Pin-striped pirates

Tax Justice Network Australia

Volcafe is the world’s second-largest raw coffee trader and a market share of 13 per cent.

Volcafe managed to minimise the tax it paid through the use of the tax haven of Jersey in the English Channel. It would buy coffee from small co-operatives in developing countries at the world market price and then sell the coffee beans to its own subsidiary, Cofina, at a similar price.

In that way it made next to no profit in the developing countries and paid almost no tax to the governments of the developing countries it operated in, cheating them out of much needed tax revenue.

Cofina then sold the coffee beans to the final customer, such as Nestlé or Starbucks. The money from the sale flowed into Jersey, where Cofina paid no tax on it.

In 1998 Cofina sold coffee values at US$408 million and made a gross profit of US$27 million.

Cofina was a post box company with only one or two administrative staff. The coffee beans themselves travelled directly from the developing country to the final customer in the developed world, never passing through Jersey.

Company documents showed that the firm went out of its way to keep everything top secret.

Volcafe employees were told to identify themselves as Cofina staff, although they were not. One document stated: ‘You should program your fax machine in a way your name does not appear on faxes dispatched in the name of COF [Cofina].’

Volcafe closed down Cofina under pressure from public campaign groups.

No legal aciton was ever initiated. 

Read the full paper on 'Tackling tax-havens' on the Evatt site.  

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