Glencore-Prodeco ordered to pay 60,023 million pesos for changing mining contract

19.05.2015

Glencore-Prodeco, the former Colombian minister of mines and energy, Hernán Martínez and two Ingeominas officials were ordered to pay 60.023 million pesos for changing a large-scale mining project contract which resulted in lower royalties being paid to the Colombian government.

After a thorough tax investigation, Colombia’s Comptroller General has ordered the Prodeco group, owned by the multinational Glencore plc, Hernán Martínez Torres,  minister of mines and energy between 2006 and 2010, the former director of Ingeominas, Mario Ballesteros and the former technical director of Ingeominas, José Fernando Ceballos, to pay 60,023 million pesos.

Changes made without prior assessment or planning

They were all implicated in changes made to a mining contract resulting in a reduction in basic royalties, additional royalties and compensation due on gross income from production at the Calenturitas mine in 2010, the year in which the changes were made.

According to the Comptroller, the accused made the changes without conducting the assessment or planning procedures required for large-scale mining projects. Consequently, there was a reduction of more than 52 million pesos in royalties.

Former minister Martínez explained that Prodeco representatives visited him at the ministry of mines and told him the company was not happy with the royalty clause because it prevented it from fully developing the mine. He said he disagreed with the company and asked its representatives to discuss it with Ingeominas.

Prodeco representatives said they did not realize they were acting irregularly when they changed the contract. However, the Comptroller said he had the necessary evidence to show that the accused were guilty.

Although Glencore claims to respect communities, collective bargaining and workers’ rights, IndustriALL Global Union knows it is involved in industrial and community disputes all over the world. IndustriALL therefore supports the Colombian Comptroller General’s order, which states that the company violated “the national interest and administrative principles and therefore the Colombian state’s financial interests”.

“The conduct of multinational corporations prejudices Colombian sovereignty. Companies have an impact on the environment and communities, cause displacement in the areas they operate in and leave ill-health and poverty in their wake. A delegation of trade union and community representatives recently denounced the company at the Glencore shareholders’ annual general meeting in Switzerland,” says Carlos Bustos Patiño, projects coordinator for IndustriALL in Colombia.