Testimony (16 September 2014) presented to the Marikana Commission by Mahomed Seedat, an executive director of a Lonmin subsidiary, has uncovered a startling structure where massive sales commissions have been paid by Lonmin to Western Metals Sales Limited, a Lonmin owned subsidiary based in Bermuda (a known tax haven). Nearly R200-million a year in sales commissions were paid to the subsidiary from 2008-2012, totaling R1.2-billion, an additional R1.2-billion was paid in management fees to Lonmin Management Services.
Lonmin allegedly put a stop to this practice in 2007, however records show that the practice was actually stopped in 2012 and only backdated to 2007. Lonmin’s legal counsel Schalk Burger explained that attempts to stop the payments had been blocked by Lonmin’s black economic empowerment (BEE) partner, Incwala Resources (then controlled by Ramaphosa’s Shanduka Group)
The Alternative Information and Development Centre (AIDC) as well as the EFF has called on SARS to investigate Lonmin for tax evasion. EFF’s Mbuyiseni Ndlozi expressed his outrage:
“What this means is that Lonmin, where mineworkers were murdered and where Cyril Ramaphosa is a director, has been claiming that they do not have money to pay workers the R12 500 minimum wage, while they are in reality shifting billions of rands to tax havens,”
In response to the EFF’s statement, a Lonmin spokesperson has denied any wrong-doing calling the allegations “completely false”. Dick Forslund, a senior economist suggests that the payments to Bermuda are only a small part of a larger system which sustained exorbitant executive salaries. The alleged tax avoidance tactics practiced by Lonmin are particularly embarrassing for Cyril Ramaphosa in light of his recent attacks against corporate tax evaders.