Swiss village gives extra tax from GlencoreXstrata to affected countries

Hedingen donates some of its 'commodity million' from Glencore back to countries where the company is accused of exploiting people and resources for mining

The Guardian, Rupert Neate, Monday 23 September 2013

Ivan Glasenberg paid Rüschlikon village 360m Swiss francs (£246m) in taxes
linked to Glencore's flotation in 2011. Photograph: Bloomberg/Getty Images

A Swiss village has voted to donate 110,000 Swiss francs (£75,000) of taxes paid by Ivan Glasenberg, the billionaire chief executive of GlencoreXstrata, to charities in countries where the London-listed mining and commodity trading company is accused of exploiting people and resources.

The people of Hedingen, a village near Zurich, voted 764 to 662 in favour of donating the money in a "clear sign of solidarity with those suffering the consequences of the extraction of raw materials". The village will donate 10% of the "commodity million" Swiss francs it received out of taxes paid by Glasenberg in relation to Glencore's flotation in London in 2011.

Samuel Schweizer, a member of the citizens' committee that proposed the donation, said the villagers felt obliged to give back some of the "extraordinary wealth to the people who should have received it in the beginning".

He added: "It is extraordinary that our small community got more than 1 million francs of extra tax money from Glencore extracting raw materials in a number of very poor countries, where it is accused of polluting, abusing labour and not paying much in taxes. We had a unique opportunity to raise public awareness. We felt we must share this with the people who are suffering from the operations of Glencore."

The money will be paid to non-governmental organisations working on humanitarian projects in the Democratic Republic of the Congo, Colombia and Bolivia.

Glasenberg, who is worth $6.7bn according to Forbes magazine, paid 360m Swiss francs (£246m) in taxes linked to the flotation to the village of Rüschlikon, where he lives, in 2011. The money has since been redistributed between Rüschlikon, Hedingen and other communities in the Canton of Zurich.

Five of the villages are following Hedingen's lead and voting on whether to donate the money to charity over the next three months.

Schweizer said pressure is building on Rüschlikon, which kept 50m Swiss francs of Glasenberg's taxes, to donate some of the money to charity. Residents of Rüschlikon, already dubbed "the richest village in Switzerland", last year voted down a motion to give some of the money to an African charity.

Instead villagers voted to cut the local tax rate by 7%.

Schweizer added that if other villages follow Hedingen's lead, Rüschlikon "will be pressured into reconsidering its decision". "We wish that Rüschlikon would act in the same way [as Hedingen].

"We hope that people will open their eyes to the danger that raw material extraction will be the next reputational time bomb for Switzerland," he said. "Political leaders have not learned anything from the disaster of [Switzerland's role at the heart of the] banking industry."

The Berne Declaration, a non-governmental organisation campaigning against Switzerland's role in hosting global commodity companies, said: "While the decision makers in the capital Berne consider our commodities industry still only a political reputation risk, the landmark decision in the rural-conservative Hedingen shows that on the ground Glencore and their competitors already have a real reputational problem in this country.

"Remarkably and correctly, the people of Hedingen assume that tax money is not automatically white, clean or legitimate. As citizens, they take responsibility for that which the government still shies away from."

A Glencore spokesman said: "We believe that Glencore's global presence and economic strength have a predominantly positive impact on the communities in which we operate. We seek out, undertake and contribute to activities and programmes designed to improve quality of life for the people in these communities. In 2012, Glencore spent over $200m investing in the sustainable development of the communities in which it operates.

"Glencore's tax strategy and payments play a vital role in our intention to achieve long-term sustainable development. We are committed to full compliance with all statutory obligations, full disclosure to tax authorities and reporting transparently in the tax payments that we make to the governments of the countries in which we operate."