinavian option as the best (or “least worst”?) solution.

I see the point you make that it isn’t “companies” in the end that pay taxation, but as has been discussed in a number of other threads here recently, the short to medium term problem is addressing the shortfall caused by companies avoiding tax.

I doubt many ordinary people seeing their taxes rise and services cut as a result are content to wait for the trickle down of higher wages, lower costs, higher dividends for shareholders, better economic performance etc, even assuming we can trust companies to have the social responsibility to do it.

Since they don’t see the need from a CSR standpoint not to move to Ruritania in the first place, I wont be holding my breath……

Tax to trade is the answer. If you want to do business here you must pay a fee or tax that must be paid or you don’t get to trade here.

Then you can put your head office where you like. On the moon for all I care, but if you don’t pay the fee, fuck off. If all countries did this it would be sorted.

“In the long term, increasing the tax revenues will help to make governments more accountable to their people. Remember the old slogan ‘No taxation without representation?’”

That could be true if you ewre asking people, instead of some anonymous corporation, to pay the taxes.

Or if you were proposing that corporations get the vote.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    SABmiller: world's second largest brewer is dodging millions in poorer countries http://bit.ly/fknAS2

  2. dan mcquillan

    RT @libcon: SABmiller: world's second largest brewer is dodging millions in poorer countries http://bit.ly/fknAS2

  3. Clint David Samuel

    RT @libcon: SABmiller: world's second largest brewer is dodging millions in poorer countries http://bit.ly/fknAS2

  4. mark wright

    RT @libcon: SABmiller: world's second largest brewer is dodging millions in poorer countries http://bit.ly/fknAS2

  5. ActionAid Liz

    RT @libcon: SABmiller: world's second largest brewer is dodging millions in poorer countries http://bit.ly/fknAS2

  6. Kemi

    Best to stick to real beer at the mo'… rt @libcon: World's second largest brewer dodging millions in poorer countries http://bit.ly/fknAS2

  7. Brit Lefit

    #British brewer deprives #poor #India & #Africa of #taxes
    RT @libcon:#SABmiller world's 2nd largest #brewer is #dodging http://bit.ly/fknAS2

  8. irene rukerebuka

    RT @libcon: SABmiller: world's second largest brewer is dodging millions in poorer countries http://bit.ly/fknAS2

  9. Chris Jordan

    RT @libcon: SABmiller: world's second largest brewer is dodging millions in poorer countries http://bit.ly/fknAS2

  10. Tim Cowlishaw

    If you need another reason to ditch the mass-produced cooking lager and support your local small brewery: http://bit.ly/g1BecA #ukuncut

  11. Sarah Palmer

    RT @libcon: SABmiller: world's second largest brewer is dodging millions in poorer countries http://bit.ly/fknAS2

  12. False Economy

    in wake of #ukuncut, important piece on tax dodging abroad by superbrewer SAB Miller http://bit.ly/fknAS2 @libcon

  13. Lee Hyde

    RT @FalseEcon: in wake of #ukuncut, important piece on tax dodging abroad by superbrewer SAB Miller http://bit.ly/fknAS2 @libcon

  14. dan mcquillan

    RT @FalseEcon: in wake of #ukuncut, important piece on tax dodging abroad by superbrewer SAB Miller http://bit.ly/fknAS2

  15. Rooftop Jaxx

    RT @FalseEcon: in wake of #ukuncut, important piece on tax dodging abroad by superbrewer SAB Miller http://bit.ly/fknAS2 @libcon

  16. ActionAid Liz

    RT @FalseEcon: in wake of #ukuncut, important piece on tax dodging abroad by superbrewer SAB Miller http://bit.ly/fknAS2 @libcon

  17. John Turner

    RT @FalseEcon: in wake of #ukuncut, important piece on tax dodging abroad by superbrewer SAB Miller http://bit.ly/fknAS2 @libcon

  18. cowan88

    RT @FalseEcon: in wake of #ukuncut, important piece on tax dodging abroad by superbrewer SAB Miller http://bit.ly/fknAS2 @libcon

  19. Cheryl Baker

    RT @FalseEcon: in wake of #ukuncut, important piece on tax dodging abroad by superbrewer SAB Miller http://bit.ly/fknAS2 @libcon

  20. Zoe Stavri

    RT @FalseEcon: in wake of #ukuncut, important piece on tax dodging abroad by superbrewer SAB Miller http://bit.ly/fknAS2 @libcon

  21. Jackart

    Of For fuck's sake. The idiots are picking on SAB miller now. The stupidity of this meme is staggering http://is.gd/ilt24 @sunny_hundal

  22. Frank van der Linde

    RT @libcon: SABmiller: world's second largest brewer is dodging millions in poorer countries http://bit.ly/fknAS2

  23. Cayman Today

    SABmiller: world's second largest brewer is dodging millions in … http://bit.ly/gHikcq

  24. Jim Richardson

    Superbrewer SABMiller's tax havens cost poor countries £20m/yr http://j.mp/fknAS2 /v @ActionAidUK @danmcquillan

  25. ActionAid Liz

    RT @jimrhiz: Superbrewer SABMiller's tax havens cost poor countries £20m/yr http://j.mp/fknAS2 /v @ActionAidUK @danmcquillan





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