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Study backs South African calls for UNCTAD to withdraw mis-invoicing report

By Mark Ford on September 6, 2017

The South African Chamber of Mines has again called for the withdrawal of a United Nations Conference on Trade and Development (UNCTAD) report that calculated under-invoicing by the country’s miners between 2000-2014 at US$102.8 billion.

UNCTAD already responded to earlier criticism of its paper, Trade Misinvoicing in Primary Commodities in Developing Countries, published in mid-2016. The UN body said it saw no convincing challenge to its data sources, the data itself, or even the methodology used to arrive at its figures for mis-invoicing (Trade Based Financial Crime, 25 July 2016).

Extensive mis-invoicing

New research commissioned by the chamber by Eunomix Research assesses the study that reckoned to have found extensive mis-invoicing amongst mining companies in Chile, Cote d’Ivoire, Nigeria, South Africa and Zambia.

Eunomix rejects the UNCTAD study’s conclusion that trade mis-invoicing is substantial, and that under-invoicing is preponderant in mis-invoicing.

Data discrepancies

In the researchers’ view, the UNCTAD study “mainly, and perhaps exclusively, documented trade data discrepancies rather than actual trade discrepancies.”

The researchers challenge UNCTAD’s core proposition that trade discrepancies equate with trade mis-invoicing.

Instead, they argue that trade data discrepancies “imperfectly reflect” actual trade discrepancies, which may or may not indicate trade mis-invoicing.

Withdrawal calls

The chamber is calling on UNCTAD to withdraw its report. “The accusations of extensive mis-invoicing and other illicit financial flows are feeding a growing lack of trust between key stakeholders in the mining industry,” the chamber said.

The chamber maintains that the discrepancies identified by UNCTAD related to gold imported into South Africa and then re-exported, a process that distorted official trade data.

The complete report, A review of the UNCTAD report on trade misinvoicing, with a full counterfactual on South African exports, prepared by Eunomix Research can be found here.