Cocoa traders ready to pay Gbagbo
By Jack Farchy and Javier Blas in London
Published: March 21 2011 20:00 | Last updated: March 22 2011 17:02
Some cocoa traders are preparing to pay taxes to the regime of Laurent Gbagbo in a move that would hand a lifeline to the embattled former Ivory Coast president, who has refused to step down after losing elections last year.
Cocoa traders fear Mr Gbagbo may confiscate stocks of cocoa worth $1.3bn if they do not pay export taxes by the end of March, as he has ordered. Ivory Coast is the world’s largest cocoa producer, accounting for nearly 40 per cent of the global crop.
In January, the traders stopped exporting cocoa, depriving the Gbagbo government of revenue from export taxes, after the imposition of a ban by Alassane Ouattara, the internationally recognised winner of November’s election, and European sanctions.
But Ricardo Leiman, chief executive of Hong Kong-based trading house Noble Group, said that if Mr Gbagbo was still in control by March 31, the company would pay the export taxes.
“If the local government who is in charge tells us to pay the taxes, we will pay the taxes. We abide by local law and international law,” Mr Leiman told the Financial Times in an interview.
Noble Group later clarified that the company’s actions would be guided by its legal advice.
The comments caused surprise in the cocoa trading community as other companies insisted they would resist paying the taxes, citing an informal agreement among the cocoa industry to present a unified front to Mr Gbagbo and to refuse to pay. “We will not pay. No way,” one European executive said.
But another executive said that, while he did not currently plan to pay, he would have to “reassess the situation” if the threat of confiscation were to remain on March 31. “People may not have an option,” he said.
The stocks under threat number about 400,000 tonnes of cocoa – worth $1.3bn at current prices. Given export duties of 22 per cent, they could be worth nearly $300m in taxes to Mr Gbagbo’s government. Diplomats believe he needs about $150m a month to keep the loyalty of military forces and civil servants. All of the top cocoa traders own large quantities of cocoa tied up in Ivory Coast, including Barry Callebaut, Archer Daniels Midland, Cargill, Olam, Noble, Touton, Ecom Agroindustrial and Armajaro.
The dilemma for the cocoa industry comes as Mr Gbagbo’s grip on the country has weakened amid an escalation of violence. At least 30 people were killed in a mortar attack on a market in a pro-Ouattara neighbourhood of Abidjan last week.
In the past two weeks, the cocoa price has tumbled from close to its highest in 33 years as investors bet that stocks in Ivory Coast would find their way out of the country.
But brokers said big industry groups were buying options to protect against a rise in prices in case the stocks were seized or destroyed.
Mr Leiman said that even if the European Union sanctions were to prevent the company from shipping the beans out of the country in the short term, “the beans will be exported one day”.