Fortescue Metals Group is dancing around the new revelation that it too has a Singapore-based marketing hub, albeit as yet unused.
SMH reported this morning that a company called Fortescue International Marketing is incorporated in Singapore with Fortescue’s chief Nev Power and CFO Stephen Pearce as directors.
FMG founder Andrew Forrest has been on a media crusade in recent weeks, attacking BHP and Rio Tinto about their use of subsidiary companies for iron ore marketing and tax avoidance purposes.
Now it has been revealed that in January last year FMG set up a company for the principal activities of “iron ore marketing services” and “trading of iron ore”, according to the Singapore business regulator.
FMG escaped scrutiny at the Senate inquiry into corporate tax avoidance early last month, stating that they only had a “small shipping office” in Singapore.
At the sitting of the Economic References Committee inquiry on April 10, the following exchange took place between chairman Sam Dastyari and FMG CFO Stephen Pearce:
CHAIR: Fortescue does not have a marketing hub in Singapore, does it?
Mr Pearce: No, we do not have a marketing hub. We have a very small shipping office located in Singapore.
CHAIR: Obviously you knew you were coming here today. You have seen the media reports. I want to get my head around this sort of thing. Both BHP and Rio Tinto have a marketing and other function business based out of Singapore, correct?
Mr Pearce: Correct.
In relation to our “On The Bench – The Taxman Cometh” video, Australian Mining received several correspondences from a Fortescue representative who stated: “Fortescue does not have a marketing hub in Singapore” and “Fortescue runs a shipping office out of Singapore. It controls shipping, it is not a profit centre”.
In response Australian Mining asked FMG to clarify the full extent of its operations in Singapore, however the company did not reveal its ownership of Fortescue International Marketing.
SMH reported that FMG had not responded to its questions about why it set up the company, or why it has been dormant since its inception in January last year.
Fortescue CFO Stephen Pearce released the following statement this morning:
“We note with concern the media coverage today regarding Fortescue’s international operations.”
“Full details of Fortescue’s international operations were contained in its own submission to the Senate Economics References Committee dated 29 January, 2015.
“A copy of this submission is available on the public record.
“Fortescue confirms that it pays the applicable tax rates in the countries that it operates and that all income earned by those subsidiaries is then attributed back to Australia and applicable tax paid.
“The Singapore Company referred to was established specifically as the entity by which Fortescue would invest in the China Beijing International Mining Exchange. It has undertaken no other activity.
“Fortescue is proud of its record of not transferring profits overseas and paying its full share of tax and royalties to Australia.”
Australian Mining contacted FMG representation to ask Stephen Pearce why the Singapore government has the pupose of the company listed as "iron ore marketing services", however the company refused to answer any direct questions.
Andrew Forrest’s latest campaign to set up an inquiry into the iron ore price sought to “provide a forum for law makers and companies to discuss the impact of offshore marketing hubs on government tax revenue and royalties".
Both BHP Billiton and Rio Tinto have disclosed information about their marketing hubs and commercial centres, with BHP pursued by the ATO for $522 million in the face of ongoing tax audits.
Glencore also has a marketing hub in Singapore, but head of corporate affairs Cassandra McCarthy announced at the senate inquiry on April 10 that the company was winding up those operations, inherited from Xstrata, and would market products directly from Australia.